The Large Taxpayers Unit (LTU) saw a drop in revenue collection in the July-August period of the current fiscal year (FY), 2019-20. The revenue collection growth took a hit as two large sectors — gas and tobacco — have witnessed a decline of Tk17.63 billion in revenue receipts during the two months, compared to the same period of the last fiscal. Separately, the collection of value added tax (VAT) dropped 68.33 per cent in the gas sector and 16.42 per cent in the tobacco (cigarette) sector in the July-August of FY ’20. The Large Taxpayers Unit under the VAT wing has lost Tk 9.19 billion in revenue in the gas sector and Tk 8.44 billon in tobacco sector in the July-August period. The unit revealed the data and identified the reasons behind the revenue collection shortfall in a statement submitted to the National Board of Revenue (NBR) recently. The LTU saw the drop in revenue earnings to the tune of Tk 20.78 billion in July-August of the FY ’20 from six sectors, compared to that of the corresponding period of last fiscal. In the statement, the LTU listed the fall in revenue collection from gas and tobacco sector, excessive amount of refund and adjustment to Advance Tax (AT) as reasons for fall in revenue receipts. The VAT collection in the gas sector has declined mainly due to withdrawal of Supplementary Duty (SD) from this sector, it said. About tobacco sector, the unit said the supply of cigarettes, except the low-cost brands, fell by 18.41 per cent that affected the revenue collection. It also cited the increase of the slab-wise value in the budget as another reason behind the drop in the revenue collection from this sector. However, the supply of lower slab cigarettes increased by 1.15 billion sticks in the July-August period. The total tax incidence (TTI) and prices of other slabs of cigarettes are higher than that of the lower slabs of cigarettes, the LTU added. “Due to the increase in the slab-wise value, the prices of medium-tier of cigarettes are almost similar to the lower-tier ones,” it said in the statement. As a result, the SD of similar categories of cigarettes in medium segment has reduced by 10 per cent, it added. Despite the upward revision of segment-wise value in the budget, the net revenue collection from this sector has declined. SD is imposed on the prices of cigarettes. The LTU data show that some 7.23 billion sticks of cigarettes — including premium, high, medium and low segments — were sold in the first two months of FY 2018-19 but the figure dropped to 5.90 billion in the current FY. The sales of low segment cigarette have registered a 48.82 per cent growth while the same of medium segment cigarettes declined by 60.73 per cent. Sales of high and premium brand cigarettes also saw a negative growth at 14.95 per cent and 49.24 per cent respectively during July-August period of this year, the statement said. Explaining the reasons behind the decline in gas sector revenue, the unit said there was 93.24 per cent SD on gas sector, which has been exempted this year, resulting in a decline of Tk 7.76 billion in revenue collection in the first two months of FY ’20. Refund of the paid VAT against the import of Liquefied Natural Gas (LNG) and Tk 1.42 billion in revenue collection arrears in the same period of the previous year are also cited as reasons behind the decline in revenue collection. The unit anticipated a further blow to its revenue collection performances after the LNG importers would start claiming the AT after adjusting taxes in their VAT returns. Obtaining excessive refund to the tune of Tk 1.37 billion by the large companies and adjustment of AT worth Tk 1.70 billion in July-August period were also cited as the reasons behind the drop in the revenue collection. In the new VAT law, the government has extended the area of obtaining refund of the VAT paid by the businesses. Contacted over phone on Sunday, the LTU (VAT) commissioner Muhammad Mubinul Kabir declined to comment of the issue.
Source – Financial Express.
