VAT waiver likely on cotton waste, jhut collections

Business Desk :
The government is likely to offer tax benefits to local textile spinning mills on collection of cotton waste and jhut (clips) for production of recycled fibre in the upcoming budget for FY24.
Currently, there is a 15% VAT on supply and sales of cotton and jhuts. The government may propose a 7.5% VAT waiver at the supply stage in the budget, sources said.
Industry insiders said the partial waiver may not help the sector flourish and tap the potentials.
Finance Minister AHM Mustafa Kamal may propose the waiver while placing the budget for FY24 on Thursday.
The government may also phase out tax benefits on two sectors — ballpoint pen manufacturing and software development and customization — and likely impose 15% and 5% tax respectively.
The specific duty on imports of clinker for cement manufacturing might go up for both industrial and commercial importers while tax benefit on import of construction materials for hotels may be scrapped.
VAT might be imposed on non-fortified basmati rice imports. Imports of sandwich panels might also be costlier.
The tax benefit on blender, juicer, pressure cooker, washing machine, microwave oven, electric oven, ICT and computer, active pharmaceutical ingredients, refrigerator, sanitary napkin, diaper, soap, shampoo, biscuit, and cattle feed would be widened and extended.
From the upcoming FY, businesses would not be able to claim tax rebate on purchase of vehicles as inputs. Production of artificial fibre, optical fibre cable, medicine for malaria, tuberculosis and aircraft lease rent would enjoy tax benefit.