The government has projected an additional revenue income worth Tk 54.99 billion in the upcoming fiscal year (FY) with readjusted VAT and customs-related measures in the deficit budget.
The National Board of Revenue (NBR) has prepared the projection on the basis of upward and downward revisions of the tax measures dealt by its two wings.
In the estimation for FY 2016-17, the board eyes an additional amount of Tk 43.25 billion that would be mobilised from new tax measures by the Value Added Tax (VAT) department.
It also projects Tk 11.74 billion additionally from the upward revision of customs duties.
For the VAT wing, major new budgetary measures include increase in tax on tobacco items, upward revision of VAT rate on construction services and supplementary duty on mobile- phone uses.
The VAT department estimates Tk 24.90 billion worth of additional revenue from cigarettes, bidi, jarda and gul due to hike in their supplementary duty and price slab in the budget.
The VAT wing outlined the gross estimate of revenue collection in a paper placed before Finance Minister AMA Muhith during budget discussion.
In the Finance Bill 2016, VAT rate on construction services has been increased to 6.0 per cent from 5.5 per cent. The VAT department estimated an additional Tk 7.0 billion from this sector in the upcoming fiscal.
The government has increased the SD on use of mobile phone by 2.0 per cent. The measure may yield Tk 4.0 billion in additional revenue to the public exchequer, the NBR estimates.
In the budget, tariff value has been increased on average to 20 to 25 per cent on some products, including billet, ingot, GI wire, HR coil, HR coil, ship scrap, brick, packing paper, cigarettes and bidi paper, handmade cake etc.
With the hike in the tariff value, the government expects to collect Tk 2.50 billion in additional revenue in FY 2016-17.
VAT on space and establishment services increased to 15 per cent from 9.0 per cent in the proposed budget. The VAT wing projected Tk 2.0 billion in additional tax from the revision.
The government has withdrawn VAT exemption from some major items, including bread, hardboard, plastic and rubber slipper, motor cycle, fabric made by power loom, electric generator, travel agency and meditation.
From those sectors the NBR expects additional Tk 2.0 billion in VAT.
By increasing the amount of package VAT twofold, the board estimates additional Tk 150 million in FY 2016-17.
However, small businesses are protesting the sharp increase in the amount of package VAT and they forewarn "substantial increase in the prices of products for this reason".
In the budget, the NBR offered fresh VAT exemption to six sectors: spare parts of wheat crusher, patient-and dead body- carrying ambulance, suppliers of jute goods, dyeing, printing, finishing and calendaring activity of grey fabrics and hard rock extracted from Madhyapara project.
The VAT wing estimates Tk 120 million losses in revenue collection due to the VAT waiver offered to various sectors.
The target for VAT wing in FY 2016-17 has been fixed at Tk 741.14 billion. It will have to collect additional Tk 163.61 billion over the target for the current fiscal.
In a projection paper, the NBR eyes Tk 80.86 billion in revenue collection with the normal 14 per cent growth while 39.62 billion will be collected through strengthening monitoring, reducing tax gap and realising tax arrears.
In the paper, the customs wing estimated additional Tk 5.11 billion in VAT at import stage, Tk 4.77 billion from supplementary duty and Tk 1.86 billion from customs duty because of revised rates of duties for various sectors.
The revenue is expected to be mobilised due to upward revision of customs duty on import of rice, cornflower, agriculture machinery, tobacco machinery, boulder and crushed stone, transformer, lamp holder, cable connector, fibre optic cable, talcum powder and some other goods, increase in tariff value, regulatory duty and imposition of VAT on billet, bar and rods and fixing tariff value for tea import.
An additional amount of revenue worth Tk 5.0 billion may come from import of billet, Tk 1.85 billion from rice import and Tk 350 million from tea import in the next FY.
