Cigarette, pharmaceuticals and telecom services made a significant contribution to the government’s revenue collection efforts during the first three quarters of the current fiscal year. Cigarette industry was the largest contributor.
The sectors made the achievement despite the disruptions being caused by the Covid pandemic to the country’s economy.
According to the NBR officials, VAT collection from large taxpayers grew by 9.17 per cent in the first three quarters of the current fiscal year (FY), 2020-21.
Taxpayers under the Large Taxpayers Unit (LTU) under the VAT subdivision contributed to the growth in revenue collection in the July-March period of the FY’21.
LTU commissioner Wahida Rahman Chowdhury said the unit has been able to maintain an upward growth of VAT collection from large taxpayers despite the pandemic.
She also said the change in policy measure on reduction of VAT on spectrum and other fees to 7.5 per cent helped the government realise revenue without engaging in any dispute with the mobile phone operators.
“We have received additional Tk 1.0 billion VAT in the current FY because of the change in VAT measure.”
Moreover, VAT collection of the unit witnessed a 15 per cent growth in the month of March alone compared to that of the same period last year, as per official data.
The unit collected Tk 30.40 billion more VAT until March, than that of the previous FY. Out of the total amount, VAT collection from cigarette companies stood at Tk 27 billion in March alone.
However, an increase in the price of cigarettes and a hike in Supplementary Duty (SD) levied in the budget also helped to collect higher revenue from the cigarette sector.
Price of low-tier cigarettes increased by Tk 2.0 in the budget, while it’s SD rose to 57 per cent from 55 per cent.
On the other hand, tax and price slab of medium-tier cigarettes remained unchanged, while prices for high-tier and premium quality increased by Tk 4.0 and Tk 5.0 respectively.
As the use of mobile phones surged significantly in this pandemic, revenue collection from mobile phone operators increased to Tk 8.0 billion.
Pharmaceutical companies also paid higher VAT in the first three quarters, officials said.
Besides, it seemed that the Covid pandemic forced people to purchase more pharmaceutical items and safety gears, causing an increase in revenue of pharmaceutical companies.
Again, LTU commissioner recommends that the National Board of Revenue (NBR) should revise the cigarette-dependent tax policy.
A holistic approach in revenue collection, rather than the existing piecemeal type, is required to collect higher revenue, she added.
According to provisional data, the LTU collected an aggregate amount of VAT worth Tk 362.09 billion against its target of Tk 469.32 billion.
However, the LTU acquired a record growth in the first three quarters of this FY compared to that of the same period in the last three FYs.
Until March of FY 2018-19 and FY 2019-20, the unit achieved 1.36 per cent and 1.54 per cent growth respectively.
Although overall revenue collection of the NBR posted a negative growth in some of the months of the current FY, the LTU’s VAT collection maintained an upward trend during the first nine months.