Business Report :
In a bid to keep several essential commodity prices lower in the holy month of Ramadan, the National Board of Revenue (NBR) has announced an exemption of Value Added Tax (VAT) on liquefied petroleum gas (LPG) and several essential goods, including biscuits, salt, mustard oil, and flour.
Additionally, certain insecticides used in agriculture have also been included in the VAT exemption list.
The exemption applies at different stages, with some products benefiting at the production level and others at the business level.
The NBR issued an official order in this regard yesterday which was released on Monday.
According to the order, VAT on rapeseed oil, colza seed oil, and canola oil at the production stage will remain exempt until 30 June. VAT on Mustard oil will also be exempt at the production stage but without any specified time limit.
Additionally, VAT exemption at the business level applies to domestically produced biscuits, salt, flour, semolina, chilli powder, coriander, turmeric, ginger, rice bran oil, sunflower oil, rapeseed oil, colza seed oil, canola oil, and lentils or pulse-based food grains.
The NBR has also granted VAT exemptions on LPG and natural gas at the business level under specific conditions. However, importers who sell directly to consumers will not be eligible for the exemption.
Previously, these products were subject to a 5 percent to 7.5 percent VAT at the trading stage.
A senior official of the National Board of Revenue (NBR), who was involved in the process, told media, “Those essential products already have VAT exemptions at the production stage. However, in some cases, VAT was imposed at the trading stage, which some traders were using as an excuse to destabilise the market.”
“In a bid to prevent anyone from destabilising the market under the pretext of VAT at the trading stage, the government has decided to exempt these products from VAT at that stage,” said the NBR official.
He further explained, “Currently, most supermarkets pay VAT at the standard rate of 15percent. Therefore, keeping an additional VAT at the trading stage for these products is not logical.
Moreover, traders, particularly those based in Old Dhaka, have been accused of hiking prices using this excuse. This measure has been introduced to address such issues.”
To avail of the VAT exemption, businesses must adhere to certain regulations, including VAT registration, issuing invoices, maintaining all types of registers, and submitting monthly VAT returns.
