The government has lowered the proposed income tax on export receipts in the face of opposition by exporters and retained the opportunities for legalising undisclosed money as the Finance Bill 2012 was passed in the parliament on Wednesday.
The government also scrapped the proposal for additional tax on mobiles considering 70 million mobile users especially from low-income groups.
The lowest ceiling of tax-free income of individuals was increased to Tk 2,00,000 from the earlier Tk 1,80,000 but the minimum tax limit was increased to Tk 3,000 from the earlier Tk 2,000 as the bill was passed after being placed by the finance minister, Abul Maal Abdul Muhith, amid a boycott of the current session by the
main opposition Bangladesh Nationalist Party.
The finance minister told the parliament that the tax at source on export receipts would be lowered to 0.8 per cent from the proposed 1.2 per cent.
He had proposed the same rate of tax on exporters in the outgoing financial year of 2011–12 but it was set at 0.6 per cent.
Muhith said that the opportunity for legalising undisclosed money at a penalty of 10 per cent had been retained for some sectors despite widespread criticism of the provision by different quarters. The sectors were not specified.
Many believe that allowing a blanket facility to holders of undisclosed money was politically motivated in view of the next general elections, scheduled for January 2014.
Earlier, the prime minister, Sheikh Hasina, in her speech asked the finance minister to consider at least half a dozen proposals in the finance bill.
Her proposals include lowering income tax at source on export, waiver of 2 per cent additional tax on mobiles, keeping cottage industries having an annual turnover less than Tk 40,00,000 out of the tax purview.
Muhith, in response, said that the value-added tax on businesses having less than Tk 70,00,000 in annual trade would be collected through a package system instead of the proposed turnover basis.
He scrapped his proposal for mandatory taxpayer’s identification number for account holders having Tk 1,00,000 in investment. He also announced that 10 per cent tax on interest of life insurance was waived.
He said that he had allowed the aluminium industries to enjoy a tax break by withdrawing the proposal for bringing the industries industry under the tax net and waived 5 per cent regulatory duty on cold, rolled sheet.
He said that saving certificate was made attractive for the next financial year as the government targeted to fetch a substantial amount of fund from non-bank sources.
Muhith said that budget implementation would be easier for him if the targeted foreign loans from the lender and donor agencies could be made available by improving the loan utilisation facility.
He proposed the national budget for the 2012–13 financial year with a total outlay of Tk 1,91,738 crore and placed the Finance Bill 2012 in the parliament on June 7.
The outlay has a deficit of Tk 52,608 crore or 5 per cent of the projected Tk 10,41,360 crore gross domestic product.
He projected a 7.2 per cent growth in the gross domestic product and a 7.5 per cent inflation in the new financial year.
In the 2011–12 financial year, the GDP grew by 6.2 per cent while the inflation hovered around double digits.
The finance minister said that he still hoped that the GDP growth in the outgoing financial year would be close to 7 per cent.
It has been projected that Tk 1,39, 670 crore will be generated in revenue.
Muhith said that he would rely heavily on domestic sources such as bank borrowings and saving instruments to collect the projected Tk 33,484 crore to make up for the deficit. The rest of the deficit or Tk 18,584 crore, will be taken from lender and donor agencies.
The budget proposal is scheduled for passage today.