VAT collection in Q1 up

Collection of Value Added Tax (VAT) witnessed a 15 per cent growth in the month of March alone compared to that of the corresponding month last year though overall revenue collection posted a negative growth in the current fiscal year 2020-21 (FY21).

In the first three quarters of FY21, VAT collection from large taxpayers grew by 9.17 per cent, according to the latest data of National Board of Revenue (NBR).

Until March, the LTU collected Tk 30.40 billion more VAT than that of the previous (FY20). Three sectors - cigarette, pharmaceuticals and mobile phone - made an impressive contribution to revenue collection efforts of the NBR during the first three quarters of FY21 despite Covid-19 pandemic.

Taxpayers under the Large Taxpayers Unit (LTU) under the VAT wing contributed to the growth in revenue collection in July-March period of the FY21.

Until March, the unit collected Tk 30.40 billion more VAT than that of the previous fiscal (FY20).

Cigarette industry was the largest contributor, as usual as the NBR collected Tk 27 billion in VAT from cigarette companies in March alone.

Revenue collection from mobile phone operators also increased to Tk 8.0 billion, as use of mobile phone surged significantly in this pandemic.

Pharmaceutical companies also paid higher VAT in the first three quarters, NBR officials said.

"LTU has been able to maintain an upward growth of VAT collection from large taxpayers despite the Covid-19 pandemic," said LTU commissioner Wahida Rahman Chowdhury.

She said the change in policy measure on reduction of VAT on spectrum and other fees to 7.5 per cent helped the government realize revenue without engaging in any dispute with the mobile phone operators.

"We've received additional Tk 1.0 billion VAT in FY21 because of the change in VAT measure," she added.

Some major sectors and entities, including large posh hotels, were facing severe blow to survive in the pandemic.

VAT collection from hotels and restaurants declined significantly during the last one year due to the outbreak of Covid-19.

However, increase in price of cigarettes and hike in Supplementary Duty (SD) levied in the budget also helped to collect higher revenue from cigarette sector.

Price of low-tier cigarettes increased by Tk 2.0 in the budget, while SD on cigar rose to 57 per cent from 55 per cent, according to the NBR.

On the other hand, tax and price slab of medium-tier cigarette remained unchanged, while prices for high-tier and premium quality increased by Tk 4.0 and Tk 5.0 respectively.

According to a 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 achieved a record growth in the first three quarters of this FY compared to that of the same period in last three FYs.

Until March of FY19 and FY20, the unit achieved 1.36 per cent and 1.54 per cent growth respectively.