NBR issues rule covering 1.0pc surcharge on mobile handset

The National Board of Revenue (NBR) issued a rule Sunday facilitating the collection of 1.0 per cent surcharge levied on both imported and locally produced mobile handset from the current fiscal year (FY) -- a measure that would make the mass-used device slightly costlier.
The surcharge that came into effect from July 1 last was incorporated in the budget for the FY 2014-15 to help increase the non-tax revenue for the government.  
As promised in the finance minister's budget speech, the money from the surcharge will be spent on developing the country's information-technology sector.
According to an official estimate, the newly imposed surcharge would fetch the government some Tk 400 million in this fiscal.
Local mobile handset manufacturers and importers fear that the growth in mobile-phone services would be stymied by the new measure.
They said the surcharge would force lower-income group of people to shoulder additional 1.0 per cent price for purchase of mobile-phone handset.
Almost every rickshaw-puller and housemaid -- and even some beggars specially in Dhaka's streets -- uses the mobile phone, nowadays, to communicate with their families in far-flung areas.             
According to the NBR rule, the amount of surcharge would be spent on the flourishing of Information and Communication Technology (ICT) sector.
Rezwanul Huq, Director of Symphony and also General Secretary of Bangladesh Mobile Phone Importers Association, said the government would get a negligible amount of revenue from the surcharge but one-percent increase in prices would matter for the commoners.
As per the tax measures, the importers of mobile handset would have to pay an aggregate 21.75 per cent tax at import stage from the current fiscal year, he added.
In the FY 2014-15, the government imposed 15 per cent VAT and 1.0 per cent surcharge on mobile handset. However, it halved 5.0 per cent customs duty on import.
Uday Hakim, operation director of local mobile phone- manufacturing company Walton, also expressed his concern over the matter.
He said the prices of mobile set would go up with the imposition of the new surcharge.
"The government could consider exclusion of low-priced mobile handset from imposition of VAT and surcharge to make the device accessible for the lower-income group of people," he said.
Nowadays, mobile phone is a necessity, not luxury, he noted. And he urged the government to facilitate expansion of the mobile- phone services rather than impose new taxes.
Mr Huq, director of the largest mobile-phone importer in the country, Symphony, said expansion of smart-phone uses would be hindered with the new taxes.
"Still, some 95 per cent people are yet to use smart phone in Bangladesh despite having a sharp growth during the last three years," he said.
As per NBR rules, importers and manufacturers of all types of mobile-phone handsets, irrespective of high-range smart phone or feature phone, will have to pay the surcharge.
The NBR issued the rules by explaining details on procedures of tax collection from the importers of mobile handset.
Value-added tax (VAT) authorities will collect the surcharge at the time of collection of 15 per cent VAT from importers and manufacturers of handset. The surcharge is an add-on to the handset price.
The importers and local manufacturers will have to pay the surcharge on the device through treasury chalan or electronic transfer in a specific code.
The amount of surcharge should be mentioned in the VAT-11 chalan and copies of treasury chalan of surcharge payments be attached at the time of VAT-return submission.
Customs, excise and VAT commissionarates will have to keep monthly collection statements on surcharge as non-tax revenue receipts.
The VAT authorities have been authorised to impose punitive measures and penal taxes in case of non-compliance with the rules by the importers, local industries or anyone, for that matter.
Assistant commissioners are empowered to suspend unloading or release of products from the factories or ports in case of failure in payment of the surcharge.