The revenue board has projected the collection of an additional VAT revenue of Tk 60 billion from three areas in the upcoming fiscal year (FY).
The Value Added Tax (VAT) is expected to come from tobacco and mobile phone sectors, and through installation of increased number of Electronic Fiscal Devices (EFDs) or Sales Data Controllers (SDCs) in the businesses.
According to a projection by the National Board of Revenue (NBR), the upward price adjustment of the high and premium slab cigarettes would help collect an additional Tk 40 billion in VAT in FY2021-22.
The VAT wing of the board is also expected to collect an additional amount of Tk 10 billion each from the mobile phone sector and businesses through installation of EFDs or SDCs.
The VAT wing submitted the estimates to Finance Minister AHM Mustafa Kamal with the details of loss and gain of VAT collection from the proposed fiscal measures in the National Budget placed in parliament on Thursday.
The VAT wing will have to collect an additional Tk317.06 billion in the FY2021-22 through the implementation of the fiscal measures and also from the normal growth of businesses at the rate of 15 per cent.
The projection has been made on the basis of a provisional estimate of VAT collection worth Tk 962.94 billion in the current fiscal year (until June 30, 2021), showing a shortfall worth Tk137.06 billion against the revised target.
In the projection, the VAT wing has estimated that it would have to lose revenue worth Tk 780 million due to offering VAT exemptions on some products and services in the FY 2022.
It has also projected an additional amount of VAT worth Tk 5.0 billion through settlement of the pending cases and arrears.
The normal growth of businesses, the VAT wing expects, would fetch an additional income of Tk 144.44 billion. It is also hopeful about 15 per cent growth of VAT income over the current FY's possible collection worth Tk 962.94 billion.
The government has set a Tk 1.24 trillion VAT collection target for FY2021-22, expecting 16 per cent growth over the revised target for the current FY.
The NBR expects the life and business activities to become normal in the upcoming FY.
According to the official data, the NBR has installed some 3,096 EFDs/SDCs so far in shops and other businesses.
"The NBR has a plan to install 10,000 EFDs/SDCs by June 22 in different sectors," the paper said.
In the proposed budget, the government has raised the price slab of high and premium category cigarettes. In the current FY budget, the government had increased the price of low-tier cigarette by Tk 2.0.
In the paper, the NBR said the upward adjustment of low and medium tier cigarettes every year may leave negative impact on revenue collection.
In an instant post-budget reaction, national professional officer of World Health Organisation (WHO) Dr Syed Mahfuzul Huq said the increase of price in high and premium tier may lead to rise in the consumption of low and medium quality cigarettes.
Despite having no change in any of the tax measures for mobile phone operators, the VAT wing projected an additional amount of VAT revenue in the upcoming FY.
Talking to the FE, a senior NBR official said the VAT wing, in February last, resolved legal complexities on collection of VAT on different fees of mobile phone operators, including issuance of 4G licences, renewal, royalty, technology neutrality and spectrum.
The amendments of the VAT law would help mobilise the additional revenue in the next FY, he said.
The VAT wing had not received any VAT on those fees, charged by Bangladesh Telecommunication Regulatory Commission (BTRC), until February last due to some legal complexities over charging VAT at 15 per cent rate, he said.
The rate has been cut to 7.5 per cent, barring the VAT rebate opportunity for the mobile phone operators, he added.
As per VAT law, businesses are not allowed to claim VAT rebate in case of paying VAT below the standard rate of 15 per cent.