Some major industrial goods including MS (mild steel) products, mobile phone, scrap and ship scrap are set to get waiver from payment of Advance Tax (AT) in the upcoming budget for the fiscal year (FY) 2021-22.
Official sources said AT collected at the import stage might be withdrawn to facilitate import of raw materials of the manufacturing sector and remove hassle of VAT refund from field-level VAT offices.
Businesses have strongly opposed imposition of AT on the industrial sector as their working capital remained blocked in the VAT offices for a longer period due to complexities in getting refund.
Field-level VAT officials also proposed to withdraw AT from the sectors which are exempted from payment of VAT and other taxes at trading stage.
They alleged that the businesses face hassle while the VAT officials spend unnecessary time on verification related to the refund claims.
Currently, AT is applicable at two different rates--5 per cent and 4 per cent--on imports of the products based on the nature of import products.
The decision on waiver of AT has been taken as per the recommendation of a committee which was formed comprising senior VAT officials.
Officials said a specific VAT rate is currently imposed on MS products, scrap and ship scrap ranging from Tk 1,000 and Tk 2,000.
There is 4.0 per cent AT on this sector.
Due to AT, VAT officials said,the manufacturers are claiming such a volume of VAT refund from the VAT offices that creates a situation of negative VAT collection.
They also recommended reducing AT to 1-2 per cent for the sectors or waiving it.
Officials said the NBR would set a new rate of AT, 3.0 per cent, in the budget for the next FY for the manufacturing sector.
The existing provision of slapping penal tax for non-compliance would be halved in the budget to help the Covid-hit businesses.
Restrictions on claiming VAT refund in case of having legal disputes between the National Board of Revenue(NBR) and businesses might be withdrawn in the budget, sources said.
From the next FY, they said, businesses will be able to claim VAT refund despite having any kind of disputes.
The NBR may also offer 10-year tax-holiday facility for home appliance manufacturers in the next budget.
