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Savings certificates' proposed tax may go

Govt may lower duty on cars too

Rejaul Karim Byron
The government may withdraw the proposal for increase of tax on savings certificates, advance income tax at import level and on lower cylinder capacity cars in the face of criticism from different quarters including ministers.
Finance ministry sources said yesterday they are now reviewing the budget proposals on the basis of the reactions received. And a final decision in this regard may be taken and announced in the Jatiya Sangsad in a couple of days.
The proposed budget for next fiscal year seeks to increase advance income tax to five percent from three percent now on all com-
mercial imports except capital machinery, raw materials and essential items. It would mean increase of tax on about 3,000 commodities at customs point.
Business leaders have already said the brunt of the tax increase would fall on the consumers as prices of goods would go up. The National Board of Revenue (NBR) is learnt to have been considering lowering the tax hike to four percent instead of the proposed five percent.
At present, there is no tax on profit up to Tk 1.5 lakh on savings instruments. If the profit crosses Tk 1.5 lakh, tax at a rate of 10 percent is imposed on it.
In the proposed budget, the provision of up to Tk 1.5 lakh tax-free profit has been withdrawn, and imposition of tax on the whole amount of profit has been proposed.
On the other hand, the government has decided to lower the rate of interest on the existing savings instruments by 1 to 1.5 percentage point from the next fiscalyear.
The tax proposals have triggered criticism from different quarters.
Even Agriculture Minister Mada Chowdhury on Saturday criticised the proposed tax hike on the profit of savings instruments.
Against this backdrop, NBR sources said the government is now contemplating withdrawal of the proposal to bring under tax net the profit of up to Tk 1.5 lakh on the savings instruments.
The proposed budget seeks to raise supplementary duty on vehicles of 1001 to 1500 cc to 45 percent from 30 percent now. But it seeks to lower supplementary duty on vehicles of 1501 to 1650 cc to 45 percent from lOOpercent.
Questions have been raised about the rationale behind such proposals. At a budget discussion recently, former governor of Bangladesh Bank Mohammad Farash Uddin said it is beyond his comprehension why the supplementary duty on cars used by the rich people will
be cut, and on those used by the middle income group will be increased.
NBR sources said reducing the rate of proposed tax on vehicles used by lower income group peopleisbeingconsidered.
Besides, a number of reforms regarding Value Added Tax (Vat) have been made to increase tax collection. Raising advance trade Vat at import level to 3 percent from 2.25 percent has been proposed. By withdrawing truncated vat facility on about 12 commodities, it has been proposed to impose 15 percent Vsat. And increase of Vat on coconut oil, juice, sugar and incense has been proposed.
The proposals are being reviewed, NBR sources said.