The Ministry of Textiles and Jute (MoTJ) has sought reduction in the value added tax (VAT) rate on all artificial fibre yarns to 2.0 per cent instead of proposed 6.0 per cent, a source said.
According to the new budget document, VAT on man-made fibre yarns has been increased by 1.0 per cent to 6 per cent in the proposed budget for the next fiscal year (FY).
The existing VAT rate is 5.0 per cent on purchase of artificial fibre yarns per kilogram in the current FY.
The newly proposed VAT rate may push up the cost of clothes, produced with artificial fibre yarns, and also hurt the low income group people, industry insiders said.
Bangladesh Textile Mills Association (BTMA) on June 12, 2020requested the textiles and jute ministry to reduce the proposed VAT rate.
An association source said clothes made from artificial fibre yarns are being widely used by the country's poor, ultra-poor, day labourers and lower middle-class consumers.
There is also a huge demand for clothes, made of artificial fibre yarns, in the global market, he added.
To safeguard the interests of the low income group people and keep the prices of clothes keeping under the buying capacity of such people, the government should bring down the VAT rate to 2 per cent instead of proposed 6 per cent, he mentioned.
On June 14, the MoTJ requested the National Board of Revenue (NBR) to consider the issue following the appeal made by BTMA.
Finance Minister AHM Mustafa Kamal on June 11 unveiled the national budget for the fiscal year 2020-21 with an outlay of Tk 5.68 trillion.
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