The National Board of Revenue (NBR) is set to waive Value Added Tax (VAT) on dealers' commission in a bid to ensure smooth operation of open market sale (OMS) of essentials to the poor at reduced prices.
The Board has taken the initiative following a proposal of the food ministry to withdraw the 15 per cent VAT on dealers' commission as it is creating obstacle for ensuring food safety to the poor and underprivileged people.
The VAT wing of the NBR recently sent a summary to finance minister AMA Muhith for his approval of VAT exemption on dealers' commission.
A senior VAT official said VAT on dealers' commission on OMS operation has been in place since the operation of VAT law but it was never identified as an obstacle by the ministry concerned.
The issue came into focus after the commercial audit department raised objection as it found VAT was not deducted from OMS dealers' commission in some places.
The NBR placed the proposal to withdraw the VAT for ensuring smooth food rationing to the poor people, he added.
As per dealers' policy, OMS dealers receive commission at a rate of Tk 1.50 for per kilogram (kg) rice and Tk 1.0 for per kg wheat.
Expenditures on food grain extraction, transportation, rent of shops, weighing machine, wages of workers and other costs are met from this commission amount given as operating cost. The dealers have to pay 15 per cent VAT at source on that commission as per VAT Act 1991.
"OMS food-grain distribution was hampered in some places under social safety net for this reason. Grassroots-level people are being deprived of their due benefit," the food ministry said in a letter to the NBR.
Dealers are playing a vital role in supply of rice at subsidised prices, helping poverty eradication and nutrition, it said. The government recently enhanced focus on poor-friendly food-aid programme to make rice available for the ultra-poor at Tk 10 per kg.
Prime Minister Sheikh Hasina Wednesday inaugurated a programme to sell rice to the poor at Kurigram's Chilmari.
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