Bangladesh Textile Mills Association (BTMA) urged the government to set value-added tax (VAT) on all kinds of yarn at Tk3 per kilogram in the next national budget for the fiscal year 2022-23.
In the current budget, a miller has to pay Tk6 as VAT for a kilogram yarn made of manmade fiber and other fiber, where there is a higher presence of artificial fiber.
Meanwhile, the platform also wanted an extension of 15% income tax till 2026 in a bid to encourage investment.
Mohammad Ali Khokon president of the Bangladesh Textile Mills Association (BTMA) president made demands in the budget proposal for the fiscal year 2022-23 placed to the National Board of Revenue (NBR).
“In the recent years, different types of clothing products are being made of manmade fiber and recycled fiber at home and abroad. It is becoming more popular to consumers due to its comfort, fanciness and comparatively reasonable price Mohammad Ali Khokon.
Considering the present trend and the government’s priority of product diversification, the NBR should set VAT at Tk3 on yarn made of manmade fiber and recycled fiber, said Ali.
The BTMA urged the government to withdraw 15% VAT and 5% advanced tax (AIT) on pet chips (textile grade), therapeutic acid and Ethelene glycol.
Besides, the organization also urged the government to keep the tax at the source at 0.5% and treat it as a final settlement to encourage new investment.
On top of that, BTMA demanded a withdrawal of a 2% tax on cotton purchases from local sources.
The platform of the primary textile sector also demanded to keep the income tax for the sector at 15% by 2026.
Despite having a favorable investment environment in the country with political stability, the private investment in the textile sector did not happen as expected.
On the other hand, investment is encouraged in the manmade fiber by the apparel makers due to the rise in demands of these products, said the proposal.
So, to encourage long-term investment, the government should increase the deadline of the existing income tax rate till 2026, it added.
Meanwhile, BTMA wants duty and tax-free imports of fiber including recycled fiber used in spin manufacturing.
As there is no scope of misuse, the textile millers called for imposing a 1% duty on imports of spare parts for the next budget, said the BTMA leader in the budget proposal.
Currently, the sector has to pay 26.2% to 104.68% import duty on spare parts used in textile mills. However, they have to pay a 1% duty on the import of capital machinery.