Finance Adviser Dr Salehuddin Ahmed on Monday proposed increasing the price of certain products at the production stage, including cotton yarn and yarn made of man-made fibre (MMF).
In the proposed budget for the financial year 2025-26, he said that the specific tax amount at the production stage of cotton yarn has been proposed Tk 5.0 a kilogram (kg) instead of Tk 3.0 per kg.
The VAT rate at the production stage of yarn made of MMF and other fibres has been proposed to be fixed at Tk 5.0 per kg instead of Tk 3.0 per kg.
The measures have been proposed to introduce a standard VAT system along with increasing the tax-GDP ratio, he said.
To encourage environmental-friendly recycling industries, the withholding tax rate on the supply of raw materials to this industry has been proposed to be cut to 1.5 per cent from 3.0 per cent.
VAT exemption has also been proposed at the production stage of textile grade pet chips.
To protect local industries, import duty for polyester staple fibre is proposed to be increased to 1.0 per cent from zero per cent.
Polyester (Synthetic) staple fiber (PSF) and pet CHIPS (Textile Grade) products are widely used in the textile industry.
To simplify and make the bond management system more business-friendly, 'Central Bonded Warehouse' and 'Free Zone Bonded Warehouse' systems have been proposed to be introduced to save time in importing raw materials for export-oriented industries.
Furthermore, supplies made against domestic letters of credit have been included under the definition of 'deemed export industry' and simultaneous deemed and direct export industry.
Moreover, import entitlement for bonded factories at a time has been increased from one-third to one-half of their total entitlement to reduce both time and cost for raw material imports by export-oriented companies.
The source tax on export proceeds of readymade garment industry has remained unchanged in the proposed budget for the upcoming fiscal.
Neither the finance bill nor the budget speech has mentioned any change regarding the rate.
According to the income tax ordinance, a 1.0 per cent source tax on the export proceeds is applicable.
Munni_fe@yahoo.com
