Staff Reporter :
Finance Minister Abul Hassan Mahmood Ali has unveiled the proposed budget for the fiscal year 2024-25, suggesting various adjustments in duties and taxes. These changes are expected to lead to potential price hikes for several products.
Local Freeze and AC
Nearly 90 percent of refrigerators and freezers sold in the markets are produced in Bangladesh, with a number of local brands alongside foreign companies. The finance minister proposed an increase in the value-added tax (VAT) on locally manufactured refrigerators from 5 percent to 7.5 percent. Additionally, VAT on locally produced air conditioners has been set at 7.5 percent.
It was also proposed to increase duties on foreign compressors and other components used in manufacturing air conditioners and refrigerators. Consequently, prices of refrigerators and air conditioners are likely to rise.
Cigarettes and Tobacco Products
Following the trend of previous years, the finance minister has proposed a hike in the supplementary duty on cigarettes, bidis, and other tobacco products at their manufacturing stage. This is likely to drive up retail prices of these products.
Motorcycles
The budget proposed a 10 percent import duty on various parts for motorcycles with an engine capacity above 250 cc. Additionally, the import duty on some related products has been raised from 5 percent to 15 percent. Hence, motorcycles with high engine capacity are likely to see a price increase.
Imported Water Filters
To protect domestic manufacturers, the import duty on foreign water filters has been proposed to be increased from 10 percent to 15 percent. This is expected to raise the cost of imported water filters.
Electric Bulbs
The budget proposed a 10 percent duty on materials used in the production of LED and energy-saving bulbs. Moreover, VAT on energy-saving bulbs and tube lights has been increased from 10 percent to 15 percent. Consequently, electric bulbs are likely to become more expensive in the next fiscal year.
Imported Fish
A 15 percent VAT and a 5 percent advance income tax have been proposed for imported fish such as mackerel, aligning its tax with that of sardines. As a result, imported fish is likely to become more expensive.
Soft Drinks and Beverages
The transaction tax on carbonated drink and beverage companies has been increased from 0.6 percent to 3 percent. Simultaneously, the supplementary duty on soft drinks has been raised by 5 percent to 30 percent. Therefore, these products are expected to become pricier in the next fiscal year.
Mango Bar, Juice, Ice Cream
VAT on locally produced mango bars, mango juice, pineapple juice, guava juice, and tamarind juice has surged from 5 percent to 15 percent. Additionally, the supplementary duty on ice cream has doubled from 5 percent to 10 percent, likely resulting in price increases.
Mobile Talk Time, SIM Cards
The supplementary duty on mobile phone services is proposed to rise by 5 percent, raising the total tax on these services to over 39 percent. This will increase the cost of phone conversations and internet usage. The supplementary duty on e-SIMs is also set to rise from Tk 100 to Tk 300.
Medical Expenses
Specialized hospitals previously enjoyed a 1 percent duty on importing medical devices and equipment. The budget has proposed increasing this rate to 10 percent for over 200 devices and machinery, raising healthcare costs.
Entertainment Services
The VAT on amusement parks and theme parks is set to double to 15 percent, likely making travel and entertainment more expensive.
Engine Oil
Currently, synthetic lubricating oil is increasingly being used in different automobiles, including hybrid cars and other modern machinery. Due to the high price in the international market and difficulties in customs valuation, the finance minister proposed to set the minimum value at $5,000. Additionally, to align the value of furnace oil with the international market price, he proposed to fix the minimum value for furnace oil at $480 per metric ton (MT).
Bricks
Taxes on bricks have been increased at different levels, likely resulting in higher prices for this construction material.
Other Products
Customs duty on some other products, including industrial raw materials, has been increased in the proposed budget. Additionally, the zero-duty importation facility has been completely withdrawn. Consequently, imported switches, sockets, and holders are likely to experience price hikes in the local market. To address the issue of under-declared values, the finance minister proposed to increase the minimum value of complete switches, complete sockets, and their parts. While the import duty on raw materials used for manufacturing switches, sockets, and holders has been reduced from 5 percent to 1 percent, a 15 percent VAT has been imposed.