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The government may introduce a new slab of advance tax at the import stage for industrial products in the upcoming national budget for the fiscal year 2020-2021 to provide some relief to manufacturers.
The rate of advance tax (AT), previously known as advance trade VAT, may be cut to 3 or 4 per cent per cent for industrial products and other products associated with industrial production and investment from the current 5 per cent.
The AT will remain unchanged at 5 per cent for commercial products, officials of the finance ministry said.
A number of products which are exempted from payment of customs duty and other taxes may be also be exempted from paying AT.
The officials said that entrepreneurs and manufacturers had been demanding withdrawal of the AT on import of industrial products, including raw materials and intermediate goods, as the payment of AT increased their cost of production.
Advanced Tax, introduced in the budget for the last FY20, is refundable but businesses have been claiming that are unable to obtain the refunds due to procedural complexities.
In addition to the reduction in the rate of the AT, the National Board of Revenue will also ease the refund process so that businesses can get their money back easily.
It may also propose a number of reforms in the Value-Added Tax and Supplementary Duty Act-2012 in the budget scheduled to be placed in the parliament on June 11.
The NBR imposed 5 per cent AT on all types of import in the last budget through several Gazette notices.
However, it later waived the AT on import of capital machinery for manufacturers under concessionary duty rates, import of raw materials of poultry, livestock, fisheries and dairy feeds and machinery for feed manufacturers, dredgers, one-day old chicks, import by bonded warehouse licence-holding export-oriented industries and government agencies.
The tax administration may also increase the excise duty on bank accounts with a balance of above Tk 5 crore.
Currently, account holders with bank balances, irrespective of whether the balance is debit or credit, exceeding Tk 1 lakh at any time during a year are subjected to excise duty while account holders with a balance below Tk 1 lakh are exempted from paying the indirect tax.
Account holders with a balance of between Tk 1 lakh and Tk 5 lakh have to pay an excise duty of Tk 150 a year and the rate of tax goes up to Tk 25,000 per account for balances exceeding Tk 5 crore any time in a year.
