TAX, CUSTOMS AND REVENUE MEASURES

 

Mr. Speaker,

 

52.  National Budget is not only a balance sheet of probable

income and expenditure of the government. On the one hand it

contains the broad contours of future development plan of the

government  and  on  the  other  it  is  also  a  document,  which

captures  the  principles  and  operational  programs  of  the

government  to  remove  social  disparity.  Government

expenditure has a role to play in implementing its development

programs.  No  less  important  is  the  role  of  internal  resource

mobilization. So far I have presented to this august house our

proposals for resource allocation in the light of the philosophy

and strategy of development pursued by the government. Now I

would  like  to  throw  some  light  on  the  steps,  methods  and

efforts that we propose to undertake for mobilization of internal

resources.      

 

Mr. Speaker,

 

53.  We need to implement the Poverty Reduction Plan in its

totality in order to achieve the Millennium Development Goal

of the United Nations. To achieve this we have to consistently

increase  the  expenditure/GDP  ratio,  which  is  currently  only

15%.  Private  investment  also  suffers  if  investment  by  the

government  does  not  considerably  increase.  This  is  more

relevant for a stage of development at which we are presently

placed.  For  the  development  of  the  private  sector we  require

huge investment in areas like infrastructure, energy and power.

Investment  of  this  magnitude  can  only  come  from  the

government. Like wise in order to enhance the level of income

  30

of the poorer sections of the society and to reduce poverty. We

need sufficient investment in sectors like education, health and

nutrition.  We  need  investment  in  different  sectors  for

employment generation.          

 

Mr. Speaker,

 

54.  With  anguish  in  my  heart  I  would  like  to  inform  the

house through you that compared to other developing countries,

our  tax/GDP  ratio  is  very  low. Our annual revenue income is

only  10.5%  of  the  GDP. We  cannot  accomplish  our  task  of

poverty reduction and achieve economic progress if this dismal

tax/GDP  ratio  does  not  improve.  So  we  have  to  persistently

augment the collection of revenue and bring it to such a level

where we no longer have to depend on others. And only then

we can initiate the pace of development on the basis of our own

values, our hopes and aspirations with our own resources.

 

Mr. Speaker,

 

55.  We all nurture the dream that we will emerge as a self-

reliant developed country on the world stage. We all have our

responsibility to translate this aspiration into reality. Although it

may sound unpleasant, I have to mention that we as a nation are

extremely reluctant to pay taxes. But on the other hand our urge

for  development  is  enormous.  How  can  we  expect  the

government  to  invest  resources  in  business,  industry,  health,

and  education  and  in  building  necessary  infrastructure?  We

have to shun this culture of non-payment of taxes. Without this

we cannot stand on our own feet as a proud nation in the world.   

 

  31

 

Mr. Speaker,

 

56.  As  a  nation  we  have  to  shun  dependence  not  only  in

words  but  also  in  deeds.  Those who  are  affluent,  those who

have  ability  must  come  forward  to  pay  lawful  taxes  and

contribute  their  share  to  reducing  poverty,  dismantling  the

barriers and bridging the divides between the rich and the poor.

We have to prove that we all repose our trust in creating a self-

reliant, dignified and prosperous Bangladesh. With this courage

of conviction I would like to place before this house the salient

features  of  Revenue  proposals  comprising  of  Income  Tax,

Customs and Value Added Tax   

 

 

Income Tax

 

 

Mr. Speaker,

 

57.  Direct  tax  plays  a  significant  role  in  ensuring  socio-

economic  development  and  establishment  of  social  justice.

During  last  three  years  major  reform  measures  including

transparency and dynamism in tax administration, reduction of

discretionary  powers  of  tax  officials,  and  facilitation  of  the

growth  of  investment  were  undertaken  to  attain  the  goal  of

increased  revenue  from Direct  Taxes.  In  continuation  of  this

reform program, I would like to place the important proposals

relating  to  direct  taxes  before  this  august  Parliament  through

you.

 

  32

58.  Last year I announced the schedule of tax rate and ceiling

of  tax-exempt  income  for  assessment  year  2004-2005  and

2005-2006.  In  continuation  of  this  practice,  for  the  next

assessment  year  2006-2007,  I  propose  enhancement  of  the

ceiling of tax-exempt income from Tk. 1 lakh to Tk. 1 lakh 20

thousand keeping the rates of tax unchanged. I also propose the

enhancement  of  the  limit  of  total  income  that  attracts  the

highest  tax  rate  from Tk.  9  lakh  to Tk.  10  lakh  20  thousand.

[Annexure-'A-1']

 

59.  I propose tax rate for non-listed companies to be fixed at

40 percent for the assessment year 2006-2007 instead of 37.5

percent.

 

Mr. Speaker,

 

60.  With  a  view  to  expanding  the  tax base, simplifying tax

collection  and  payment  procedures,  and  making  the  tax  rate

equitable,  now  I would  like  to  place  before  this  house  some

important tax proposals:

 

a)  To allow banks to make provision for bad & doubtful

debts up to 1 percent in place of 2 percent of the total

outstanding loans till assessment year 2006-2007;

 

b)  In lieu of the present provision of Dividend distribution

tax, it is proposed to withhold advance income tax @

10 percent on dividends making it taxable in the hands

of shareholders;

 

c)  Rate of advance income tax applicable to profits from

approved  Securities  &  Bonds  to  be  reduced  to  10

percent from the prevailing 20 percent;

  33

 

d)  To  deduct  tax  @  4  percent  on  freight  charges  of

resident  ocean  going  ships  as  final  settlement  of  tax

liability;

 

e)  To  deduct  tax @  10  percent  on  the  profit  or  interest

paid  on  deposits  by  non-banking  &  other  deposit

collecting financial institutions;

 

f)  To deduct tax at source @ 0.25 percent on total export

proceeds of knit-wear & readymade garments as final

settlement of tax liability;

 

g)  At present, the rates of advance income tax applicable

to  "Royalty  &  Technical  Know-how  fee"  and

"Professional & Technical service fee" are 10 percent

and  5  percent  respectively,  which  very  often  cause

confusion  because  the  "fees"  are  of  same  nature.  In

order to remove this confusion, the rates of tax for all

these fees be re-fixed at 10 percent;

 

h)  To  deduct  tax  at  source  @  0.015  percent  on  the

transaction  value  of  shares  for  members  of  stock

exchange as final settlement of tax liability;

 

i)  To  collect  tax  for  sale  of  apartments @  Tk  175  per

square meter and for land @ 2.5 percent on deed value

at the time of registration from persons engaged in real

estate business as final settlement of tax liability;

 

j)  To collect tax on the basis of production capacity from

brick  fields  at  the  time  of  issuance  and  renewal  of

license to brickfields; [Annexure-'A-2']

  34

 

k)  To enhance tax rate on the value of banderole of hand

made cigarettes from 3 percent to 4 percent;

 

l)  To introduce a reduced rate of tax @ 10 percent on the

income from computer software business, this facility

to continue up to 30th June, 2008.

 

Mr. Speaker,

 

61.  With  a  view  to  simplifying  the  application  and

compliance of Income tax Law and making it more effective, I

take the opportunity to present some more proposals before the

house:

 

a)  It  is  proposed  that  tax  return  certified  by  chartered

accountant  as  correct  under  section  82  of  the  Income

Tax Ordinance cannot show loss or lesser income than

the  last  assessed  income.  Any  return  certified  by

chartered account to be subject to audit;

 

b)  Loss from a source, income of which is tax exempt, not

to  be  set  off  against  the  taxable  income  of  any  other

source during the year;

 

c)  It  is  proposed  to  make  submission  of  accounts

mandatory  by  the  Insurance  Companies  to  the  Taxes

Department  complying with  the  provisions  laid  down

in the Insurance Act, 1938;

 

d)  Allowable expenditure under the head 'perquisites' for

companies  be  raised  from  Tk.  1  lakh  50  thousand  to

Tk. 1 lakh 92 thousand.

  35

 

Mr. Speaker,

 

62.  Now I propose extension of the period of tax exemption

in some areas:

 

a)  Tax exemption period on income of hospitals, formed

under the Companies Act, be extended from 30th June,

2005 to 30th June, 2008;

 

b)  Tax  exemption  period  on  income  from  poultry,  dairy

firm, poultry feed production, etc. be extended from the

prevailing 30th June, 2006 to 30th June, 2008.

 

63.  The existing provision relating to tax-holiday will expire

on  30th  June,  2005.  Considering  the  present  state  of  socio-

economic  development,  export  business,  and  for  employment

generation, it is proposed that the tax-holiday facility for some

defined sectors of industry be extended for another three years

i.e. up to 30th June, 2008. The tax holiday period depending on

location  be  re-fixed  at  4 &  6  years  in  place  of  5 &  7  years

respectively (Annexure-'A-3'). Similarly it is also proposed to

continue  the  existing  facility  of  accelerated  depreciation

allowance for new industry up to 30th June, 2008.

 

Mr. Speaker,

 

64.  We  are  given  to  understand  by  different  quarters  that

there is still huge amount of undisclosed income in the country.

Opportunity  of investing this income without any explanation

will  expire  on  the  30th  June,  2005. We  presume  that  a  good

number of people is holding such undisclosed income who, for

  36

some  reasons  or  other,  could  not  avail  themselves  of  this

opportunity. I propose to extend the time limit of disclosure of

this type of income without any explanation by paying only 7.5

percent income tax thereon up to 30th June, 2006.

 

65.  At  present,  a  good  number  of  philanthropic  and

educational  institutions  are  working  in  Bangladesh.  To

encourage donations to these institutions by any individual or

industrial  enterprise,  it  is  proposed  to  allow  the  donors         

tax-rebate for such donations.

 

 

 

Customs Duty

 

 

Mr. Speaker,

 

66.  During  the  current  fiscal  year  rationalization  was

undertaken and four rates of customs duty were brought down

to  three  namely,  7.5%  on  basic  raw  materials,  15%  on

intermediate  goods  and  25%  on  finished  goods.  I  propose  to

continue with this three-tier duty structure. Similarly I propose

further rationalization of the existing structure of supplementary

duty in respect of goods of general nature and bring down five

tiers of supplementary duty to three. However, considering the

negative  impact  of  some  goods  on  health  and  environment,  I

propose  to  continue  with  the  existing  higher  rate  of

supplementary duty on those goods.

  37

 

Mr. Speaker,

 

67.  Our  government  has  identified  agriculture  as  a  priority

sector  and  we  have  been  providing  concessions  in  terms  of

reduced  import  duty  to  a  range  of  items  like  seeds,  fertilizer,

capital  machinery  and  other  implements  essential  for

agriculture  sector.  In  continuation  of  this  avowed  policy,  I

propose  complete withdrawal  of  all  duties  and  taxes  on  some

varieties of fertilizer. I also propose reduction of customs duty

from 15% to 7.5% on raw materials needed for the manufacture

of parts and accessories of rice and wheat mills (Annex- 'B-1').

 

Mr. Speaker,

 

68.  Lot of dairy and poultry firms have come up throughout

the  length  and  breadth  of  the  country.  We  would  like  to

strengthen this potential sector and make it more competitive. I

propose withdrawal of all duties and taxes on the raw materials

of  dairy  and  poultry  feed, medicine,  other medical inputs and

capital machinery required by this sector. 

 

Mr. Speaker,

 

69.  In  these  days  of  globalization,  we  are  required  to

strengthen our Ready-made Garments, Textile, Hosiery, Label

Manufacturing  and  Terry  Towel  Industries  and  make  them

more  competitive.  With  this  end  in  view,  I  propose

concessionary  rate  of  customs  duty  for  some  dyes  and

chemicals  essential  for  these  sectors.  I  also  propose  complete

withdrawal of duties and taxes on some machinery and spares

required  by  the  above-mentioned  sectors  and  complete

  38

withdrawal of all duties and taxes on waste cotton, one of the

basic raw materials of Terry Towel Industry (Annex- 'B-1').

 

Mr. Speaker,

 

70.  Leather and Leather goods industries have emerged to be

a potential sector of our country. In order to encourage further

development  of  this  sector,  I  propose  concessionary  rate  of

customs duty for some dyes and chemicals of this sector.

 

Mr. Speaker,

 

71.  We  are  now  manufacturing  quality  transformers  in

Bangladesh.  After  meeting  the  domestic  requirement  we  are

also  exporting  transformers. We  believe  that  this  sector  can

achieve  further  improvement  and  expansion  if  we  provide

necessary  protection  and  assistance. Considering  the  potential

of this sector, I propose reduction of customs duty on some raw

materials needed for the manufacture of transformer. Following

the same rationale and principle, I propose reduction of customs

duty  on  some  raw materials  of  Iron  and  Steel  Pre-fabricated

building. I also propose reduction of customs duty on some raw

materials of local Bicycle Industries (Annex-'B-1'). 

 

72.  The  current  rate  of  customs  duty  on Angles, Shapes  and

Sections  made  of  Iron  and  Steel  is  only  7.5%.  These  are

intermediate goods, so rationalization of duty structure for these

items is the need of the hour. I, therefore, propose enhancement

of customs duty on these items from 7.5% to 15% (Annex-'B-2').

 

 

  39

 

Mr. Speaker,

 

73.  I  propose  withdrawal  of  customs  duty  on  Academic

Journals and Periodicals essential for higher studies subject to

certain conditions.

 

Mr. Speaker,

 

74.  The  demand  for  mobile  phones  has  been  growing

steadily  over  the  past  few  years.  The  existing  duty  rate  for

mobile  phones  is TK.  1500  per mobile  set  at  the  importation

stage. I propose rationalization of its duty structure. Regardless

of its import value, I propose duty of Tk. 300 per mobile set at

the importation stage and Tk. 1200 for connection of each SIM

Card or similar technology at local stage (Annex-'B-1').

 

Mr. Speaker,

 

75.  There are frequent fluctuations of prices of POL products

in the international market. In order to address this situation we

need to reduce the total tax incidence of these products at the

importation stage and rationalize it suitably. No less important

is ensuring stability of domestic market price and collection of

duties  and  taxes, which  are  due  to  the  government. With  this

end in view we have decided to refix the tariff value of crude

and  refined  petroleum  products.  Accordingly,  I  propose

reduction  of  customs  duty  on  crude  petroleum  from  25%  to

7.5% and customs duty on refined POL products from 25% to

15%. Supplementary duty of 15% on refined petroleum product

will be completely withdrawn. This rationalization will have no

  40

negative impact on retail price of POL products. Following the

same  principle  and  rationale,  I  propose  specific  duty  for

Petroleum Bitumen (Annex-'B-1' and Annex-'B-3').   

 

Mr. Speaker,

 

76.  Now,  I  would  like  to  propose  some  changes  in  the

Customs Act,  1969  (Act  IV  of  1969). The  existing  time limit

for  final  assessment  of  provisionally  assessed  goods  is  150

days.  I  propose  to  reduce  this  time  limit  to  120  days.  The

existing  time  limit  for  clearance  of goods brought by sea and

land route is 45 days. I propose to reduce this limit to 30 days.

Likewise,  I  propose  to  reduce  the  existing  time  limit  for  air

cargo from 30 days to 21 days.

 

Mr. Speaker,

 

77.  Now, I would like to place before the august house some

important proposals regarding supplementary duty:

 

In order to provide protection to the industries engaged in

the  production  on  mineral  water,  I  propose  to  impose  35%

supplementary  duty  on  mineral  water  at  the  import  stage.

Likewise,  I  propose  to  impose  20%  supplementary  duty  on

imported  detergents.  Giving  due  consideration  to  similar

factors, I propose introduction of 20% supplementary duty on

all imported Lamps and Light fittings. (Annex-'B-4').    

 

The  Agro-processing  industry  of  our  country  are  producing

quality  processed  food  items  and  varieties  of  fruit  juice.  To

provide  protection  to  these  industries  and  to  save  foreign

exchange, I propose enhancement of supplementary duty from

  41

25% to 35% on some of the items of processed food and fruit

juice.  In  the  same  manner,  I  propose  enhancement  of

supplementary duty from 25% to 35% on all kinds of imported

furniture.  

 

Value Added Tax

 

 

Mr. Speaker,

 

78.  It  was  BNP  government  that  introduced  Value  Added

Tax  in  1991  for  the  first  time  in  Bangladesh.  I  believe  this

modern  system  of  taxation  has  taken  its  roots  in  the  country.

This is my view that instead of expanding the existing tax base

the need of the hour is to consolidate it further and to make it

more transparent. That is why I don't like to propose any major

change in the existing tax regime. I firmly believe that we need

to further simplify the collection procedures and ensure proper

enforcement  of  the  law  and  the  regulations made  there  under

(Annex-'C').    .

 

Mr. Speaker,

 

79.  With  a  view  to  ensuring  improved  management  and

collection of VAT and to provide better service to the taxpayers

we have established a Large Taxpayers' Unit comprising of the

enterprises  paying  large  amounts  of  tax.  In  order  to  ensure

transparency and efficacy I now propose some changes in the

Value  Added  Tax  Act  and  the  rules  made  there  under       

(Annex-'C').

 

  42

 

Mr. Speaker,

 

80.  100%  export  oriented  industries  have  been  enjoying

exemption  facilities  in  respect  of  some  services  and  utility

charges at both the stages of import and export. With a view to

providing  more  encouragement  to  export  business  I  now

propose to introduce similar facility for the enterprises situated

in EPZ areas and those engaged in deemed exports.

 

Mr. Speaker,

 

81.  In  order  to  provide  increased  assistance  to  agriculture

sector  I  propose  exemption  of  Trade  VAT  on  insecticides,

fungicides,  pesticides,  anti-sprouting  products,  plant  growth

regulator and disinfectants used in the sector(Annex-'C').    

 

Mr. Speaker,

 

82.  In  the  Value  Added  Tax  Act  there  is  provision  for

punishment  of  VAT  related  offences.  The  hefty  amount  of

penalty  of  Taka  Twenty  Five  thousand  for  both  major  and

minor  offences  appears  to  be  a  little  inconsistent.  In  order  to

remove this inconsistency I propose reduction in the amount of

penalty for minor offences from Taka Twenty Five thousand to

Taka Ten thousand (Annex-'C').    .

 

Mr. Speaker,

 

83.  During  the  2004-2005  fiscal  year  the  target  for  the

National Board of Revenue was fixed at Tk. 32,190 (Taka thirty

two  thousand  one  hundred  and  ninety)  crore  comprising  of

  43

Income  Tax,  Customs  Duty,  Value  Added  Tax  and  others.  I

mentioned  in  my  budget  speech  last  year  that  it  was  a

challenging target. Although it may not be possible to achieve

the target, we expect that we will be able to collect Tk. 30,500 

(Taka  thirty  thousand  five  hundred  crores)  by  the  end  of  the

fiscal  year. Thus  growth  of  revenue  over  the  past  year  2003-

2004 is expected to be 16.45%. Keeping in view this trend the

revenue target for the next fiscal year has been fixed at Tk. 35,

652 (Taka thirty five thousand six hundred and fifty two) crore.    

 

Mr. Speaker,

 

84.  Compared  to  other  developing  countries  our  tax  GDP

ratio is still very low. In order to come out of this situation it is

necessary  for  us  to  modernize  revenue  administration;

undertake reforms and ensure proper enforcement of the laws.

With  a  view  to  achieving  this  objective  we  have  already

undertaken a reform program of our revenue administration. A

draft Strategic Development Plan has been prepared. The World

Bank  is  expected  to  provide  financial  and  technical  support.

Implementation of the project is likely to be completed over a

period  of  three  to  five  years.  I  fervently  hope  that  through

management  reforms,  administrative  improvement  and  with

increasing  eagerness  of  the  taxpayers,  we  would  be  able  to

achieve the target.    

 

Mr. Speaker,

 

85.  With humility, I can say that hopes and aspirations of all

sections  of  the  society  have  been  reflected  in  the  budget

proposals  of  2005-2006  fiscal  year.  The  poverty  reduction

strategy  paper,  which  has  been  formulated  with  the  active

  44

participation of the people from all walks of life, is the basis of

all our proposals. In this connection, I would like to place on

record my sense of gratitude to the Honourable Prime Minister

Begum  Khaleda  Zia  for  her  unstinting  support  and  valuable

guidance in the preparation of this budget. I am also thankful to

the  business  leaders,  industrialists,  distinguished  economists,

members  of  the  press,  NGO  representatives,  civil  society,

honourable  members  of  parliament  and  to  my  cabinet

colleagues for their valuable comments and suggestions.     

 

Mr. Speaker,

 

86.  Our never-ending pursuit to build a society free of hunger

and  poverty  shall  continue. We want  to  pursue  this  objective

through  massive  employment  generation  and  ensuring  health

care and nutrition for all. In spite of our resource constraints we

are determined to accelerate our onward march. Alongside the

government, people belonging to all strata of the society and all

shades  of  opinion  must  come  forward  and  put  in  their  best

endeavours  in  materializing  the  hopes  of  this  nation.  This

people-government partnership shall not only remain confined

to the formulation of plan, this should also be expanded to the

implementation  of  the  plan.  "The  engagement  is  not  just  for

policy planning. It is importantly an engagement for results, for

inclusion,  for  imaginative  solutions,  and  ultimately  an

engagement to unlock the potentials of the nation."      

 

Mr. Speaker,

 

87.  In every crisis and disaster we, as a nation have left an

indelible mark of our courage and determination, our patience

and resilience. There are few parallels in history of the sacrifice

  45

that  we  have  made  in  securing  our  independence  and  the

progress that we have achieved over the past few decades. We

have  many  achievements,  but  our  problems  are  no  less

formidable.  Yet  we  dream  of  a  Sonar  Bangla  for  our  future

generation where people will live in peace and harmony, where

there will be equitable distribution of resources, where people

will direct all their sincere endeavor to the attainment of a self-

reliant nation. Let all of us come forward with all our spirited

efforts, intense patriotism and deep commitment to unlock the

potentials  of  our  nation.  Let  us  build  a  poverty-free,

exploitation-free, developed and prosperous Bangladesh. Let us

secure our due place on the world stage as a proud nation.      

Allah Hafez

Bangladesh-Zindabad

 

  46

Annexure-"A-1"

 

Financial Year 2006-2007

Income tax rate for individual category of assesses

 

Sl no.  Proposed Slab  Proposed

Rate

(a)  On first Tk. 1,20,000/- of total income  Nil.

(b)  On next Tk. 2,50,000/- of total income  10%

(c)  On next Tk. 3,00,000/- of total income  15%

(d)  On next Tk. 3,50,000/- of total income  20%

(e)  On the balance of total income  25%

 

  Minimum tax payable Tk. 1,800/-

  47

Annexure-"A-2"

 

Rates of taxes to be collected from brick manufacturer at

the time of issuance of permission or renewal of license:

 

Sl.  Particulars  Amount of

tax due

(Taka)

1.  For one section brick field  7,500/-

2.  For one and half section brick field  10,000/-

3.  For two section brick field  15,000/-

 

  48

Annexure-"A-3"

 

List of eligible sectors for tax holiday

 

1. Textile;

2. High Value Readymade Garments;   

3. Pharmaceuticals;

4. Melamine;

5. Plastic products;

6. Ceramics & sanitary ware;

7. Steel from iron ore;

8. Fertilizer;

9. Insecticide & pesticide;

10. Computer hardware;

11. Residential hotel having facility of three star or more;

12. Petro-chemicals;

13. Basic raw materials of drugs, chemicals & pharmaceuticals;

14. Agricultural machine;

15. Ship building;

16. Boilers & compressors;

17. Textile machinery; and

18. Physical infrastructure:

(a)  Sea or river port;

(b)  Container terminals, internal container depot (ICD),

container freight station (CFS);

(c)  LNG terminal and transmission line;

(d)  CNG terminal and transmission line;

(e)  Gas pipe line;

(f)  Flyover;

(g)  Large water treatment plant & supply through pipe

line;

(h)  Waste treatment plant; and

(i)  Export processing zone.

  49

Annexure-"B-1"

 

List of H.S.Codes where proposal of reduction of Custom Duty is Made

 

Sl.

No.

H.S.Code  Description  Existing

Rate

Proposed

Rate

1.  1302.20.00  Pectic substances  15%  7.5%

2.  2501.00.24  Salt in bulk  25%  7.5%

3.  2501.00.91  Denatured salt (coloured)  25%  15%

4.  2513.20.00  Emery natural abrasives  15%  7.5%

5.  2519.90.00  Other carbonates  15%  7.5%

6.  2709.00.00  Crude Petroleum oils  25%  7.5%

7.  2710.11.11  Refined Oil  25%  15%

8.  2710.11.19  Refined Oil  25%  15%

9.  2710.11.20  Refined Oil  25%  15%

10.  2710.11.31  Refined Oil  25%  15%

11.  2710.11.32  Refined Oil  25%  15%

12.  2710.11.41  Refined Oil  25%  15%

13.  2710.11.42  Refined Oil  25%  15%

14.  2710.11.43  Refined Oil  25%  15%

15.  2710.11.49  Refined Oil  25%  15%

16.  2710.11.61  Refined Oil  25%  15%

17.  2710.11.62  Refined Oil  25%  15%

18.  2710.19.11  Refined Oil  25%  15%

19.  2827.31.00  Magnesium choloride  15%  7.5%

20.  3814.00.00  Organic composite solvents  25%  15%

21.  3824.90.90  Other chloroparafin wax  25%  15%

22.  3926.90.80  Cot and Apron  25%  15%

23.  4823.20.00  Filter paper and paperboard  15%  7.5%

24.  5202.99.10  Cotton Waste  7.5%  0%

25.  7217.30.00  Wire of other base metals  25%  15%

26.  7225.19.00  Other silicon-electrical steel  15%  7.5%

27.  7803.00.10  Hollow bars  15%  7.5%

28.  7803.00.90  Other bar  15%  7.5%

29.  8407.34.91  Bus or Truck CNG engine  25%  15%

30.  8408.20.31  Bus or Truck CNG engine  25%  15%

31.  8517.30.10  Telephonic machinery  15%  7.5%

32.  8517.30.90  Telephonic machinery  15%  7.5%

33.  8525.20.23  Cellular/Mobile telephone  1500 Tk.  300 Tk.

34.  8540.11.10  CRT for TV  25%  15%

35.  8544.11.00  Winding wire of copper  25%  15%

36.  9608.99.10  Ball points for ball point pen  15%  7.5%

  50

 

Annexure-"B-2"

List of H.S.Codes where proposal of enhancement of Custom Duty is Made

 

Sl.

No.

H.S.Code  Description  Existing

Rate

Proposed

Rate

1.  Heading 16.04  Prepared or preserved fish; caviar  15%  25%

2.  Heading 16.05  Molluscs and other aquatic prepared or preserved  15%  25%

3.  2106.90.90  Other food preparations  15%  25%

4.  2601.11.00  Iron ore  0%  7.5%

5.  2601.12.00  Iron ore  0%  7.5%

6.  2601.20.00  Iron ore  0%  7.5%

7.  3811.90.00  Other Anti-knock preparations  7.5%  15%

8.  4903.00.00  Drawing or colouring books  0%  7.5%

9.  4904.00.00  Music, printed or in manuscript  0%  7.5%

10.  5605.00.20  Lumi lurex yarn  7.5%  15%

11.  6112.11.00  Track suits of cotton  15%  25%

12.  6112.20.00  Ski suits  15%  25%

13.  6211.20.00  Ski suits  15%  25%

14.  7019.90.10  Glass wool blanket  7.5%  15%

15.  7211.29.10  Carbon steel strips    0%  7.5%

16.  7211.29.20  Carbon steel strips  7.5%  15%

17.  Heading 72.16  Angles, shapes and sections of iron  7.5%  15%

18.  7408.11.00  Copper wire  15%  25%

19.  7605.11.00  Aluminium wire  15%  25%

20.  8408.90.11  Engines of capacity 3  to 45 HP  0%  7.5%

21.  8413.50.20  Low lift pump for swimming pools  7.5%  15%

22.  8413.60.20  Low lift pump for swimming pools  7.5%  15%

23.  8413.70.20  Low lift pump for swimming pools  7.5%  15%

24.  8413.70.40  Low lift pump for swimming pools  7.5%  15%

25.  8413.81.20  Low lift pump for swimming pools  7.5%  15%

26.  8413.91.10  Low lift pump for swimming pools  7.5%  15%

27.  8426.41.10  Works trucks fitted with crane  7.5%  25%

28.  8427.20.00  Other self-propelled trucks  7.5%  15%

29.  8427.90.00  Other trucks  7.5%  15%

30.  8470.50.00  Cash registers  0%  15%

31.  8481.80.91  Taps, cocks, valves  15%  25%

32.  8504.40.10  Mobile and other battery charger  7.5%  15%

33.  8504.90.10  Static converters    15%  25%

34.  8541.40.00  Photosensitive semi-conductor  0%  15%

35.  8703.32.95  Vehicle 1500 cc- 1649 cc in CKD  15%  25%

36.  8703.32.96  Vehicle exceeding 1649 cc in CKD   15%  25%

37.  8705.40.00  Concrete-mixer lorries  7.5%  15%

38.  8705.90.00  Other special purpose vehicle  7.5%  15%

39.  Heading 87.08  Tractor Parts  0%  15%

40.  Heading 89.08  Scrap Vessel  800 Tk.  1000 Tk.

  51

Annexure-"B-3"

  List of H.S.Codes where proposal of reduction of

 Supplementary Duty is Made

 

Sl.

No.

H.S.Code  Description  Existing

Rate

Propose

d Rate

1.  1702.40.00  Glucose and glucose syrup, containing in the dry

state at least 20% but less than 50% by weight of

fructose, excluding invert sugar

15%  0%

2.  2515.20.00  Ecaussine  and  other  calcareous monumental  or

building stone; alabaster

15%  0%

3.  2710.11.11  Refined Oil  15%  0%

4.  2710.11.19  Refined Oil  15%  0%

5.  2710.11.20  Refined Oil  15%  0%

6.  2710.11.31  Refined Oil  15%  0%

7.  2710.11.32  Refined Oil  15%  0%

8.  2710.11.41  Refined Oil  15%  0%

9.  2710.11.42  Refined Oil  15%  0%

10.  2710.11.43  Refined Oil  15%  0%

11.  2710.11.49  Refined Oil  15%  0%

12.  2710.11.61  Refined Oil  15%  0%

13.  2710.11.62  Refined Oil  15%  0%

14.  2710.19.11  Refined Oil  15%  0%

15.  6110.12.00  Of kashmir (cashmere) goats  15%  0%

16.  6110.19.00  Other fine animal hair  15%  0%

17.  6112.11.00  Track suits of cotton  15%  0%

18.  6112.20.00  Ski suits  15%  0%

19.  6211.20.00  Ski suits  15%  0%

20.  8519.10.10  Coin-or disc-operated record-players in CKD  15%  0%

21.  8519.21.10  Other record-players without loudspeaker in CKD  15%  0%

22.  8519.31.10  Turntables (record-decks)   With automatic

record changing mechanism in CKD

15%  0%

23.  8519.31.20  Turntables (record-decks)   With automatic

record changing mechanism in CBU

15%  0%

24.  8519.40.10  Transcribing machines in CKD  15%  0%

25.  8519.40.20  Transcribing machines in CBU  15%  0%

26.  8519.93.10  Other Pocket size cassette player sound

reproducing apparatus in CKD

15%  0%

27.  8519.99.10  Other sound reproducing apparatus in CKD  15%  0%

28.  8520.10.10  Dictating machines not capable of operating

without an external source of power in CKD

15%  0%

29.  8520.20.10  Telephone answering machines in CKD  15%  0%

30.  8527.12.90  Pocket-size radio cassette-players in CKD  15%  0%

31.  8527.21.20  Combined with sound recording or reproducing

apparatus: in CKD

15%  0%

  52

Annexure-"B-4"

List of H.S.Codes where proposal of enhancement of

 Supplementary Duty is Made

 

Sl.

No.

H.S.Code  Description  Existing

Rate

Proposed

Rate

1.  1902.19.00  Pasta, uncooked   0%  65%

2.  1904.10.00  Prepared foods obtained by the swelling or

roasting of cereals

0%  65%

3.  2201.10.00  Mineral waters and aerated waters  0%  35%

4.  2201.90.00  Other water  0%  35%

5.  2501.00.23  Salt boulder for crushing and salt in bulk  0%  35%

6.  2501.00.99  Other salt  0%  35%

7.  2915.70.32  Sodium salt of palmitic acid (soap noodle)

imported by other

0%  35%

8.  3208.20.90  Paint imported by Other  0%  20%

9.  3402.90.10  Detergents  0%  20%

10.  5801.90.90  Woven pile fabrics and chenille fabrics  0%  20%

11.  5903.10.90  Other plastic laminated fabrics   0%  20%

12.  5903.20.90  Other plastic laminated fabrics  0%  20%

13.  8212.20.19  Stainless steel blade  0%  20%

14.  8212.20.90  Other Safety razor blades   0%  20%

15.  8504.32.00  Transformer  0%  20%

16.  8504.33.00  Transformer  0%  20%

17.  8714.92.10  Wheel rims of bicycle  0%  20%

18.  9401.61.00  Upholstered Seats, 

With Wooden Frame

0%  35%

19.  9405.10.10  Chandelier & Oth. Electric Ceiling Or Wall

Lighting Fitting, Spotlight

0%  20%

20.  9405.10.90  Chandeliers & Oth. Elec. Ceiling Or Wall

Lighting Fittning(Exc.Spotlights)

0%  20%

21.  9405.20.00  Electric Table, Desk, Bedside Or Floor-

Standing Lamps

0%  20%

22.  9405.40.90  Other Elec. Lamps & Lighting Fittings, Nes  0%  20%

23.  9405.99.00  Parts Of Heading No.94.05 Of Other

Materials

0%  20%

24.  9504.40.00  Playing cards  0%  35%

 

  53

Annex-'C'

 

Proposals for Value Added Tax (Local Stage) 

on the Budget 2005-06

 

01.  Amendments in the Value Added Tax Act, 1991

(1)  Inclusion of 'Local VAT office' and 'Divisional Officer' of

the  Large  Tax-payers'  Unit  (LTU)  in  the  definition  of

'Local  VAT  Office'  and  'Divisional  Officer'  in  clause

(Antosta Ja) and clause (Ra) of Section 2.

(2)  Insertion of a new sub-section 1ka under section 13 to fix

the  rate  of  duty  drawback  on  certain  goods  by  the

government in the official gazette. 

(3)  a)  Reduction of minimum penalty from taka 25 thousand

to taka 

  10  thousand  for minor offences under sub-section (1)

of section 37.

b)  Insertion  of  'Service'  in  clause  (Triple  Nio)  of  sub-

section (2) under section 37.

(4)  Insertion of provision regarding request from a VAT officer

to another VAT officer in the recovery of the government

dues.

 

2.  Amendments in the Value Added Tax Act, 1991 

(1)   Inclusion of 'Superintendent' of the Large Tax Payer Unit

(LTU)  '  in  the  definition  of  'Superintendent'  in  clause

(Nio) of rule 2.

(2)  Clause (Ka) of proviso under sub-rule (1) of rule 17Ka has

been amended to extend the time limit from thirty days to

ninety  days  for  bringing  the  goods  back  to  the  factory,  in

cases  where  the  goods  are  damaged  or  unfit  for

consumption  or  when  there  is  a  material  change  in  the

nature of supply.

  54

 

3.  Value Added Tax related other S.R.O`s

 

(1)   Exempted from VAT :

a)  Exemption  on  Iron  Ore,  Petroleum  Bitumen,

Magnesium  Sulphates  (Fertilizer),  Zinc  Sulphates

(Fertilizer),  Disodium  Tetraborates  (Fertilizer),

Waste Paper, Infusion Set with or without IV fluid

bag at the import stage. 

 

b)  100%  exported  oriented  industries  have  been

enjoying VAT  exemption  to  the  extent  of  80%  on

gas  and  electricity  and  60%  on WASA  bills.  The

exemption  will  be  extended  to  the  100%  deemed

exporters and the industries within EPZ. They have

been  also  exempted  from  VAT  payable  on  the

services rendered by Insurance, C&F Agent, Freight

Forwarders, Shipping Agent and Port Services both

at the import and export stage.

c)  Introduction  of  exemption  on  Rice,  Chemical

Fertilizer  and  Insecticides,  Fungicides,  Pesticides,

Anti-sprouting products, Plant growth regulator and

disinfectants  to  be  used  in  agriculture,  at  the  trade

level.

 

(2)   Introduction  of Duty  drawback  at  the rate of 80% on gas,

electricity and 60% on WASA bills at the production level

for  100%  export  industries  and  Drawback  @  100%  on

Insurance, C&F Agent and 60% on Telephone both at the

import and export stage.

 

 

4.  List  of  VAT  related  S.R.Os  and  on Order  to  implement  the

Budget proposals, 2005-2006.

 

  1. NBR`s SRO No. 150-Law/2005/441-VAT dated : 09/06/2005

  2. IRD`s SRO No. 151-Law/2005/442-VAT dated : 09/06/2005

  3. IRD`s SRO No. 152-Law/2005/443-VAT dated : 09/06/2005

  4. IRD`s SRO No. 153-Law/2005/444-VAT dated : 09/06/2005

  55

  5. IRD`s SRO No. 154-Law/2005/445-VAT dated : 09/06/2005

  6. IRD`s SRO No. 155-Law/2005/446-VAT dated : 09/06/2005

  7. IRD`s SRO No. 156-Law/2005/447-VAT dated : 09/06/2005

  8. IRD`s SRO No. 157-Law/2005/448-VAT dated : 09/06/2005

  9. IRD`s SRO No. 158-Law/2005/449-VAT dated : 09/06/2005

  10. NBR`s SRO No. 159-Law/2005/450-VAT dated : 09/06/2005

  11. NBR`s SRO No. 160-Law/2005/451-VAT dated : 09/06/2005

  12. NBR`s Order No. 06/VAT/2005, dated : 09/06/2005