NBR step to check VAT evasion

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Doulot Akter Mala
The government has restricted cash transaction of over Tk 0.1 million for local manufacturers enabling them to get value added tax (VAT) rebate on procurement of raw materials in a bid to check tax evasion.
Local manufacturers have to pay the prices of raw materials, worth above Tk 0.1 million, through banking channel to get tax rebate after production is completed, officials said.
The National Board of Revenue (NBR) has made the rule mandatory from July 1, to keep recorded transaction for checking VAT evasion.
"Non-recorded transaction is the main cause of tax evasion. Businessmen have to pay for raw materials through banking channel if the amount exceeds Tk 0.1 million," said a senior VAT official.
The measure will also help income tax department to cross check shown income in the tax return, he said.
The revenue board has lost a substantial amount of revenue over the years due to cash transaction without any valid document, he said.
Local manufacturers were getting rebate on paid tax for procurement of raw materials on the basis of cash payment which creates disputes with the taxmen.
"We suspect false declaration of purchasing prices of raw materials to raise the volume of rebate while businessmen claimed taxmen harass them by charging additional tax," the official said.
The new measure will help resolve such misunderstanding with the businessmen on big chunk of rebate, he said.
Amir Hossain Khan, president of Shop Owners Association, said the measure will not be effective as most of the producers purchase raw materials on deferred payment.
Local manufacturers buy raw materials in phases and pay the prices later as per their convenience on the basis of personal contact, he said.
"I don't understand how the revenue board will assess the procurement value. The rule may be abused by producing several procurement values," he said.
NBR member (VAT) Abdul Mannan Patowary said the government has introduced the new rule to check concealment of actual purchase value of raw materials.
"Now, businessmen have to follow the rule to get VAT rebate," he said.
"I don't think it would be complicated to implement or follow. It has been done to thwart big chunk of tax evasion," he added.
The government has set Tk 270.92 billion target for VAT collection which is the highest among the other wings of NBR.
The government has empowered the Vat officials to keep watch and freeze bank accounts of suspected tax evaders from the current fiscal to boost revenue collection.