Commerce ministry asks NBR to cut source, income tax on jute

The commerce ministry has asked the National Board of Revenue (NBR) to cut the existing source tax and income tax on jute as the sector is now in a tight corner, sources said.
The ministry has recently written to the board for taking necessary actions in this regard, confirmed a senior official of the ministry.
The decision was made during a recent meeting chaired by Senior Commerce Secretary Tapan Kanti Ghosh, focusing on enhancing the capacity of jute product exports.
Currently, traders concerned have to pay 2.0 per cent and 1.0 per cent as tax at source and income tax on procuring raw jute and export earnings respectively.
Industry insiders said there are multiple problems involving non-availability of financial assistance, 'Mandatory Jute Packaging Act-2010' and existing anti-dumping duty by India.
They claimed that jute producers have to provide the source tax, hindering the growth of the country's potential sector.
Besides, Russia-Ukraine war, Covid pandemic and the higher price of raw jute have contributed to the fall in jute export, they mentioned.
The rampant breach of the 'Mandatory Jute Packaging Act-2010' is the main reason behind not ensuring and increasing the use of eco-friendly jute sacks and bags nationwide, according to a source.
Private jute millers in the country have repeatedly urged the government to enforce the Act nationwide, according to sector insiders. They argue that instead of using jute-made sacks and bags as required by law, artificial alternatives are being used for selling, transporting, importing and exporting commodities.
Currently, the use of jute sacks is limited to government rice procurement campaigns, while jute bags are utilised for packaging jute seeds. Sources said that the authorities responsible for ensuring the use of jute sacks have failed to curb violations at various levels.
A total of 19 products, including paddy, rice, wheat, maize, fertilisers, sugar, spices, turmeric, onion, ginger, garlic, coriander, pulses, potato, flour, crude flour (ata), rice bran, poultry feed and fish feed, are listed under the jute packaging act. This list aims to protect the environment by prohibiting the use of artificial packaging.
Following the anti-dumping duty imposed by India on Bangladesh jute goods, the government introduced the 'Mandatory Jute Packaging Act-2010' and subsequent 'Jute Packaging Rules-2013'.
The legal framework also aims at reviving the struggling jute sector in the country and combating environmental pollution caused by the widespread use of synthetic bags in packaging goods.
Jute serves as a vital cash crop for over 3.0 million small farm households, accounting for nearly one-third of manufacturing output and standing as Bangladesh's largest agricultural export commodity.
The livelihoods of an estimated 50 million individuals depend on jute-related activities encompassing agriculture, domestic marketing, manufacturing and trade.
According to the Bangladesh Jute Mills Association (BJMA), the jute industry has long been the lifeblood of the economy and continues to be a key pillar of the rural economy in Bangladesh today.
Around 15 million farmers engage in cultivating this cash crop, with millions more involved in its processing, transportation and associated services. In contrast, the use of polythene diminishes soil fertility, harms marine animals and disrupts drainage systems.
According to a private jute miller, the mandatory use of jute bags has the potential to revive the jute sector's golden days and eliminate the illicit trade of plastic shopping bags.
In the fiscal year of 2021-2022, the export volume of raw jute and jute products amounted to $1.12 billion, according to the Export Promotion Bureau.
Data from the bureau shows that Bangladesh generated $1.16148 billion through the export of raw jute and jute goods in fiscal year 2020-21, compared to $882.35 million in fiscal year 2019-20.
The country currently produces around 8-9 million bales of raw jute. Out of this volume, around 5-5.5 million bales are utilised in the manufacturing of various jute goods, while the remaining portion is exported as raw jute.
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