Bangladesh : Rice procurement faces disruption due to 0.5pc source tax
Bangladesh’s rice procurement is slowing due to a 0.5% source tax on domestic purchases. While Boro paddy targets were exceeded, rice collection lags. Farmers, unfamiliar with tax deductions, are hesitant to sell. Officials propose extra procurement to stabilize prices and cut imports, but the tax remains in place.
Rice procurement activities across the country are facing disruptions following the imposition of a 0.5 per cent source tax on domestic rice procurement, according to an official document.
The document was placed in a recent meeting of the Food Planning and Monitoring Committee (FPMC) held at the Bangladesh Secretariat with Finance Adviser Dr Salehuddin Ahmed in the chair.
As per the meeting document, the target for Boro crop collection as paddy was 350,000 metric tonnes, while the collection as of July 15 was 3,76,942 tonnes, which means 108 per cent achievement.
The parboiled rice collection target was 1.4 million (14 lakh) metric tonnes, where the achievement within the stipulated time was 9,60,802 tonnes, which means 68.3 per cent of the target.
The target for Atap rice was 35,000 metric tonnes, while the collection was 27,908 tonnes, which means 79.4 per cent of the target.
The document mentioned that some 26,942 MT of paddy procurement has been achieved ahead of schedule, which is a record so far.
The Food Department has sent a proposal for the ex-post facto approval of the procurement of 26,942 MT of paddy in the current Boro season.
In the case of rice procurement, the target of 67.6 per cent parboiled rice and 78.2 per cent parboiled rice has been achieved till July 15, 2025.
“Rice procurement activities are being disrupted due to the imposition of a 0.5 per cent source tax on domestic procurement of rice,” the document stated.
Considering the potential demand for the distribution of 3.123 million (31.23 lakh) MT of rice in the food budget of the fiscal year 2025-26, it said that some more quantity of parboiled and parboiled rice can be procured from domestic sources in the ongoing Boro procurement 2025 season.
“This will help in ensuring a fair price of paddy and rice in the market. Besides, the quantity of rice imports will be reduced and foreign exchange will be saved,” it added.
The Food Department has proposed procuring 50,000 MT of Boro parboiled rice and 15,000 MT of Boro parboiled rice in the current season, as per the document.
In the current Boro procurement season 2025, permission may be given to procure 26,942 MT of paddy in addition to the target, the official document said, adding that the procurement of 50,000 MT of Boro parboiled rice and 15,000 MT of parboiled rice in the current season might be considered.
A top official of the Food Ministry mentioned that the target for rice collection is 1.4 million (14 lakh) metric tonnes, whereas some 950,000 metric tonnes have been collected.
“Hopefully, we will be able to reach the target. We will stop the process to procure the rice in the middle of August,” he said.
The Food Ministry official said the source tax is creating trouble for the field officials to procure rice.
He mentioned that usually the farmers who used to sell rice and paddy to the government system do not have any income tax file or do not know anything about income tax, tax at source, and others.
“When they see their total amount reduced in the name of source tax, they become frustrated and express unwillingness to sell their rice,” the official said.
When asked, he said that till now there is no move from the ministry to the Finance Ministry or the National Board of Revenue (NBR) to withdraw this source tax.
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Source : The Financial Express
