The National Board of Revenue (NBR) has forwarded a proposal to the finance ministry to reduce the tax at source tax on apparel exporters to 0.25 percent.
Following approval from the finance ministry it will go to law ministry and a notice will be issued after vetting.
A letter in this regard was given to NBR from the prime minister’s office. In the 2019-20 budget, source tax on garment was fixed at 1 percent, which means that if a garment owner exports products worth Tk100 then the source tax will be Tk 1. In the new system, this will fall to 0.25 paisa.
Reducing source taxes has become a norm of sorts. Earlier, on Jan 2, 2019, source tax for export income was brought down from 0.60 to 0.25.
When garment manufacturers requested the PM to reduce source tax, she made a promise.
In this regard, president of Bangladesh Garment Manufacturers’ Association, BGMEA, Rubana Huq, gave a letter to PM’s principal secretary Nazibur Rahman on Sept 12.
Then a letter was given to the chairman, NBR on Sept 22 last from the PM’s office.
A request was made to make the reduced source tax effective from Jul 1.
BGMEA president Rubana Huq, says: “We have many challenges and factories are closing down with falling orders; in such a state if the tax is fixed at 0.25 percent we will be able to reap the benefits.”
We also need support to stay alive; we wanted 5 percent cash incentive without any conditions but was given only 1 percent, she added.
Due to the fall in source tax, the revenue of around Tk 2 billion will be lost.