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In the proposed national budget for the fiscal year 2025-26, the interim government has outlined a series of tax and VAT changes that may lead to lower prices for certain goods and services.
Finance Advisor Salehuddin Ahmed presented the proposed budget for the 2025-26 fiscal year in a speech broadcast by state-run BTV on Monday.
The changes include both exemptions and duty adjustments.
In the energy sector, the interim government has proposed a VAT exemption on the import of liquefied natural gas (LNG), which may positively impact gas prices and energy costs.
A broad range of consumer and essential products will benefit from VAT exemptions. These include all types of utensils made from natural materials such as leaves, flowers, and bark, handmade clay utensils, and textile-grade date chips, all of which would enjoy VAT exemptions at the production stage.
Additionally, locally sold sanitary napkins, packaged liquid milk, and ballpoint pens are also set to be exempted from VAT at the business-to-business level.
Tech-related products are also included in the plan, with VAT exemptions extended to computer monitors up to 30 inches, an increase from the previous 22-inch limit.
Similarly, VAT has been waived on lease rent for passenger aircrafts.
The supplementary duty on all types of ice cream has been halved, from 10 percent to 5 percent.
The budget also seeks to support the health sector by making healthcare equipment more accessible. Until 2030, all VAT will be exempted on the import and local purchase of necessary materials and spare parts used to manufacture hospital beds.
For greener transport and energy solutions, the existing VAT exemptions on locally produced motor vehicles will continue.
Along with that, hybrid and electric vehicles, including general and ICU ambulances, will be conditionally exempted from VAT until Jun 30, 2030.
The interim government also plans to fully exempt VAT on the production of lithium and graphene batteries until Jun 30, 2027. From Jul 1, 2028 to Jun 30, 2030, these batteries will be granted exemption from all VAT in excess of 5 percent.
The import of essential components for refrigerators, freezers, air conditioners, and their compressors will remain exempt from supplementary duty until 2028.