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Applicable Area of VAT
From the very inception, BAT was applicable on most of the goods
and a few numbers ofservices at the rate of 15%. It was imposed by
placing the Sales Tax (chargeable at
different rates at import stage) and the excise duty (chargeable
at different rates on
locally produced goods and rendered services) and the Business
Turnover Tax (
chargeable at a rate of 2% on some local small units)
Under VAT Act Supplementary Duty (SD) at a small rate is
applicable on some goods andservices (SECTION 7)
Under VAT Act and Rules a Turnover Tax (TT) at a rate of 2% was
introduced on actualturnover goods and services not exceeding tk.
500000. Later on, the rate was upgraded
to 4%. Now at 3%, if the yearly turnover is not over 70 lac.
(Rule 4)
At the early stage some high revenue yielding goods like
cigarette, biri, natural gas,petroleum produces etc were kept under
the Excise Duty System to avoid the revenue
risks
Tax base was broadened time to time by bringing some new goods
and new servicesunder the VAT Network. The list of exemptions is
being shortened every year. (SECTION
14)
VAT Levi-able on (area of Applicability):
All exports, deemed exports, all goods under the H.S
Nomenclature exception thefollowing: (Section 3, 8)
o All exports, deemed exports and foods for consumption outside
Bangladesh andother Goods supplied to an outgoing conveyance
o All goods under Second Schedule of Narcotic Control Act, 1990,
incase ofmanufacturing in Bangladesh
o Goods described under the First Schedule of the VAT Act, such
as: Live Animals,meat, fish, fresh milk, unprocessed agricultural
products, natural sands, rough
timber, raw milk, cocoon, raw wool, raw cotton, raw jute etc
o Goods and services under the turnover Tax VAT is applicable on
all services excepting the services described under the Second
Schedule of the VAT Act, such as:
o Basic services to live on, personal services, social welfare
services, medical andhealth services given by the private sector,
library, museum, art gallery, zoo,
botanical garden, transmission of Radio, TV (excepting other
commercial
activities), taking deposit and savings by Bank and Financial
Organizations, life
insurance policy savings, SEC, Transportation of passenger
(without AC) and
goods, Air Lines (excepting the farm rents chartered plane and
helicopter),
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religious activities, postal services (excepting courier and
express mail services),
all charitable and scientific service activities provided for
public interest,
stevedoring and hand operated laundry and cleaning activities
(except services
provided in hotel and mechanized laundry etc)
Services under First Schedule (Part 2) of the Excises and Salt
Act, Such as: Servicesrendered by Bank or financial institute and
services rendered by airline.
TAX EXCEMTIONS FOR COTTAGE INDUSTRIES
Goods produced by the cottage industries are exempted from VAT
and SD under some
conditions mentioned below as per the SRO no.
169-Law/2003/376-VAT, dated 12 June, 2003
issued under section 14 (1) of VAT Act.
Conditions:
For the purpose of the SRO, Cottage industries means:
It should not be a joint stock company Its invested capital for
plant, machinery and equipment at any time in the year should
not be over 25 lack Taka
Its annual turnover should not be more than BDT 40
lacsProcedure:
Fulfilling the above SRO conditions the manufacturer of VAT
payable goods exce[pting the goods under
the negative list will app;y to the commissioner of VAT in form
mushak-6 with a declaration in form-
ka. After enquiring into the matter, if the commissioner is
confirmed that the applicant has fulfilled the
conditions as per the SRO then he will direct the divisional
officer of VAT to enlist as a cottage industry.
Then the divisional officer of VAT will enlist it as a cottage
industry tin form mushak-8. The enlisted
person will maintain accounts of transaction in form-kha and tat
the time of supplying the goods, he wil
always issue a cash memo mentioning the enlistment amount.
Negative List for Cottage Benefits:
Palm Oil (All Sorts), coconut oil (All Sorts) CDSO, Soya Bean
oil Tea, lozenge, biscuit, chanachur Juice, energy drink, mineral
water All types of cigarette, biri, zarda, gul Antiseptic,
disinfectant, medicine Paints, pigments, Varnishes, polishes
Perfume, water used in cosmetics, cosmetics Sun screen or sun tan
materials, hair items Toothpaste and like items
