Steel producers oppose proposed VAT, SD, AIT

The country's steel manufacturers on Wednesday demanded withdrawal of the proposed value-added tax (VAT), supplementary duty (SD) and advance income taxes (AIT) imposed on them in the national budget for the fiscal year 2026-27.

They also earnestly urged the government to reinstate the previous turnover tax rate of 0.6 per cent instead of the proposed 1.0 per cent to save the struggling sector from an impending financial collapse.

Bangladesh Steel Manufacturers Association (BSMA) also warned that the combined effect of the recent power price hike and the new tax and duty structure could push up overall steel production costs -- both direct and indirect -- by an extra Tk 11,000 to Tk 12,000 per tonne

The BSMA leaders came up with the call at a press conference held at the Jahur Hossain Chowdhury Hall of the Jatiya Press Club in Dhaka on Wednesday.

BSMA President Mohammed Jahangir Alam, Secretary General Dr. Sumon Chowdhury, Vice Presidents Md. Abdus Salam and Maruf Mohsin, and Joint Secretary Saumitra Kumar Mutsuddi were present, among others.

In his speech, Mr Jahangir Alam hailed the proposed national budget, saying that it has attempted to improve the overall business environment.

However, the proposed budget imposed an additional tax burden on the steel sector despite the fact that the industry is currently passing through a severely critical phase.

Although the annual demand for steel is around 5.0 million tonnes, the installed production capacity currently exceeds 10 million tonne, he said.

"Because of sluggish market demand and prevailing economic headwinds, most factories are operating at less than 50 percent of their capacity, resulting in massive operational inefficiencies and mounting financial losses," he said.

Adding to the industry's woes, the recent hike in electricity prices alone has increased production costs by up to Tk 2,000 per tonne. Furthermore, increased tariffs by the Chattogram Port Authority, alongside higher logistics and transport costs, have pushed operational expenses up by an additional Tk 3,000 to Tk 3,200 per tonne.

He also said the new measures proposed in the upcoming budget will impose a further fiscal burden of Tk 2,000 to Tk 2,500 per tonne directly. Overall, the total direct and indirect additional production costs could increase by an estimated TK 11,000 to TK 12,000 per tonne, posing an absolute existential threat to the sector and driving up construction costs nationwide.

Speaking on the occasion, Sumon Chowdhury said if the government doesn't pay heed to the steelmakers' plea, the sector will face serious trouble in the future which will not only impact the operators but also the overall economy.

"Steel sector is directly linked to different sectors including housing and government infrastructure development," he said.

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