Package VAT to remain unchanged

The government will continue the existing package Value Added Tax (VAT) system for the small traders and shopkeepers in the 2016-17 financial year (FY17).

The new Value-Added Tax and Supplementary Duty Act-2012 would now be implemented from July 1, 2017, according to the budget document, presented by the Finance Minister AMA Muhith in the Jatiya Sangsad (JS) Thursday.

"Under the new Act, it is important for both the manufacturers and service providers to keep proper accounts of their transaction at every stage of supply of goods and services. Unfortunately, the necessary preparation for achieving the above objective is far from satisfactory", the finance minister told the JS, explaining the reason behind the delay in implementing the new VAT law. 

The minister, however, proposed some changes for simplifying the procedures of the Value Added Tax Act, 1991 and Value Added Tax Rules, 1991 to create the proper ground for full implementation of the new Act.

The proposals include the abolition of the present value approval system by the VAT authority and making provisions for having a single registration for different business units situated on different adjoining plots under single ownership.

Muhith also proposed to increase the tax to Taka 7,000, Taka 14,000, Taka 20,000 and Taka 28,000 respectively depending on turnover and location.

He said the small traders, wholesalers and shopkeepers who find it difficult to pay 3.0 percent on their annual turnover are entitled to pay Taka 3,600, Taka 7,200, Taka 10,000 and Taka 14,000, respectively depending on their turnover and locations. 

"This amount of tax is too low, which needs to be rationalised," he added. 

He also proposed to increase the net VAT rate of garage and workshop from existing 7.5 percent to 10 percent, the net VAT rate of Dockyard from existing 7.5 percent to 10 percent, the net VAT rate of Construction services from existing 5.5 percent to 6.0 percent, the net VAT rate of Transportation of petroleum products and other transport services from existing 2.25 and 7.5 percent to 4.5 percent and 10 percent respectively.

The minister suggested increase of the tariff value of some products, namely: coal, different kinds of paper and paper products, scrap or ship scrap, CR coil, GP sheet, CI sheet, coloured CI sheet and different kinds of MS products ranging between 20-25 percent respectively.

Muhith also proposed to make changes in the existing law for bringing cases and disputes arising out of taking benefit by making untrue statement and providing false information or document within the ambit of ADR mechanism. 

"I am also proposing to extend the time limit from 10 working days to 20 working days to file application for resolving the cases through ADR. I am further proposing to reduce the time limit for disposal of the disputes through ADR from existing 60 working days to 50 working days," he added. 

He also proposed to increase the supplementary duty rate of these two segments from existing 61 percent and 63 percent to 62 percent and 64 percent respectively. 

He believed that the collection of Value Added Tax will continue to increase for FY 2016-2017 like previous years.

Source: BSS.