Budget for 2020-21 fiscal year looks to provide relief to small and medium firms devastated by virus fallout
The National Board of Revenue (NBR) is going to raise the VAT-free turnover ceiling to Tk80 lakh from Tk50 lakh in the national budget for the 2020-21 fiscal year.
The government's move is aimed at providing relief to small and medium firms devastated by the novel coronavirus outbreak. Besides, revenue board officials have said the highest ceiling of turnover tax is also expected to be raised.
Turnover up to Tk50 lakh was kept out of the VAT net in the current fiscal year — which means businesses with Tk50 lakh annual exchanges will not pay any VAT. This highest limit is being raised to Tk80 lakh in the next budget.
Businesses with Tk50 lakh to Tk3 crore annual turnover pay 4 percent turnover tax according to the existing VAT law.This ceiling for turnover tax is also being raised in the upcoming budget to Tk80 lakh to Tk3.5 crore.
A revenue board official said the pandemic had dealt small and medium enterprises a mighty blow and their losses were higher than those of others.
"Though the government has announced Tk20,000 crore stimulus packages for the SME sector, chances are limited for such entrepreneurs to get loans for their working capital from the package," commented the official, preferring anonymity.
Therefore, the move to raise the VAT-free turnover limiting the budget will at least ease their burdens lightly, according to NBR officials.
On top of this,the highest ceiling for turnover tax is being raised to Tk3.5 crore to provide relief to SMEs.
Currently, businesses pay 15 percent VAT if their annual turnover surpasses Tk3 crore.
Meanwhile, Mohammad Helaluddin, President of Bangladesh Shop Owners' Association, alleged that field level revenue officials often disregarded the VAT and tax-free turnover ceilings.
"They harass us in numerous ways," claimed Helaluddin.
He appreciated the move to raise VAT and tax-free turnover ceilings and said it would benefit them. The association president, however, emphasized a proper field level implementation.
The Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) did not propose to the government a raise in the ceilings in the upcoming budget this year. However, the apex trade organization recommended slashing turnover tax to 2 percent from the existing 4 percent.
The NBR officials also hinted that the turnover tax rate might remain unchanged in the next budget.
As in the current fiscal year, heavy engineering industry, automobiles, refrigerators, freezers, air conditioners and motorcycles will enjoy VAT waivers in the next fiscal year.
VAT waivers may continue for local manufacturers of agricultural machinery, including power reaper power tillers, operated seeders and combined harvesters.
Revenue officials also said investing organizations in economic zones and public-private partnership projects may continue enjoying VAT waivers next year too.