Glimpse of 2017-18 financial year Budget

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MNA Editorial Desk: Finance Minister unveiled Tk 400,266 crore national budget for 2017-18 financial year (FY18) at the National Parliament. The budget speech began at about 1:30pm on Thursday.

This giant budget includes allocating two festival allowances of Tk 10,000 each for the valiant freedom fighters in addition to their monthly honorarium.

Besides Muhith in his speech said “GDP growth rate will be 7.4 percent in 2017-18 and inflation will come down to 5.5 percent by the end of the fiscal year.”

Multilateral lending agencies, like the World Bank, ADB and IMF, however, projected the GDP to grow by less than 6 percent in the outgoing fiscal year.

The value-added tax has been a matter of much controversy as businesses implored the government to lower the proposed rate.

“I think I will be able to satisfy the business community by increasing the existing turnover tax and VAT exemption threshold,” Muhith said about VAT.

He proposed raising the annual turnover threshold, exempting businesses with a turnover up to Tk 3.6 million.

The finance minister also put forward a proposal to raise the registration threshold, allowing businesses with annual turnover up to Tk 15 million to pay 4 percent in VAT.

VAT exemptions were also proposed for primary food items, public transport, public health and medical services, education and training. VAT exemptions for agriculture, livestock and fisheries will be maintained.

The incorporation of structural changes proposed by the business community has been a ‘milestone’ in the tax’s implementation, Muhith also said.

However, the minimum individual income tax exemption limit has been retained at Tk 250,000 for the financial year of 2017-18.

In his budget proposals, the finance minister also kept the minimum tax at Tk 3,000 for taxpayers all over the country except for those living in areas under city corporations.

The minimum amount of tax has been proposed at Tk 5,000 for those living in Dhaka and Chittagong, and Tk 4,000 for those living in other cities.

For persons with disability the ceiling has been proposed at Tk 400,000 instead of existing Tk 375,000 and it has remained Tk 425,000 for war-wounded gazetted freedom fighters.

The tax rate is 10 per cent on the next Tk 400,000 above Tk 250,000, 15 per cent on the next 500,000, 20 per cent on the next 600,000 and 25 per cent on the next Tk 3,000,000, according to the finance minister’s proposal.

People having deposits in the banks or travelling abroad by air are likely to pay more in future as the finance minister has proposed to increase of excise duty on bank deposits and double duty on air tickets.

“With a view to collecting more revenue from this sector, I am proposing the following changes to be implemented in The Excise and Salt Act, 1944,” said Muhith.

“I am proposing not to impose any Excise Duty on the accounts where the balance, whether debit or credit, does not exceed the limit of Tk 1 lakh at any point of time during a year.”

“However, I am proposing to impose Tk 800 Excise Duty instead of existing Tk 500 in cases where the balance, whether debit or credit, exceeds Tk 1 lakh but does not exceed the limit of Tk 10 lakh.

“Similarly, Tk 2,500 will be imposed instead of existing Tk 1,500 in cases where the balance exceeds Tk 10 lakh but does not exceed the limit of Tk 1 crore; Tk 12,000 will be imposed instead of existing Tk 7,500 in cases where the balance exceeds Tk 1 crore but does not exceed the limit of Tk 5 crore and Tk 25,000 will be imposed instead of existing Tk 15,000 in cases where the balance exceeds Tk 5 crore,” said the finance minister.

“In addition, I am proposing to revise the existing Excise Duty on airline tickets as follow, except for domestic travels and travel to the SAARC countries which I propose to keep the same as present,”

He proposed Tk 2,000 Excise Duty on airline tickets instead of existing Tk 1,000 for travel to any Asian countries except the SAARC ones and Tk 3,000 Excise duty on airline tickets instead of existing Tk 1,500 for travel to Europe, USA and other countries of the world.

In order to avoid any inconvenience of travellers, this Excise Duty will be collected at the time of purchasing air tickets, said the minister.