The government has decided to reduce the rate of tax at source for the readymade garment exporters to 0.80% from the proposed 1.50% for next fiscal year 2016-17 in the wake of hectic lobbying from different stakeholders. The tax rate for jute product exporters may also be set at 0.60% considering the prospect of the industry, said the finance ministry officials. Earlier on June 2, Finance Minister AMA Muhith had proposed to set the tax at source on export to 1.50% from existing 0.60% for all the exporters. Since then, leading business chambers and trade bodies have been pressing the government to reduce the tax rate or keep it unchanged at 0.60% for the next fiscal year considering the interest of exporters. According to ministry officials, the proposed tax rate for other exporters may also go down due to huge resistance by different quarters but the rate will not be set below 1% considering the revenue prospects. From July to April of FY’16, the revenue authorities had collected over Tk1,300 crore as tax at source from the export-oriented industries. The government was supposed to get Tk4000 crore from the sector due to the hike in tax at source on the export to 1.50%, however, the revenue amount will now go down as the rate will be slashed. Reduction of the proposed tax rate will be passed today with the finance bill 2016 at the parliament where the government will make some revisions in income tax, custom duties and Value Added Tax (VAT) measures that will come into effect from July 1. Finance Minister AMA Muhith will propose passage of the bill that included the implementation of the government’s financial proposals and amendments to several laws today. Earlier on June 2, finance bill 2016 was tabled in the parliament with the announcement of the budget for the fiscal year 2016-17. The finance bill 2016, which will be passed today, is also set to bring a relief for individual taxpayers as it may raise the income tax rebate on investment in some specific sectors by individuals to 25% from proposed 20% for the upcoming FY’16-17. “National Board of Revenue (NBR) has already made decision and the Finance Minister has already approved the proposal,” said a finance ministry official. Finance minister AMA Muhith during his budget speech on June 2, proposed to cut the tax rebate limit to 20% from existing 30% for individual taxpayers, apparently to enhance revenue income. However, the decision sparked widespread criticism from different quarters as the stakeholders and economists argued that tax liability of taxpayers would be increase due to proposed reduction of the tax rebate. The government may also reduce the amount of Value Added Tax to be paid by VAT payers for legal action against assessment of revenue authorities during filing of appeals. With the FY’17 budget, the government has proposed that VAT payers have to deposit 50% of the disputed VAT or penalty before making an appeal to the National Board of Revenue’s appeal commissioners against the assessment or decisions of field-level VAT officials. Another 50% of the disputed VAT will be required in filling an appeal to the Tax Appellate Tribunal against the decision of the appeal commissioner as per proposed measures mentioned in the finance bill 2016. Currently, VAT payers need to pay only 10% of disputed amount at each stage of appeals. However, the government has decided to reduce the amount of VAT to be paid before filing appeal which may be set between 10% to 15%, sources said adding that the decision will come into effect with passage of finance bill 2016
