The Commerce Ministry has asked the National Board of Revenue (NBR) to cut the existing source tax and income tax on jute as the sector is now in a tight corner.
The ministry recently wrote to the board for taking necessary actions, sources said.
The decision was made during a recent meeting chaired by Senior Commerce Secretary Tapan Kanti Ghosh, focusing on enhancing the capacity of jute product exports.
Currently, traders have to pay 2% and 1% as tax at source and income tax on procuring raw jute and export earnings respectively.
Insiders said there are multiple problems involving non-availability of financial assistance, “Mandatory Jute Packaging Act-2010” and existing anti-dumping duty by India.
They said that jute producers have to provide the source tax, hindering the growth of the sector.
Besides, Russia-Ukraine war, Covid pandemic and the higher price of raw jute have contributed to the fall in jute export, they mentioned.
The rampant breach of the Mandatory Jute Packaging Act-2010 was the main reason behind not ensuring and increasing the use of eco-friendly jute sacks and bags nationwide, according to a source.
Private jute millers in the country have repeatedly urged the government to enforce the Act nationwide, according to sector insiders.
They argued that instead of using jute-made sacks and bags as required by law, artificial alternatives are being used for selling, transporting, importing and exporting commodities.
Currently, the use of jute sacks is limited to government rice procurement campaigns, while jute bags are utilized for packaging jute seeds.
Sources said that the authorities responsible for ensuring the use of jute sacks have failed to curb violations at various levels.
A total of 19 products, including paddy, rice, wheat, maize, fertilizers, sugar, spices, turmeric, onion, ginger, garlic, coriander, pulses, potato, flour, crude flour (ata), rice bran, poultry feed and fish feed, are listed under the jute packaging act.
This list aims to protect the environment by prohibiting the use of artificial packaging.
Following the anti-dumping duty imposed by India on Bangladesh jute goods, the government introduced the ‘Mandatory Jute Packaging Act-2010’ and subsequent ‘Jute Packaging Rules-2013’.
Around 15 million farmers engage in cultivating this cash crop, with millions more involved in its processing, transportation and associated services.
In FY22, the export volume of raw jute and jute products amounted to $1.12 billion, according to the Export Promotion Bureau.
The country currently produces around 8-9 million bales of raw jute.
Out of this volume, around 5-5.5 million bales are utilized in the manufacturing of various jute goods, while the remaining portion is exported as raw jute.
