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Foreign Investors' Chamber of Commerce & Industry (FICCI) has termed the implementation of the proposed national budget for the fiscal year 2019-20 as challenging one.
"A huge deficit financing from the banking sector may tighten the liquidity situation," it said in a statement on Friday.
FICCI has also urged the government to reduce corporate tax rate to facilitate investment.
Besides, it has requested the government to withdraw a proposed increase in the supplementary duty, minimum income tax and SIM tax on telecom services, saying that these could hamper the government's vision of digitalisation of Bangladesh.
However, FICCI has hailed a higher allocation for development of human resources.
It said the GDP growth target of 8.2 per cent is achievable, provided the GDP-investment ratio increases to an expected level of 32 per cent.
FICCI in its statement said: "Finance Act, 2017 had a bold provision of withdrawing withholding tax on the supply of direct materials. Unfortunately, tax has been proposed on direct materials which will be detrimental to industrial growth."
Historically, it said, the title of the schedule of SD on locally-manufactured items was "SD at manufacturing stage" which has been changed to "SD at supply stage".
Consequently, the cost of locally-manufactured products will go up significantly and make them uncompetitive to imported ones and this will discourage local production, the FICCI observed.
The chamber hailed the fixation of a time-limit for the issuance of certificates by National Board of Revenue under double taxation treaty, withdrawal of tax on dividend received from non-resident Bangladeshi company, and increase in the threshold of wealth surcharge.
It has also praised an increase in the dividend income exemption threshold and withdrawal of the restrictions on taking input VAT rebate from certain services in the proposed budget.