Staff Reporter :
The National Board of Revenue (NBR) has reduced value-added tax (VAT) on biscuits and cakes by half, following the demands from processed food manufacturers, reducing it from 15 percent to 7.5 percent, according to an order issued on Thursday.
On 9 January, the interim government had tripled VAT on processed food, including biscuits and cakes, raising it from 5 percent to 1 percent.
Despite the new statutory regulatory order (SRO), consumers will still pay 2.5 percent more in VAT compared to what they paid before the January hike.
A senior NBR official said that under the 5 percent VAT rate in the fiscal year 2023-24, the NBR collected approximately Tk300 crore from biscuits and cakes.
Based on calculations, the hike to 15 percent could have generated an additional Tk600 crore in revenue, the official added.
However, despite the reduction, the official expressed hope that the revenue authority will still manage to collect an additional Tk150 crore in the current fiscal year (FY25).
The official further said, “Processed food manufacturers demanded a reduction to the previous rate of VAT, as the hike would significantly impact low-income people. Considering the situation, the government made this decision.”
Industry insiders said that 80-90 percent of the demand for biscuits is produced in the country.
There is a high demand for packets of biscuits priced at 5, 10 and 15 taka in the market and people with limited incomes eat these biscuits more.
If the price of these biscuits increases due to the increase in VAT, people with limited incomes will be the most affected. That is why they have been demanding the withdrawal of VAT on biscuits and cakes.
