• Friday, Sep 20, 2019
  • Last Update : 02:25 am

New VAT regime from Monday

  • Published at 10:15 pm June 30th, 2019
bigstock-vat-text-on-wooden-cubes-above-229256470-1527186070808.jpg
Bigstock

Rate for e-commerce and ride sharing service cut to 5%

New value added tax (VAT) regime will start on Monday with a few changes brought in the final budget for 2019-20 fiscal year, as the government is committed to implementing the much talked-about VAT and Supplementary Duty Act, 2012 from the first day of new financial year.

Instead of previous seven slabs, the businesspeople now have to pay VAT at 15 %, 10%, 7.5% and 5% rates.

The 15% rate will be applicable only for the imported and luxury items, while wholesalers and retail sellers have to pay at the rate of 5%. Other businesses will pay VAT at 7.5% and 10% rates. 

Besides, there will be special rates for a few sectors including pharmaceuticals, petroleum, rod and iron and yarns.

Officials at the National Board of Revenue (NBR) have said they have set the four-tier VAT rates for different sectors. But only those who will pay VAT at 15% rate will enjoy rebate or refund facility.

The traders will get VAT rebate once they pay surplus amount of VAT or double VAT, they add.

“If anyone thinks his estimated VAT is higher than his payable amount, he can switch to 15% VAT rate and take rebate,” NBR Second Secretary Md Tariq Hassan clarifies.

He informs that the government has cut down VAT on ride sharing and e-commerce services from the proposed 7.5% to 5% in the Finance Bill 2019.

The sectors had been out of VAT purview from the beginning.

The government enacted the VAT and Supplementary Duty Act, 2012 seven years ago but could not implement it amid protests from business community.

But, this year both the parties came to a settlement, said AHM Mustafa Kamal in his budget speech.

“To ensure effective implementation of this Act, we will provide all types of logistical support including necessary manpower,” he added.

Kamal informed that a joint working group, comprising officials from the government and private sectors, would oversee the implementation of the new VAT law.

Meanwhile, businesspeople have welcomed the new VAT law in a post-budget reaction in the capital, saying they do not have any objection to it, as the government has kept multiple rates as demanded.

President of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) Sheikh Fazle Fahim, however, has urged the authorities concerned not to harass businesspeople while implementing the new VAT act, saying that they have no discord with the NBR.

The new VAT act excluded traders having annual turnover up to Tk50 lakh from the VAT net, while it imposed a 4% turnover tax for the small traders having turnover up to Tk3 crore.

The VAT registration threshold has been set at Tk3 crore, which was Tk80 lakh earlier.

Besides, a total of 98 products and 42 services will enjoy VAT exemption facility in the new fiscal year, according to the Finance Bill, 2019.

Previously exempted heavy industries like automobiles, refrigerators, freezers, air conditioners, motorcycles, mobile industries and government mega projects will also enjoy the facility.

However, products, which had been out of Vat net, such as plastic and aluminum items, soybean oil, palm oil, sunflower oil, mustard oil will be brought under the VAT purview.

Besides, astrologists, marriage media services and program producers of entertainment industry have been brought under the VAT net from today.

Mandatory EFD for 24 business categories

The NBR made electronic fiscal device (EFD) mandatory for 24 types of businesses in city corporations and district headquarters from the new fiscal year.

The businesses are hotel, restaurant and fast-food shop, decorator and catering service, motor workshop, advertising agency, printing press, community centre, sweetmeat, jeweler, furniture, courier service, beauty parlour, fitness centre, coaching centre, social and athletic club, apparel outlet, electronics sales centre, outlets at shopping centre, department store, super-shop, wholesale outlet, laundry, cinema hall and security service.    

Besides, the NBR or vat commissioners can make mandatory EFD for any service or business, if they feel necessary. 

An EFD is a device which produces the digital record of every sale and transaction which will instantly send the data to a central server automatically.