FBCCI demands removal of tax at source for supply of essentials
With people bearing the brunt of heightened inflation, the country’s apex trade body yesterday urged the government to remove the source tax on the income from supply of essential commodities, including food grains, agricultural produce, and other essentials such as edible oil and sugar to contain prices from the next fiscal year.
“There is a provision to collect tax on agricultural products at the supply stage, which increases prices of consumer goods,” said Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
He made the proposal at the consultative committee meeting jointly organised by the National Board of Revenue (NBR) and the FBCCI at the Pan Pacific Sonargaon Dhaka.
At the meeting, the FBCCI placed tax related proposals to the NBR for consideration on behalf of businesses for the fiscal year 2024-25.
The apex trade body said at present, 2 percent tax at source is applicable on the supply of items such as rice, wheat, potato, onion, garlic, chickpeas, lentils, turmeric, pepper, maize, flour, flour, salt, edible oil, sugar, and all kinds of fruits among other items.
Such products should be exempt from taxes, Alam added.
Taking into consideration the current inflation and the real incomes of low-income individuals, the FBCCI president recommended that the tax-free income limit for individuals be increased by Tk 1 lakh to Tk 4.50 lakh and to fix it at Tk 5 lakh for senior citizens and women.
He further said there are currently about one crore TIN holders, but only around 35 lakh file income tax returns regularly.
He recommended setting up income tax offices at the upazila level to increase government revenue and bolster the tax-GDP ratio.
He also proposed to reduce the rate of tax at source to 0.50 percent from 1 percent for all export items, including garments, and continue it for the next five years.
Besides, he proposed reducing the income tax rate on cash incentives to 5 percent from 10 percent.
Considering tax at source as minimum tax, the effective tax rate for non-listed companies stands at around 50 percent although the current corporate tax rate for them is 27.5 percent, he said.
“There is no scope to reinvest and run business smoothly after paying about 50 percent of income as tax,” he noted.
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