Amid the ongoing high inflation in the country, the interim government increased the value added tax (VAT) and supplementary duties on hundreds of products and services, including hotels, restaurants, telephones, internet, drugs, soft drinks, cigarettes, etc.
Two new ordinances were issued on Thursday night (January 9) increasing VAT and supplementary duty (SD) on these goods and services.
In the middle of the current financial year 2024-25, the cost of these goods and services will increase due to an unexpected increase in VAT and supplementary duty. For example, increasing the supplementary duty on mobile phone services will increase the cost of talking and internet usage. If you go to eat at a restaurant, the cost will increase. Additional cost will be added in buying clothes.
The two newly issued ordinances are – The Customs and Supplementary Duties (Amendment) Ordinance-2025 and The Excise and Salt (Amendment) Ordinance-2025.
After the publication of these two ordinances by the government, the VAT department of the National Board of Revenue (NBR) has issued instructions in this regard. As a result, the changes in the Ordinance became effective immediately. That is, additional VAT and supplementary duties have come into force.
It is learned that the organization plans to increase and rationalize VAT on some goods and services in compliance with International Monetary Fund (IFM) conditions. In continuation of this, the proposal to increase the VAT, supplementary duty of NBR was passed in the meeting of the advisory council of the interim government on January 1. It has been issued in the form of an ordinance after the approval of the Chief Adviser and the President subject to the opinion of the Law Ministry. As there is no national parliament, the government has decided to increase the customs and taxes through an ordinance.
VAT increased at business level
VAT has been increased from 5% to 7.5% at the local business level, and 3% from 2.4% at the local business level in the case of medicines. However, VAT of 2 percent has been abolished at the local dealer level of LP gas.
VAT has been increased on goods and services
Kitchen towels, toilet tissues, napkin tissues, facial tissues, hand towels, sunglasses, non-AC hotels, confectionery stores, institutional purchases, own-brand ready-made clothing showrooms or shops – VAT on these goods and services has increased from 7.5 percent. 15 percent. Electric Poles, Motor Vehicle Garages and Workshops, Dockyards, Printing Presses, Film Studios, Film Exhibitions (Cinema Halls), Film Distributors, Repairs and Servicing, Automatic or Mechanical Sawmills, Sports Organisers, Transport Contractors, Board Meeting Providers, Tailoring Shops and Tailors, VAT increased from 10 percent to 15 percent on services provided by building maintenance organizations, social and sports clubs etc.
Also Potato Flakes, Corn, Machine Made Biscuits, Handmade Biscuits, Pickles, Chutneys, Tomato Paste or Tomato Ketchup or Sauce, Mango, Pineapple, Guava and Banana Pulp, Tamarind Paste, Transformer Oil, Lubricant Oil, LP Gas, Imported Bulk Petroleum Bitumen, Laminated Driving License from BRTA, Hard Rock, Ferro-Manganese and Ferro-Silico Manganese, Ferro Silicon Alloy, HR Coil to CR Coil, CR Coil to GP Sheet, GI Wire, 5 KVA to 2000 KVA Electrical Transformers, Plastic Eyeglass Frames, Metal Eyeglass Frames, Reading Glass, Coconut Shells In mattresses made from VAT on these products has been increased from 5 percent to 15 percent. In addition, VAT for restaurants is set at 5 percent to 15 percent, VAT for inventing companies is set at 5 percent to 15 percent.
The price of cigarettes will increase
The ordinance has increased the price and duty of cigarettes by four levels. At the lower level, the price of 10-pack cigarettes has been increased from Tk 50 to Tk 60. The applicable supplementary duty has been increased from 60 percent to 67 percent. The middle tier has been increased from Tk 70 to Tk 80 and supplementary duty has been increased from 65.5 percent to 67 percent. At the higher level, the duty has been increased from Tk 120 to Tk 140 and the supplementary duty has been increased from 65.5 percent to 67 percent. The premium price has been increased from Tk 160 to Tk 185 and the supplementary duty has been increased from 65.5 percent to 67 percent. Apart from this, additional duty of 10 percent has been imposed on limestone and dolomite.
Taxes also increased in business establishments
Businesses currently have to pay tax on their annual turnover ranging from Tk 50 lakh to Tk 3 crore. According to the new rules, turnover tax can be paid if it is Tk 30 lakh to 50 lakh. 15% VAT will be payable on the sale of goods and services if the annual turnover is Tk 50 lakh. The existing 20 percent supplementary duty on liquor bill has been increased to 30 percent. Apart from this, supplementary duty has been increased on several goods and services at import, production and service levels. For example, the supplementary duty on fruit juice at the import level has been increased from 20 percent to 30 percent; Copper 60 to 100 percent; It has been increased from 30 to 45 percent in betel nut.
Air ticket prices will increase
Excise duty on airline tickets has not been increased for several years. In most cases one has to go abroad not under compulsion, sometimes for work, sometimes for travel. As a result, the excise duty on air tickets needs to be increased. Not just increase, rationalization in some cases is proposed. For that reason, the NBR report has proposed amendments to the 'The Excise and Salt Act-1944'. According to the report, excise duty at the rate of Tk 500 has to be paid on domestic routes and flight tickets of SAARC countries. To rationalize it, domestic routes are being increased by 200 taka to 700 taka and in SAARC countries it is doubled to 1000 taka. Apart from this, it is being increased from 2000 taka to 2500 taka in Asian countries and 4000 taka from 3000 taka in European countries. Increase in excise duty may increase ticket prices.
Supplementary duty has increased at the import level
Betel nuts increased from 30 percent to 45 percent, pine nuts from 20 to 30, fresh or dried betel nuts from 30 to 45 percent. Besides mangoes, oranges, lemons, grapes, lemons, papayas, watermelons, apples and pears, fruit juices, vegetable juices, tobacco, paints, polymers, varnishes and lacquers, soaps and soap products, detergents, fruit drinks, artificial or flavored drinks and electrolyte drinks (carbonated and non-carbonated), tobacco cigarettes etc. Supplementary duty has been increased from 5 to 15 percent.
Supplementary duty is increased at the supply stage
Supplementary duty has been increased from 20 per cent to 30 per cent on hotel or bar bills where alcohol or alcoholic beverages are served. Similarly, in the case of restaurants, if liquor or liquor-like products are supplied, the supplementary duty on the bill has been increased from 20 percent to 30 percent. Mobile phone SIM card has been increased from 20 percent to 23 percent. For the first time, supplementary duty has been imposed on Internet Service Providers (ISPs). In this case 10 percent supplementary duty has to be paid.
