Tax on mobile bill withdrawn : Muhith also raises tax-free income ...

Staff Correspondent

In a major change in the next year?s budget, the government yesterday withdrew the proposed 2 percent tax deduction at source on post-paid and pre-paid mobile phone bills.

It also increased the tax-free income limit of an individual taxpayer to Tk 2 lakh from Tk 1.80 lakh.

However, Finance Minister AMA Muhith kept the minimum individual tax at Tk 3,000 that was Tk 2,000 in the outgoing fiscal year, considering the rise in growth and per capita income.

The ?Finance Bill 2012? was passed in the House yesterday with some major changes.

The tax-free income limit for female taxpayers over 65 years of age has been revised to Tk 2.25 lakh from proposed Tk 2 lakh, while the limit for physically challenged individuals was increased to Tk 2.75 lakh from Tk 2.50 lakh.

The changes came after Prime Minister Sheikh Hasina in her concluding speech on the budget asked the finance minister to consider making revisions to the proposed budget.

?How can we talk if tax is imposed on conversation over mobile phones?? said Hasina referring to the finance minister?s proposal to impose tax on mobile bills.

The government also revised tax at source on export receipts downward to 0.8 percent in the face of opposition from the business community. The tax was increased to 1.2 percent from 0.6 percent in the proposed budget for the next fiscal year.

The finance minister had also proposed increasing tax at source on bank interests to 15 percent for those without tax identification number (TIN) from current 10 percent, a uniform rate for all account holders with or without TIN.

Muhith retained the proposal, but gave some relief to small savers following worries that tax hike on interest incomes of bank-account holders without TIN will hurt small savers.

Now a bank account holder will not need any TIN if he or she has Tk 100,000 in his or her account and the account is a savings account.

The minister withdrew the proposed 10 percent tax at source for premiums in case of life insurance.

The minister imposed 100 percent supplementary duties on imported cars ranging between 1,501cc and 1,750cc, and 150 percent duties on imported cars between 1,751cc and 2,000cc.

The minister retained the package value added tax system for shop-owners with an annual turnover below Tk 70 lakh. The VAT rates, however, have been raised by 50 percent.

Shop-owners in Dhaka and Chittagong city corporations will have to pay Tk 9,000 as VAT, which is now Tk 6,000.

VAT for shop-owners will be Tk 7,200 against existing Tk 4,800 in other city corporations, Tk 5,400 against present Tk 3,600 in district and municipalities, and Tk 2,700 instead of Tk 1,800 in other parts of the country.

Businesses with annual turnover of less than Tk 40 lakh will remain out of the VAT net, said Muhith.

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