Finance Minister AHM Mustafa Kamal on Thursday unveiled a Taka 568,000 crore National Budget in the Parliament with an ambitious target of 8.2 per cent GDP growth.
Considering the economic fallout of the coronavirus, the Finance Minister proposed to continue 1 per cent additional cash incentive for apparel exports for fiscal year 2020-21 while proposing to increase source tax to 0.50 per cent from the current 0.25 per cent.
It may be mentioned here that for FY20, the source tax was initially set at 1 per cent before the Government through a statutory regulatory order decided to reduce the same to 0.25 per cent.
The continuance of 1 per cent additional cash incentive for apparel exports effectively means that the garment makers will continue to enjoy 5 per cent cash incentive for exports to all non-traditional export destinations.
Kamal also proposed to continue corporate tax for non-green units at 12 per cent and 10 per cent for green factories, for the next 2 years, which were set to expire on 30 June.
In the Budget, the Finance Minister has also sought to cut down import duty on products like industrial racking system and RFID tags from 25 to 15 per cent to promote RMG and textile industries.
The Finance Minister expressed hope that the stimulus package rolled out by the Government earlier and other incentives that are being offered to help counter the effects of COVID-19, will aid the garment manufacturing sector of the country to make a rebound.
The Minister also proposed VAT waiver on masks and PPEs, which have gained popularity in terms of exports from Bangladesh in last few months since the global outbreak of COVID-19.
Besides, to promote the domestic textile sector, the Finance Minister sought to replace the existing 5 per cent ad valorem VAT on polyester, rayon and all other synthetic yarn and introduce fixed value added tax rate of Taka 6 per kg for all these products.
The budget also proposed to reduce VAT on all kinds of cotton yarn from Taka 4 to Taka 3/kg, while also retaining the duty exemptions on imports of raw cotton.
In the budget, Kamal also proposed to rationalise provisions of bonded warehouse license rules so as to ensure proper utilisation of the bond facilities.
Following the presentation of the budget, the garment manufacturers’ bodies in the country have reportedly thanked the Government for providing zero import duty on cotton, VAT rebate on import of RFID tags, industrial rake, continuance of 1 per cent extra incentive on apparel exports, waiver of VAT on mask and PPE production, etc.
The President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Dr. Rubana Huq, however, reportedly requested the Government to reinstate the source tax rate from the proposed 0.50 per cent to the earlier 0.25 per cent.
The apex garment makers’ body also reportedly requested the Government to consider exempting the RMG sector from filing returns on locally procured goods and services and VAT.