July 23, 2024, 11:10 am

Budget 2024-25: What can be expected?

  • Update Time : Thursday, May 23, 2024
  • 23 Time View

TDS Desk:

The National Board of Revenue (NBR) has proposed a standard VAT rate of 15 percent for many goods and services in the upcoming fiscal year (FY) 2024-25 budget. While there is a proposal to apply this VAT rate uniformly across all products and services, the Prime Minister has advised a phased implementation. This would result in a 15 percent VAT rate from production to the consumer level, which could increase consumer prices.

Currently, the NBR collects VAT at rates of 2, 3, 5, 7.5, 10, and 15 percent on various products and services. Plans are in place to phase out VAT exemptions in some sectors, moving towards a uniform VAT rate, according to Ministry of Finance sources.

Changes in Mobile Phone Call Costs:

The Prime Minister has given a positive nod to a proposal to increase the supplementary duty on mobile phone calls to boost revenue collection. Currently, consumers can talk for minutes worth Tk 73 when they recharge their mobile by Tk 100, with the rest deducted as VAT and supplementary duties. If the supplementary duty is increased by 5 percent, consumers will be able to talk for minutes worthTk 69.35 out of Tk 100.

Duty on Car Imports by MPs:

Currently, MPs can import cars duty-free. However, the Prime Minister has agreed to cancel this benefit to reduce inequality. The proposed budget for FY 2024-25 includes a 25 percent supplementary duty and 15 percent VAT on car imports by MPs. Additionally, duties will be imposed on imported cars for hi-tech parks, which previously enjoyed duty-free benefits.

Baggage Rules Remain Unchanged:

Under current rules, a passenger can bring 117 grams of gold by paying a duty of Tk 4,000. The NBR proposed that this be limited to once a year, but the Prime Minister vetoed this. The tax will be collected each time gold is brought in, even if it exceeds once a year.

Corporate Tax Rates:

The NBR has decided to reduce corporate tax rates conditionally. The Prime Minister agreed to reduce taxes in non-listed industries in the productive sector from 27.5 percent to 25 percent. However, taxes in all other sectors will remain unchanged.

Tariff Benefits on Agricultural Imports:

The Prime Minister advised against increasing duties on the import of agricultural inputs and fertilizers, meaning the cost of importing these items will not increase.

Return Assessment:

To reduce taxpayer harassment and increase revenue collection, all taxpayers, both individuals and companies, will be required to submit returns through the self-assessment method in the next budget. This method avoids return assessments, which are currently required for individual taxpayers and optionally for companies. Major changes to the income tax law are expected in the next budget.

No Increase in Tax-Free Income Limit:

Despite rising inflation, the tax-free income limit for individuals will not increase in the upcoming budget. Last year, this limit was raised from Tk 3 lakh to Tk 3.5 lakh.

Increased Taxes for the Wealthy:

To increase revenue collection, the NBR plans to impose additional taxes on the wealthy. The top tax rate for individual taxpayers is set to rise from 25 percent to 30 percent for annual incomes exceeding Tk 16 lakh. There are also plans to reduce tax exemptions in various sectors and eliminate tax exemptions on capital income from stock market investments.

Revenue Collection Targets:

The proposed budget for FY 2024-25 sets a revenue collection target of Tk 4.80 lakh crore. The current budget set this target at Tk 4.30 lakh crore, later revised to Tk 4.10 lakh crore. (Source:UNB)

 

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