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Bangladesh - 1 week ago

Tk 6 tr mega budget to be announced today with fear and possibility

Golam Mostafa Jibon: As the whole world is facing devastation due to the deadly clutch of corona pandemic, the Finance Minister AHM Mustafa Kamal is however going to present the mega budget of Tk 6 trillion for the new Fiscal Year (FY) 2021-22 at the National Parliament today with much fear and possibility.
Sources said, people of the country are now worried about their livelihood as worst recession is prevailing in the history of trade and commerce following the corona pandemic.
In this situation, everyone is looking for what the message of relief will be given by the finance minister?
In such a situation, the budget has been prepared by giving priority to agriculture, food, health and employment. However, the finance minister said, this year’s budget will be the entire livelihood budget. This budget will be given for the purpose of protecting the life and livelihood of the people. There will also be additional allocations for health care. Meanwhile, the finance minister has desired to end his budget speech by reading out a ‘Doa’ with a view to get rid from the ongoing corona pandemic.
In addition, the production, marketing and consumption of goods has declined and will decrease further in the future due to the global epidemic of corona.
That is why, the Prime Minister Sheikh Hasina and Finance Minister AHM Mustafa Kamal have kept a special eye on the economy with new strategies.
In this budget, there will be an initiative to coordinate both the life and livelihood. There is no alternative to increasing agricultural production to sustain the country’s economic growth amid the epidemic.
As a result, after the protection of public health and increase in employment, the agricultural sector is being given highly importance in the budget of the next FY 2021-22 as third priority.
In addition, importance will be given on agricultural mechanization, fertilizer, seed subsidy and necessary inputs to increase food production. Besides, farmers will be trained throughout the year to use these inputs and gain a better understanding of modern agriculture. For this, separate allocation will be kept in the national budget. According to the sources, the national budget for the next FY 2021-22 will try to provide relief to the common people during the coronavirus epidemic.
In order to keep the prices of almost all products produced and widely used in the country within reach, huge discounts will be given on revenue of the domestic industry.
On the other hand, in order to encourage the production of some products including computers in the country, higher tariffs are being imposed on the importation of those products.
However, duty exemption will be given on agricultural machinery and health care products to ensure the food security and protect the public health.
The initiative can help to reduce the prices of those agricultural and medical products. However, the upcoming budget is also going to announce imposition of additional tax on bidis, cigarettes and other tobacco products like previous period. In addition, the corporate tax rate may be reduced to facilitate trade and commerce.
Officials from the finance department and NBR, which are involved in the preparation of the budget said, some steps would be taken in the budget so that consumer prices do not fall. Now, the supply of money in the hands of people is less. As a result, some changes will be brought in the tariff structure so that the prices of rice, pulses, sugar, salt, paste, locally produced bread, soap, bottled water, fruit juice, spices and other processed foods will not increase again.
Besides, the price of foreign toys will go up, but the price of domestic toys will go down due to tax exemption and imposition of duty on imported such products.
Assembled motorcycles of the country will be available at a lower price than the fully imported motorcycles. The price of imported computers may go up. The price of computers produced in the country may come down.
Finance Minister AHM Mustafa Kamal said, “The next budget will be a budget of livelihood, which has prepared keeping the health protection matter in mind. Besides, some new initiatives will be taken in the budget for the people who have become unemployed due to the ongoing epidemic for a year. At the same time, the budget will have plans for various initiatives at the public-private level to create new jobs. For this, the budget allocation of this sector will be increased to sustain small and medium small businesses and industries. Similarly, policy support will be given to revive this sector.”
NBR sources said, tax exemptions will be given in some sectors. This will reduce costs in system integration, e-learning platforms, e-book publishing, mobile application development services and freelancing.
In addition to the tax exemption facility, the costs of software development, digital content development and management, digital animation development, website development, website service, IT process outsourcing, website hosting, digital graphics design, software lab test services, call center services, overseas medical transcripts services, search engine optimization services, document conversion, robotics process outsourcing and cyber security services will not increase.
Attempts are being made to reduce the price of imported medical equipment with revenue waiver facility in the next financial year.
In particular, all types of duty-exemptions are being offered for the import of 46 types of products including hand sanitizer making materials, masks and Personal Protective Equipments.
Attempts have also been taken to reduce costs in the two sectors by waiving the import of equipments used in ICU and ventilation of hospitals.
There is no duty on the import of two types of corona test kits and diagnostic equipment.
In addition, the price of some products including three-tier surgical masks, plastic face shields, surgical clothing, special oven suits, medical protective gear, safety goggles and disinfectants will reduce due to giving concession in revenue, NBR sources said.
Advance tax (IT) rate at the import stage will be reduced to make the existing VAT Act, 2012 more business-friendly and up-to-date. Both VAT evasion fines and simple interest are being waived. The advance tax rate is being increased from 4 percent to 3 percent. Both the VAT evasion penalty and the simple interest rate are being rationalized to facilitate trade.
At present, there is a provision to levy double penalty for evading VAT. In the next budget, it will be reduced and a penalty equal to VAT evasion will be provided.
Apart from this, if VAT is not paid on time, there is a provision of simple interest at the rate of 2 percent per month as per VAT law. It could be one percent of the budget.
On the other hand, emphasis has given on budget monitoring to increase VAT collection. The VAT Act is being amended to provide for the submission of annual financial statements of businesses with returns.
For this, a new section is being added in the law. Currently there is no need to submit financial statements. The law is being amended to impose a one-year financial statement within the first six months (tax period) of the following year.
The coverage of social security programs for the poor and needy people will be increased. For this, Tk 150,000 crore is being allocated in this sector. This is about 10,000 crore more than the budget of FY 2020-21. In the current budget, Tk 95,000 crore has been allocated for this sector. Besides, subsidies will also be increased in the coming budget. In the FY 2020-21, a budget of Tk 38,646 crore was allocated for this sector, while around Tk 10, 385 crore was allocated for incentives.
In the coming 2021-22 budget, about Tk 49,000 crore may be allocated in the subsidy sector and incentive sector.
According to the Ministry of Finance, a maximum subsidy of Tk 9,500 crore is being given to the agricultural sector in the forthcoming budget of FY 2021-22.
The power sector is in the second position in subsidy. Subsidy allocation in this sector is Tk 9,000 crore. Natural Liquefied Natural Gas (LNG) subsidy is Tk 8,500 crore. The government is allocating Tk 7,350 crore next year for subsidies in the export sector. Besides, Tk 6,000 crore in food, Tk 4,000 crore in remittances, Tk 2,000 crore in interest payment of incentive package loans and a minimum subsidy of Tk 500 crore are being given to the jute sector.
Apart from this, all other sectors have been allocated Tk 1,060 crore for subsidies and incentives.
The main priority in the forthcoming budget will be to ensure the allocation of necessary funds in the priority sectors to combat the outbreak of COVID-19. For this, special attention will be given to health, agriculture, social welfare, food, disaster management and job creation. There is a fund of Tk 10,000 crore in the next budget to curb the corona pandemic. 10 thousand crore has been allocated in this sector in the current budget.
Finance department officials yesterday said, the finance minister’s budget speech has been finalized. Now being last minute rubbed. The Minister of Finance will conclude his speech reciting a Doa-’Allahumma inni aujubika minal barsi wal jununi wal jujami wa min chaiyyi il askam’.

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