Value Added Tax (VAT) has been the most talked-about topic of the 2017-18 fiscal budget. Based on talks with the business community, several changes have been brought about to the VAT and Supplementary Duty Act 2012.
The proposed budget has changes in the relevant regulations too. The VAT act will come into effect from 1 July.
The changes are:
1. Those with an enlisted annual turnover of Tk 36 lakh will be given tax exemption.
2. The threshold for VAT registration has been raised from Tk 80 lakh to Tk 1.50 crore. Businesses having a turnover from Tk 36 lakh up till Tk 1.50 crore will have to pay a 4 per cent turnover tax. VAT registration will apply to turnovers above Tk 1.50 crore with a 15 per cent VAT to be paid.
3. According to the new rules, if a consignment is received with VAT receipt in its favour, rebate can be collected.
4. Relatives have been dropped from the definition of partners.
5. Local industries will get the same protection in the new act as provided by the 1991 act.
6. Supplementary duty has been imposed on all products under 1,666 HS line to protect business.
7. All types of agricultural products, ducks, chickens, livestock, fish, fruits, vegetables, edible oil, sugar, salt, cotton, jute, and silk yarn have been kept out of the VAT net.
Uniform VAT rate for 3 consecutive years
“This rate will be 15 percent which will remain unchanged over the next three years,” said Muhith in his budget speech.
UNB adds: To successfully implement the Value Added Tax and Supplementary Duty Act, 2012, Muhith said, the business community had put forward some recommendations for protecting the legitimate interest of the small entrepreneurs.
“On the basis of their recommendations, I’m proposing to raise the annual turnover from Tk 30 lakh to Tk 36 lakh,” he said.
The firms with this annual turnover will be completely out of the scope of tax. Such benefit was not there in the 1991 VAT Act.
According to the desire of the business community, Muhith said he proposed to raise the threshold for registration under VAT from Tk 80 lakh to 1 crore 50 lakh.
“In other words, businesses having a total yearly turnover up to Tk 1 crore 50 lakh will be able to avail of the opportunity to pay only 4 percent tax on their turnover,” he said.
He proposed to provide VAT exemptions on 536 primary food items such as rice, lentils, fish, meat, vegetables, sugar, honey, puffed rice, maize, wheat, liquid milk, barley, salt etc as same as before.
Besides, he proposed to provide VAT exemption to 93 items of life saving drugs.
“Public transport services, public health and medical services, education and training services will also enjoy VAT exemption. I am also proposing VAT exemption for 404 items of agriculture, livestock and fisheries sectors as same as before. Non-commercial activities of charitable and cultural organisations will enjoy VAT exemption facilities.”