Bangladesh News

Revenue earning from the construction sector increased sharply in the first three months of this fiscal year (FY) as whitening black money was allowed.

But earning from a major sector — power — decreased due to a fall in power generation.

This was found by analysing earning from income tax, value added tax (VAT) and import tax in the first three months of the current FY.

During July-September period of this FY, VAT collection from construction firms was 28.33 percent higher than that in the corresponding period of FY 2008-09.

In this year’s budget, whitening black money was allowed in different forms. The beneficiaries include those who would buy flats in the capital and other cities, and in these cases the NBR would not question the source of the money.

This led to a substantial rise in sale of flats and their prices, said sources in the National Board of Revenue (NBR), and Real Estate and Housing Association of Bangladesh.

The scope for whitening money did not however get good response from investment sector.

VAT collection in power sector this FY fell by 8.81 percent from 31.11 percent during the corresponding period of last FY.

In gas sector, VAT collection however increased by seven percent this FY from that last year.

About 30 percent of the total amount of VAT comes from this sector. Collection from this sector shot up by 23.11 this FY.

Due to expansion of cell phone companies, VAT collection from them increased by 22 percent in the first three months of this FY.

NBR sources said Aktel offered a special package that contributed to the increase in VAT collection but the trend might or might not continue.

Though VAT collection in edible oil sector increased by 23 percent this FY, collection from hotels and restaurants sector fell.

About 70 percent of income tax comes from tax-cut at sources. Income tax collection at sources from contractors and suppliers increased by only three percent this FY, which shot up by 50 percent in the first three months of last FY.

Implementation of ADP was slow both in this FY and last FY.

A major portion of tax at import level comes from supplementary duty on cars. A major feature of this year’s fiscal policy is to discourage import of luxury items by increasing tax on it.

The policy appears to have worked well. Growth of import duty on motor vehicles shot up by 10 percent during the first three months of this FY whereas during the corresponding period of last FY, growth was 23 percent.

Growth of overall revenue collection in the first three months of this FY was nine percent while the government’s target for the whole year is 16.13 per cent.