presented by...exempted/reduced rate co. exempted and reduced rate eligible company/person will: •...

1

an independent correspondent member of

Presented By :

Snehasish Barua, FCA

Date: 15 June 2016

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The presentation has been prepared on the basis of publicly available sources i.e, NBR website, Finance Bill etc., in respect to changes proposed by the Finance Bill 2016. This presentation provides an overview of the changes proposed in the Finance Bill 2016. As provisions may be amended in the Finance Act 2016, this should not be used for reference as its substitute. The information contained in this presentation is of a general nature and is not intended to address the circumstances of any particular individual. Although we aim to provide accurate and timely information, we can not provide assurance that such information is accurate as of the date it is received or that it will continue to be accurate in future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

3


A. Year-wise NBR Budget B. Corporate tax C. Personal tax D. VAT & SD E. Custom Duty

Table of contents

4


Source: The Daily Star, 3 June 2016

Budget at a glance

5


National Budget Comparison at a glance

Particulars FY 2016-17 (Amount in Crore Taka)

FY 2015-16 (O) (Amount in Crore Taka)

Changes

Total Size of Budget 340,605 295,100 15.42%

Total Revenue Earnings 242,752 208,443 16.45%

Earning from NBR 203,152 176,370 15.18%

Budget Deficit 97,853 86,657 12.91%

GDP Growth 7.2%

Inflation 5.8%

6


National Budget Comparison at a glance

Source of receipts 2016-17 2015-16 (R)

Tax 71,940 35.41% 51,796 34.53%

VAT 72,764 35.82% 53,913 35.94%

Import Duty 22,450 11.05% 17,119 11.41%

Export Duty 44 0.02% 34 0.02%

Excise Duty 4,449 2.19% 1,033 0.69%

SD 30,075 14.80% 25,064 16.71%

Other taxes and duty 1,428 0.70% 1,040 0.69%

203,150 100% 150,000 100%

35.43% growth

projected?

7


Year-wise NBR Budget

59,742

76,225

91,595 103,332

125,000

149,720

176,370

203,152

-

50,000

100,000

150,000

200,000

250,000

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

NBR BUDGET (IN CRORE TAKA)

Revised to

150,000

Collected 70%

in 9 months

Collected

136,724

8


Changes proposed for Corporate Tax

9


Corporate tax rates

No major changes proposed in corporate tax rates except for the RMG companies. Rate has been proposed as 20% as compared to 35% for the assessment year 2015-16

10


Now definition of income will also include: • Any income, receipts, profits or gains from whatever

source derived, chargeable to tax under any provision of ITO,1984

• Any amount which is subject to collection or deduction of tax at source

• Any amount on which a tax is imposed • Provision regarding bonus share withdrawn- aligned

with section 2(26) Trading receipts cannot be considered as income

Income: Redefined and created confusion

11


Introduction of tax day

Type Date

Company 15th day of the seventh month following the end of the Income Year

Other than company

30th day of October following the end of income year

If the day mentioned above is a public holiday, the next day following the tax day

12


Burden relieved for listed company and banks

Type Waiver proposed

Listed Company

A listed company will no longer be required to pay 5% additional tax for declaring dividend of less than 15% of its capital.

Banks A bank will no longer be required to pay 15% tax for showing profit in excess of 50% of its capital including reserves

Definition of income tax in section 2(62) still includes excess profit

tax/additional profit tax

13


Real estate sector - change in tax rates

Building or apartment situated in the following areas

Residential purpose

(Tk.)

Non-residential

purpose (Tk.)

Dhaka south City Corporation; Dhaka North City Corporation; Chittagong south City Corporation; Chittagong North City Corporation

1,000 3,500

In any other city corporation 700 2,500

In any other area 300 1,200

The amount mentioned above will be 20% lower for residential apartment (including common space) not more than 70 square meters and 40% lower if the size is not more than 60 square meters.

Amount reduced substantially from last year but all areas of the Dhaka

and Ctg City corporation are not the same!

14


Changes in section 30

• Withholding VAT requirement on any payment for the

purpose of inadmissible deductions has been removed

• Salary expenses will be disallowed if the employer fails to

obtain twelve digit TIN of the employee

• Excess perquisite limit has been proposed to TK. 475,000

from TK. 450,000. Will be increased Tk 2.5M for a person

with disability

• Foreign travelling expenditure threshold increased to 1.25%

from 1% of disclosed turnover.

15


Penalty for non-compliance of exempted/reduced rate Co.

Exempted and reduced rate eligible company/person will:

• Have to pay tax @ corporate tax rate if the return is not

filed within the stipulated time.

• Have to pay tax @ corporate tax rate for any disallowance

of expenditure u/s 30

Increased harassment when

such an entity applies for time

extension

Does it cover all items from (a)

to (n)?

16


TDS - Base amount

Base amount for TDS has been defined for the following

categories:

• Payment to contractors (section 52)

• Payment of royalties (section 52 A)

• Payment for certain service (section 52AA)

The base amount means the higher of the following and

inclusive of VAT:

• Contract value, or

• Bill or invoice amount, or

• Payment

Clear contradiction with section 49(2), BAS-18, other sections

under chapter VII How come VAT is revenue?

17


TDS - Supply of goods and execution of contract

Tax is required to be deducted at a rate not exceeding 10%

(50% higher rate if no E-TIN) from the payment to a resident

on account of execution of contract, supply of goods,

manufacture, process/conversion, printing and

packaging/binding. The deduction is made on the basis of

base amount.

18


TDS - Supply of goods and execution of contract

Threshold Level of payment (Tk.)

Current Rate of tax deduction

Threshold Level of Base amount

(Tk.)

Proposed Rate of tax deduction

Remarks

Up to 2 lakh Nil

Above 2 lakh to 5 lakh

1% Up to 20 lakh 3%

However, tax deduction at such prescribed rate shall not exceed 10% of the base amount


2.5% Above 20 lakh to 1 crore

4%


3.5% Above 1 crore to 5 crore

5%

Above 25 lakh to 3 crore

4% Above 5 crore to 10 crore

6%

Above 3 crore 5% Above 10 crore 7%

Source: The Financial Express

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Section 52A - Redefined

Current area of WHT Proposed area of WHT

Payment to any doctor Royalty payment Fees for professional and technical services

Royalties, franchise, or the fee for using license, brand name, patent, invention, formula, process, method, design, pattern, know-how, copyright, trademark, trade name, literary or musical or artistic composition, survey, study, forecast, estimate, customer list or any other intangibles

Current rate of tax deduction

Proposed rate of tax deduction (slab rate)

10% - ETIN 15%- No ETIN

Up to 25 lac of base amount 10% (50% higher if no ETIN)

Above 25 lac of base amount 12% (50% higher if no ETIN)

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SL.

No

Description of payment Current Rate of deduction

Proposed rate of deduction on base amount

Up to 25 lac Above 25 Lac

1. Advisory or consultancy service (from 52A) 10/15% 10% 12%

2.

Professional service, technical services

fee, or technical assistance fee (from 52A)

10/15% 10% 12%

3. Catering service 10% 10% 12%

4. Cleaning service

(a) commission

(b) gross receipts

10% 1.5%

10% 1.5%

12% 2%

5. Collection and recovery agency

(a) commission

(b) gross receipts

10% 1.5%

10% 1.5%

12% 2%

Section 52AA - Slab rates

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SL.

No




6. Management of event, training and workshop- (a) commission (b) gross receipts

10% 1.5%

10% 1.5%

12% 2%

7. Private security service provider- (a) commission (b) gross receipts

10% 1.5%

10% 1.5%

12% 2%

8. Supply of manpower- (a) commission (b) gross receipts

10% 1.5%

10% 1.5%

12% 2%

9. Indenting commission 7.5% 6% 8%

Section 52AA- Slab rates

22


SL.

No




10. Meeting fees, training fees or

honorarium

10% 10% 12%

11. Mobile network operator,

technical support service provider

or service delivery agents

engaged in mobile banking

operations

10% 10% 12%

12. Credit rating agency 10% 10% 12%

13. Motor garage or workshop 5% 6% 8%

14. Private container port or dock yard service

5% 6% 8%


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SL.

No




15. Shipping agency commission 5% 6% 8%

16. Stevedoring/berth operation commission 10% 10% 12%

17. Transport service, car rental 3% 3% 4%

18. Any other service which is not mentioned in

Chapter VII of this Ordinance and is not a

service provided by any bank, insurance

or financial institutions

10% 10% 12%


Two added and three of them delisted

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TDS - Export of goods

Tax is required to be collected by banks @1.5% from 0.60% on export

proceeds received on account of exports of knit wear and woven

garments, terry towel, carton and accessories of garments industry jute

goods, frozen food, vegetable, leather goods, packed food.

Tax is required to be collected by banks @ 1.5% from 0.60% on export

proceeds received on account of exports of any goods except knit wear

and woven garments, terry towel, carton and accessories of garments

industry jute goods, frozen food, vegetable, leather goods, packed food.

Changed from 0.8% to 0.6% in 2015

Increased by 150%?

25


Collection of tax from travel agent

In addition to the existing provision of tax collection (0.3% to

be collected on commission or discount or any other benefits),

tax is required to be deducted at the rate 0.3% on payment of

incentive bonus, performance bonus or any other benefits

from sale of ticket bill of carrying cargo by air. Calculation will

be as follows:

(A/B)xC where:

A = Incentive bonus/performance bonus or any other benefit

B = Is the amount of commission or discount

C = 0.30% (source tax)

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TDS – Commission, Discount, fees, etc.

Tax is to be collected by a company on sale of goods to any

distributor or any other person under a contract other than oil

marketing company in the following manner:

5% on the amount equal to B x C where,

B = Selling price of the company to a distributor or any other person

C = 12%

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Comparison with the current scenario:

TDS – Commission Discount, fees, etc.

Current scenario BDT Proposed scenario BDT

Sales price to distributor

1,500,000 Sales price to distributor (B)

1,500,000

Retail price fixed by the company

1,550,000 Deemed sales percentage (C)

12%

Differential amount 50,000 Deemed Income (B X C)

180,000

Source tax @ 3% 1,500 Source tax @ 5% 9,000

5 times

higher!

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SL. No

(*)

Particulars of payment Rate of deduction

Proposed Rate of deduction

1. Advisory or consultancy service 30% 20%

2. Pre-shipment inspection services 30% 20%

5. Certification, rating etc. 30% 20%

15. Contractor, sub-contractor or supplier 5% 7.5%

16. Supplier 0% 7.5%

17. Capital gain-listed security 10% 15%

26. Any payments against any services not

mentioned above

20%

Changes in TDS on payment to non-resident

* = in the sequence of the serial

Two items delisted, two

new items listed and

one of them segregated

into three items.

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Particulars Last year

Proposed rate

For security which is based on Islamic principles. (51) 5%

Tax to be deducted/collected by the local agent of a non-resident courier company on the amount of service charge accrued from the shipment of goods, documents, parcels, or any other things outside Bangladesh. [56(12)]

15% 15%

Any person responsible for collecting Value Added Tax (VAT) in accordance with VAT Act, 1991 from cigarette manufacturers shall collect tax at the rate of three per cent (3%) of Maximum Retail Price (MRP) of such cigarette at the time of collection of such VAT- (52B)(2).

3% Nil

International gateway service operator 1% 1.5%

ICX (Interconnection Exchange) and ANX (Access network) 5% 7.5%

Interest on saving instrument (52D) and saving and fixed deposit (53F) of Funds

5%

Other changes in TDS

Funds are now taxable

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TDS Return- timeframe and audit

Withholding tax return u/s 75A shall be submitted by

following dates:

a) First return: by 31 January and

b) Second return: by 31 July

DCT shall select the withholding tax return for audit within 4

years from the end of the year in which the return was filed

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Tax on motor car

CC of the Vehicle (Motor car or Jeep)

BDT

Up to 1500 CC 15,000 Such advance tax is not refundable. And the amount will be 50% higher for each additional motor car if the owner has two or more motor cars in his name or in joint names.

Up to 2000 CC 30,000

Up to 2500 CC 50,000

Up to 3000 CC 75,000

Up to 3500 CC 100,000

Above 3500 CC 125,000

Each Microbus 20,000

Authority responsible for the registration and fitness renewal of motor car shall collect advance tax from the owner of the private motor car at the following rate:

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82C – Minimum tax

Sources of income have been divided into 3 broad categories for tax computation purpose considering the concept of minimum tax: a) Minimum tax for certain sources of income b) Final discharge of tax liability c) Tax on gross receipts (old 16CCC)

Loss arising from the sources of income except for those mentioned (a) and (b), can be carried forward as per provisions of ITO 1984.

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82C – Minimum tax for certain sources of income

• Tax deducted or collected under sections 52, 52A, 52AAA, 52B, 52C, 52D, 52JJ, 52N, 52O, 52R, 53, 53AA, 53B, 53BB, 53BBB, 53BBBB, 53C, 53CCC, 53DDD, 53EE, 53F, 53FF, 53G, 53GG, 53H, 53M, 53N and 55 shall be considered as minimum tax.

• Tax from such sources shall be calculated by using regular rate of such

income and if the tax so calculated is higher than the minimum tax, then higher amount will be payable on such income.

• And loss derived from such sources can not be set off with other sources

and vice versa

How are we going to get the tax base?

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82C – Final discharge of tax liability

Withholding tax deducted from the following sources of income will be considered as final tax liability considering the rate of withholding tax would be their applicable tax rate:

Sl no.

Section Amount that will be taken as

income

Rate or amount of tax

(1) (2) (3) (4)

1 Section 52C amount of compensation as

mentioned in section 52C

as mentioned in section 52C

2 Section 52D amount of interest as mentioned

in section 52D

as mentioned in section 52D

3 Section 53DDD amount of export cash subsidy as

mentioned in section 53DDD

as mentioned in section 53DDD

4 Section 53F(1) (c) and (2)

amount of interest as mentioned

in section 52D

as mentioned in section 53F

5 Section 53H Deed value as mentioned in

section 53H

as mentioned in section 53H and the rule made thereunder

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82C – Tax on gross receipts

For any other sources of income except those mentioned in (a) and (b) above, income would be determined following the provisions of ITO 1984. However, tax liability so determined should not be less than the amount of minimum tax as mentioned below:

• Manufacturer of cigarette, bidi, chewing tobacco or any tobacco products

• Mobile phone operator company • Any other cases

1%

0.75% 0.6%

The rate will be 0.1% for new industrial undertakings engaged in manufacturing of goods for first 3 income years since commencement of commercial production.

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82C – In case of mix of income

Where the assessee has an income from any source that is exempted from tax or is subject to a reduced tax rate, the gross receipts from such source or sources shall be shown separately, and the minimum tax under this sub-section shall be calculated in the following manner- (A/B) X C A= amount of tax under the reduced rate or under the tax benefit that the source or person enjoys, B = amount of regular tax if there were no such exemption or reduced rate, C= rate of minimum tax as mentioned in earlier clause;

Does it mean exempted company will have to pay

minimum tax?

37


Changes in exempted income

a) Any payment from WPPF up to Tk 50,000 received by a beneficiary (earlier it was fully exempted income for all workers not all beneficiaries).

b) E-commerce and on line shopping are now excluded from ITES definition. Digital archiving and physical records are included in ITES definition.

c) Income up to Tk 500,000 received by an assessee from Pensioners’ savings certificate (earlier income from wage earners bond was also tax exempt).

a) Income derived from SME up to Tk 3.6 million are exempt (earlier 3

Million)

38


Penalty - Shortfall of advance tax

Simple interest: Simple interest @ 10% will be 50% higher if the return is not filed on or before the “Tax day” Period of simple interest imposition: the period will be the shorter of: a. From first day of July, following the end of the income year

in which advance tax was applicable, up to the date of regular assessment; or

b. a period of two years from the said first day of July

Does it not make Section 65 redundant?

39


Penalty – Delay in filing return

Failure to file return on or before the expiry of “Tax day”: Delay interest will be imposed @ 2% per month on the difference between the tax assessed on total income for the assessment year and tax paid in advance along with tax deducted or collected at source. Period of delay interest: the period will start from the first day immediately following the Tax day to:

a. The date of filing return where return is filed b. The date of regular assessment where return is not filed

The period shall not exceed one year

Will section 124 be applicable?

No interest for whom proviso 7(2)(c) applies instead of 75(6)?

40


Other major changes in corporate tax

• Chief executive officer has been included under the definition of “Principal officer” under section 2(48).

• Any other license fee paid by any other company engaged in providing specialized services if such license is integral to the operation of the company will be eligible to be amortized as per 3rd schedule

• Tax will include now delay interest and additional interest.

• Non-payment of tax under section 74 shall cause the application to ADR to lose its eligibility

• In addition to existing method of filling of appeal, assessee can file appeal

electronically or in any other machine readable or computer readable media.

41


42


Proposed tax rebate structure

Threshold level Amount of credit (%) on eligible amount

Up to TK. 10 lacs 15%

More than TK. 10 lac up to TK. 30 lac

(i) First Tk. 2 lac 15%

(ii) On the rest 12%

More than Tk. 30 lacs (i) First up to Tk. 2 lac 15%

(ii) Next Tk. 4 lac 12%

(iii) On the rest 10%

Reduction in investment tax credit

Eligible amount is the lesser of the following: a) Actual investment; or b) 20% of total income (previously it was 30% of total income); or c) Tk. 1.5 Crore

43


Scenario-1 (Income up to 10 lac)

Comparison with current rebate structure

When Total income is Tk. 900,000 AY 2015-16 AY 2016-17 (Proposed)

(i) Actual investment 270,000 (i) Actual investment 180,000

(ii) 30% of total income 270,000 (ii) 20% of total income

180,000

(iii) 15,000,000 (iii) 15,000,000

Tax rebate (15% * 270,000)

40,500 Tax rebate (15% * 200,000)

27,000

Investment discouraged and tax burden is slightly increased!

44


Scenario-2 (Income above 10 lac to 30 lac)

When Total income is Tk. 2,500,000 AY 2015-16 AY 2016-17 (Proposed)

(i) Actual investment 750,000 (i) Actual investment 500,000

(ii) 30% of total income 750,000 (ii) 20% of total income 500,000

(iii) 15,000,000 (iii) 15,000,000

Tax rebate (15% * 750,000)

112,500 Tax rebate: First (200,000 * 15%)

30,000

On the balance (300,000 * 12% ) 36,000

Total rebate 66,000

Investment discouraged and tax burden increased!


45


Scenario-3 (Income above 30 lac)

When Total income is Tk. 4,500,000 AY 2015-16 AY 2016-17 (Proposed)

(i) Actual investment 1,350,000 (i) Actual investment 900,000

(ii) 30% of total income 1,350,000 (ii) 20% of total income 900,000

(iii) 15,000,000 (iii) 15,000,000

Tax rebate (15% * 1,350,000)

202,500 Tax rebate: First (200,000 * 15%)

30,000

Next (400,000 * 12% ) 48,000

On the balance (300,000 * 10%) 30,000

Total rebate 108,000

Investment discouraged and tax burden increased!


46


Surcharge on individual assessee Current Net worth Value Current rate Proposed Net worth

Value Proposed rate

Up to Tk. 2.25 Crore Nil Up to Tk. 2.25 Crore Nil

More than Tk. 2.25 crore up to Tk. 10 crore

10% More than Tk. 2.25 crore up to Tk. 5 crore

10%

More than Tk. 10 crore up to Tk. 20 crore

15% More than Tk. 5 crore up to Tk. 10 crore

15%

More than Tk. 20 crore up to Tk. 30 crore

20% More than Tk. 10 crore up to Tk. 15 crore

20%

More than Tk. 30 crore 25% More than Tk. 15 crore up to Tk. 20 crore

25%

More than Tk. 20 crore 30%

Minimum surcharge BDT 3,000 Do

47


Other Major changes in personal tax

Every person, being an individual assessee, shall furnish statements of the total assets and liabilities if the person: has, in the last date of the income year, a gross wealth exceeding

taka twenty lakh; or owns a motor car; or has made an investment in a house property or an apartment in the

city corporation area

An individual not being a shareholder director of a company may opt not to submit statement of his life style if his total income does not exceeds three lac taka in the income year.

In case of parent/legal guardian of a physically challenged person, he/she will get a further initial exemption of Tk. 25,000 in addition to the prescribed limit

48


Changes in VAT & SD

49


VAT Rebate

In section 9 of the VAT Act there was an arbitrary word “etc.” which has been proposed to be deleted. Therefore, this proposed regulation has been made more precise and now the negative list will include VAT paid on construction, balancing, modernization, replacement, expansion, renovation and repair of any building or structure or establishment, purchase and repair of all kinds of furniture, stationery, air conditioner, fan, lighting equipment, generator, architectural plan and design, vehicle rent or lease .

50


VAT Rebate

• The concerned VAT officer may issue letter to show cause to the concerned person who has taken input VAT credit illegally.

• The concerned person will be given an opportunity for necessary hearing before adjustment of input VAT credit which was illegally taken earlier.

• The concerned VAT Official is required to dispose of the order within 30 working days (LY: 15) of receiving the written grounds of appeal after giving the appellant an opportunity of being heard.

51


ADR

• Disputes or cases relating to the allegation of the evasion of Value Added Tax or Supplementary Duty by untrue declaration or furnishing of false information or documents and disputes relating to such important legal matters will remain within the purview of the alternative dispute resolution process under this Act. This matters and disputes were not earlier considered for ADR.

• Application under Section 41(Uma) of VAT Act, the 1991 is required to be filed within 20 working days (LY: 10 days) from the issue date of notice against which application will be submitted.

• Negotiation and disposal in case of application filed for the process of ADR when the case remain pending with the concerned (Appeal), Appellate Tribunal or in any other court under section 41(cha) of the VAT Act, 1991 will have to be disposed off within 50 working days (LY: 60 days) of the filing of the application.

52


Appeal – burdensome disputed VAT

At the time of filing an appeal, the appellant shall have to pay certain amount as prescribed in the section. The payment of certain amount for filing appeal has been increased in the following ways:

Appeal to Amount to be deposited

Commissioner (Appeal 50% of the tax demanded or where there is no tax demanded, 50% of the monetary fine charged (LY: 10%)

Appellate Tribunal

Huge!

53


Price Declaration

Divisional officer is now not required to give their decision (within 15 days) with regard to price declaration or revised declaration by any registered person who is engaged in supplying taxable goods or services along with VAT exempted goods or services or export of goods or services [Rule 3(1a)] A registered VAT payer engaged in supplying taxable goods or services along with VAT exempted goods or services or export of goods or services is required to submit revised price declaration through VAT-1 (Ga) before seven working days. Divisional officer is now not required to approve the price declaration rather report anomalies, if any, comes to their knowledge to the Commissioner.

Relieving hassle!

54


Price Declaration

• “Approved value” will not be considered for investigation or survey of price declaration of a particular goods by Divisional Officer, Circle Revenue Officer or any other Value Added Officer. Now, investigation or survey will be carried out based on the amount of value addition and division of similar goods, actual cost, value declared or information related to market value, maintained at the Circle, Division or Commissioner’s office.

• During the investigation or survey of price declaration, if any deviation or

inconsistency is found, the Divisional Officer is not now required to determine the revised price rather need to inform the Concerned Commissioner to take action in accordance with Sub-rule 7 of Rule 3 of the VAT Rules, 1991.

Now appeal need to file directly to the Tribunal

55


Price Declaration

In case of sale of goods with discount

As per new changes in rule 3(6), there is no limit for offering discount of any

goods. Earlier, the maximum discount was 15% which could be valid only for 30

days in 12 months period. Currently, price of goods can be discounted at any

rate at any time.

Business friendly!

56


Mandatory Registration

The coverage of mandatory registration under Section 15 of the VAT Act, 1991 to pay VAT has been extended through the amendment of SRO 183- AIN/2012/641-Mushak dated 07 June 2012 by issuing a new SRO Ref: 185-AIN/2016/761- Mushak dated 2 June 2016. According to the amendment, all manufacturers of taxable goods whose place of business are in Dhaka North City Corporation, Dhaka South City Corporation and Chittagong City Corporation are required to be registered under Section 15 of the VAT Act, 1991 irrespective of its annual turnover.

57


Online Sales - Redefined

Product sales through online means sales and purchases of any goods and services using electronic network which was earlier received from a manufacturer or service provider with payment of VAT and online seller does not own any sales centre. The changes are: • Product sales through online without any selling centre. • Payment through electronic network is not mandatory. • Product or service will be received from manufacturer or service provider

with payment of VAT

58


HS Code Details Stage Action

1701.12.00 Beet sugar Import Exclusion

from

exemption

list

1701.13.00 Cane sugar specified in note 2 Import

1701.14.00 Other cane sugar Import

1701.91.00 Sugar containing added

flavoring and coloring matter Import

72.07 Bilat Import

19.05.10.00 & 19.05.20.00

Bread and other types of bread

Production

44.11 Hardboard Production

64.02 Plastic sandal Production

VAT Exemption

59



85.02 Electrical generator Production Exclusion

from

exemption

list

S007.00 Classified advertisement Service

S016.00 Travel agency Service

S060.00

Rubber purchase through

bidding for industrial

organization

Service

S099.40 Meditation service Service

S099.50 Online sales Service

VAT Exemption

60


VAT Exemption


7201.10.00

Non alloy pig iron containing

weight .5 % or less of

phosphorus

Import

Inclusion in

exemption

list

7201.20.00

Non alloy pig iron containing

weight more than .5 %

phosphorus

Import

7201.50.00 Alloy pig iron; spiegeleisen Import

8523.29.12

&

8523.49.20

Software Import &

production

61


Reference Details

S070.10 Private University

S070.20 Private Medical & Engineering College

S099.2 Other service: Service related to dyeing, printing, finishing,

and calendaring of Grey Fabrics

2nd Schedule Ambulance carrying patient and dead body

VAT Exemption

62


Change of truncated rate

Service code Details Current

rate Proposed

rate

S 003.10 Motor Vehicle garage and workshop 7.5% 10%

S 003.20 Dockyard 7.5% 10%

S 004.00 Construction Firms 5.5% 6%

S 070.10 (i)Transport Contractors: of petroleum products. (ii)Transport Contractors: others

(i) 2.25% (ii) 7.5%

(i) 4.5% (ii) 10%

S010.20

Building Construction Firms 1. Up to 1 to1100 sq-ft 10% 2. Up to 1101-1600 sq-ft 16.6% 3. From 1601 sq-ft 30%

3%

1. 1.5% 2. 2.5% 3. 4.5%

S 078.00 Sale center of own brand garments/clothes

5% 4%

63


Service code Details Current rate Proposed rate

S 067.00 Immigration advisor 7.5% 15%

S 074.00 Rent of place 9% 15% S 099.30 Sponsorship services 7.5% 15%

Truncated rate to standard rate

64


Major Changes in tariff value

Heading No

Details Proposed Price Last Year

48.04

Liner paper

BDT 26,250/MT BDT 21,000/MT

White liner paper BDT 27,500/MT BDT 22,000/MT Craft liner paper BDT 30,000/MT BDT 24,000/MT

48.05 Medium paper BDT 20,000/MT BDT 16,000/MT 48.09 Self copy paper BDT 30,000/MT BDT 24,000/M 48.10 Duplex board/ quoted paper BDT 28,750/MT BDT 23,000/MT 48.13 Cigarette/ Bidi paper BDT 43,750/MT BDT 35,000/MT

48.18

Kitchen towel (24-26 gsm) BDT 68,750/MT BDT 55,000/MT Toilet tissue (18-24 gsm) BDT 71,250/MT BDT 57,000/MT Napkin tissue (20-24 gsm) BDT 75,000/MT BDT 60,000/MT Facial tissue (12-16 gsm) BDT 81,250/MT BDT 65,000/MT

65


Major Changes in tariff value

Heading No

Details Proposed (Tk/MT)

Last Year (Tk/MT)

72.04 Scrap/Ship scrap 2,000 1,800 72.09 HR coil-CR coil 8,000 7,500

72.10 72.12

CR coil to GP sheet 6,500 6,000 CR coil to CI sheet 7,000 6,375 HR coil to GP sheet 15,000 13,500 CR coil to CI sheet color 7,200 0 HR coil to CI sheet 15,500 13,875 HR coil to CI sheet color 16,000 0

72.13 to 72.16

MS good produced from imported/collected reroll able scraped

3,500 3,300

Billet & ingot good produced from imported/collected reroll able scraped

3,000 2,750

72.13 to 72.16

MS good produced from Billet or ingot 3,000 2,750 Ingot or billet produced from Gorda/malt able & MS product produced from ingot or billet

6,000 5,500

72.17 GI wire 12,000 11,000

66


General Change

Any organisation having more than one associate under common

ownership located nearby and keeps all records together can be registered under single registration

Indenting agency and Credit rating agency are add in to the list of Compulsory VAT deduction at source service

Advertising firm has been excluded from the list of Compulsory VAT deduction at source service.

100% increase in package VAT

67


HS code Details Proposed

rate

1901.90.91 Malt extract/food preparations imported in bulk by VAT registered food processing industries

20%

2106.90.49 Other stabilizer for milk 10%

2106.90.50 Coffee mate in bulk imported by VAT registered milk food stuffs manufacturer

20%

2516.90.10 Bolder stone 10%

2917.32.10 Pharmaceutical grade imported under block list by VAT registered pharmaceutical industries

20%

Changes in SD

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rate

72.13 Bars and rods, hot rolled, in irregularly wound coils, of iron or non-alloy steel

45%

72.14

Other bars and rods of iron or non-alloy steel, not further worked than forged, hot rolled, hot drawn or hot extruded, but including those twisted after rolling

45%

72.15 Other bars and rods of iron or non-alloy steel of free cutting steel, not further worked than cold-formed or cold-finished

45%

72.16 Angles, shapes and sections of iron or non-alloy steel

20%

Changes in SD

69


HS/S code Details Proposed rate

8536.61.00 Lamp-holders 10%

8536.70.00 Connectors for optical fibers, optical fibers bundle or cables

10%

8536.61.00 Other apparatus 10%

S038.00 Foreign artist 10%

Changes in SD

70



rate Current

rate

2402.90.00 Handmade/manual process biri or others

150% 100%

24.03 Others produced tobacco and similar material; Tobacco's homogenized or reconstituted extract or perfumed

150% 100%

25.17

Pebbles , gravel, broken or crushed stone (excl. imported by VAT registered ceramic products manufacturing industries)

30% 20%

29.17 Dieoctile orthophthalates (DOP) 10% 20%

48.13 Cigarette paper 100% 60%

Changes in Supplementary Duty

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Changes in Supplementary Duty

H/HS code Details Proposed

rate Current

Rate

8415.90.91 Imported by VAT registered air condition manufacturer

60% 45%

8529.90.31 Loaded printed board (including under head 85.27,85.28) imported by VAT registered TV manufacturer

150% 100%

9404.40.00 Playing cards 10% 20%

S012.20 Service used by mobile phone through SIM/RIM card

5% 3%

72


Major Changes in CD

73


Major Changes

A new slab of 15% has been introduced in Custom Duty. Now the slabs would be 0,1, 5, 10, 15, 25

Regulatory duty reduced to 3% from 4%

Special procedure and management system have been formulated in order to prevent misuse of the duty concessions given to the importation of the industrial raw materials

74


Agriculture Sector

Custom duty on imported rice has been increased to 25% from 10% Import duties on rapeseed cake/soya cake have been increased to

10% from 5% Import duties have been reduced to 1% on some selected parts which

are used for machineries of agricultural use

Export Oriented Industries

All export oriented industries will get same benefit as garments industries during importation of fire equipment

Garments industries will get capital goods benefit to cutting table

75


Construction Sector

Duties and taxes have been enhanced or tariff value has been imposed on boulder, crushed stone, ferro alloy, billet, bar & rod, angle, fly ash

On some of the inputs rate has been reduced to 15% which are used for local manufacturing of fire equipment and doors

Chemical Sector

Duty tax is reduced for: petroleum jelly, paraffin wax, raw rubber, rubber process oil, glossy starch, gum resin.

Duty tax is increased on: talc powder, ECG and ultra sound paper, filter blocks made of pulp etc.

76


Electrical Sector

Prominent inputs on which duty is reduced are: urea resin, DOP, adhesive tape in rolls, fiber glass, inputs and parts of compressor

Duty increased on lamp holder, cable connector and busbar trunking system

Textile Sector

Duty on stripping chemical is reduced to 15% from 25% Duty on flax fiber and spandex/elastraometrics is reduced to 5%

from 10% Custom duty is increased to 5% from 3% applicable to the chemicals

and other inputs or raw materials

77


Transport Sector

Motorcycle: Existing 45% SD is reduced to 20% on some conditions Rebate facility is provided for human hauler subject to some conditions

Gas and Power Sector

Existing facilities for the capital good will be continued in the coming fiscal year

Custom assessment for concessionary or reduced rate will be allowed for input of stove, biogas plant, air tight storage bag with zipper, biogas digester, cylinder made of plastic and glass fiber

78


IT Sector

Existing duty exemptions will continue in the next fiscal year Duty is reduced for inputs of the manufacturer of SIM cards, scratch cards,

credit cards, and other smart cards

Pharmaceutical Sector

Capital goods benefit will provided for special type refrigerator, laboratory stability/humidity chamber

79


Other changes

Custom duty is reduced to 15% from 25% on lubricant used in the industries

Custom duty of alu/alu bottom foil is reduced to 15% Custom duty of children picture, coloring books is increased to 10% from

5% Custom duty on rides (amusement industries) above 10% has been

exempted on certain conditions Custom duty will be imposed at the rate of 1% on the goods imported by

referral hospitals for its establishment and development

80


Recommendation

Revisiting section 82CC with respect to decreasing minimum tax from 0.6% to 0.3-.04%

Decreasing deemed margin to 3-5% instead of 12% and changing the rate to 3% from 5%

Excluding ‘VAT inclusive price’ from the definition of base amount for TDS Reducing source tax in 53BB and 53BBB from 1.5% to 0.8% to promote

export and target of reaching 50B in 2021. Liberalizing the changes proposed for investment tax credit Updating the reference in section 73A (2) with regard to time extension. Disputed VAT deposit to be reduced to 10% from 50% Clarifying whether a tax exempt company need to pay minimum tax u/s 82c Clarifying whether all provision of section 30 will be applicable for a tax

exempt company Not to impose tax on Funds ( reinstating earlier provision)

81


No part of this presentation may be reproduced, stored in a retrieval system or transmitted in any form by any means- electronic, mechanical, photocopying, recording or otherwise- without prior permission from the presenter. This presentation is intended to provide information, but is not a substitute of legal or accounting advice.

82


Questions

83


84


Contact Details

Snehasish Barua, FCA (ICAB), ACA (ICAEW)

Partner

Snehasish Mahmud & Co

Chartered Accountants

+8801819319319

[email protected]

www.smac-bd.com

mailto:[email protected]



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