The National Board of Revenue (NBR) is considering abolishing the manual VAT- refund mechanism for leather and jute exporters, bringing the process fully under the automated e-VAT system to improve transparency, reduce revenue risks and clear long-pending refund claims.
The move is also aimed at shifting away from the Duty Exemption and Drawback Office (DEDO).
However, the total amount of outstanding refund claims for the two sectors has yet to be compiled by the relevant NBR desk.
According to an internal NBR note dated July 7, 2026, the VAT Implementation Wing has proposed cancelling a General Order under the VAT Act that allows VAT refunds on raw materials used in jute and leather products to be processed manually through the Duty Exemption and Drawback Office (DEDO).
The note, sent to the VAT Policy Wing, states that exporters are now receiving VAT refunds through the online e-VAT platform, where refunds are processed automatically using e-Challan data and information from the respective VAT commissionerates.
Officials said maintaining a parallel manual refund system could make it difficult to verify the authenticity of refund claims and create potential revenue risks.
Under the proposal, exporters seeking VAT refunds would instead receive payments through their respective VAT commissionerates using the automated data identification system.
The internal note, signed by NBR Member (VAT Implementation and IT) Syed Mushfequr Rahman, also recommends holding consultations with trade bodies representing the jute and leather sectors before a final decision is taken.
The proposal reflects the revenue board's broader effort to digitise VAT administration, minimise manual intervention and strengthen oversight of refund claims through the e-VAT system.
If approved, the decision would end a special refund arrangement introduced in March 2023 and make the automated e-VAT platform the sole channel for VAT refunds for exporters in the jute and leather sectors.
"We have to process all VAT refunds through VAT returns only, through our e-VAT system. Claimants will receive the refund in their designated bank accounts through IBAS++ after approval by the e-VAT system. No physical contact will be needed," Syed Mushfequr Rahman told the Financial Express.
Since VAT returns are submitted to VAT circles, all VAT refunds should be processed by the VAT commissionerates rather than DEDO, he said.
However, DEDO will continue to process refunds of customs duty and regulatory duty through manual verification until the system is automated under the NBR's Strengthening Revenue Mobilisation Project (SRMP), he added.
A senior customs official said there are legal complexities surrounding the refund process because DEDO does not have access to VAT returns required to assess refund claims.
He said ambiguities between the VAT Act and the VAT Rules also prevent DEDO from processing VAT refund claims.
Reza-e-Azam, Secretary General of the Bangladesh Jute Spinners Association (BJSA), said jute exporters have long-standing VAT refund claims pending. However, as jute exporters are exempt from paying VAT, many failed to submit nil VAT returns.
In such cases, he suggested that the NBR allow jute exporters to receive their previous refund claims through DEDO before shifting fully to the automated e-VAT system from 2026.
He, however, welcomed the move towards an automated refund system, saying it would minimise physical visits to tax offices and enable exporters to receive refunds more quickly.
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