Taxing OMS obstructs food rationing to the poor

Doulot Akter Mala | Published: September 04, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

Food ministry finds taxing dealers' commission as an obstacle to smooth open market sale (OMS) operation meant for distribution of some essentials at subsidised prices among the poor.
The ministry has written to the National Board of Revenue (NBR) for scrapping the Value Added Tax (VAT) on the commission of the dealers who are rationing essential supplies meant for ensuring "food safety to the poor and underprivileged people".
OMS dealers receive Tk 1.50 for per kilogram (KG) of rice and Tk 1.0 for per-kg wheat as operating cost or commission in accordance with the provision of the dealer policy.
They carry out spending on food-grain extraction, transportation, rents of shops, weight machine, wages of workers and other expenditures from this operating cost.
According to the VAT Act 1991, there is 15 per cent VAT levied at source on any type of dealers' commission. Â
In a recent letter to the NBR, the Ministry of Food mentioned that commercial audit department raised objection as VAT was not deducted from the dealers' commission in some areas. Â
The ministry wrote to the revenue board for waiving VAT on dealers' commission in the OMS operations. It sent the request following a proposal of the directorate of food.Â Â
"OMS food-grain distribution was hampered in the places under social safety net for this reason. Grassroots-level people are being deprived of their due benefit," the ministry letter reads. Dealers are playing vital role through supply of rice at fair price, helping in poverty eradication and nutrition, it said.Â Â
The government launches OMS activity to rein in prices on the local market so that low-income group of people can get food at fair price.
Earlier, the NBR had waived VAT and income tax on food- grain transport services. Procurement of paddy and rice is also exempt from payment of VAT. Â
Talking to the FE, a senior official of the VAT wing said they had yet to receive the request from the food ministry.
"We may consider the issue seriously with instructions from government high-ups," he said.Â Â
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