The price of all essential commodities is expected to decline as the Finance Minister AHM Mustafa Kamal proposed zero percent import duty on all essential commodities with special focus on the health sector.
The minister proposed zero percent import duty on essential items like ICU machines, ventilators, emergency medical devices, lifesaving drugs and fertilizers, seeds, raw cotton along with some raw materials for certain industries.
The price of essential commodities that will be reduced in this year's budget are: face masks, hand gloves, medicines, gold, sugar, handicrafts, poultry, dairy, fishing equipment, detergents, surgical devices and ICU apparatus.
Finance Minister AHM Mustafa Kamal placed the budget worth Tk 5,68,000 crore for the fiscal year 2020-21 in the parliament on Thursday.
The Minister, while reading out the budget speech, said, “I propose existing 6 slabs of Customs Duty (0%, 1%, 5%, 10%, 15%, and 25%), 3% Regulatory Duty on goods having highest import duty, and existing 12 slabs of Supplementary Duty (10%, 20%, 30%, 45%, 60%, 100%, 150%, 200%, 250%, 300%, 350%, and 500%) on import stage to continue in FY 2020-21. Besides, existing 0 percent import duty will remain unchanged for importing essential commodities, fertilisers, seeds, lifesaving drugs and raw cotton along with raw materials for certain industries.”
In the budget, there was a proposal to waive VAT on certain products in the public interest or for the protection of local industries which can help in reducing prices of some specific products.
Among the products that are likely to see drop in prices are locally produced agricultural machines and their parts. Zero tax rate has been proposed to be unchanged for basic ingredients used in the agriculture sector, especially fertilizers, seeds and insecticides.
The Finance Minister presented sector-wise proposals on the basis of the essential items. He proposed to expand the existing concessionary duty benefit on the import of raw materials by the refrigerator and air conditioner compressor manufacturing industry to protect the domestic industry.
To ensure expansion and protection of the domestic shipbuilding industry, the budget for FY 2020-2021 proposed to withdraw the existing duty exemption on the importation of dredgers.
The Minister proposed to decrease the existing rate of customs duty on Linear Alkyl Benzene Sulphonic Acid (LABSA), one of the basic raw materials used by the detergent manufacturing industries.
He proposed to expand the tax benefit on sanitary napkin and diaper industry by decreasing the rate of customs duty on the import of raw material, textile backed sheet/ non-woven air through bonded (ADL).
According to the budget proposal, it has been proposed to reduce the duty on the import of photographic plates of plastic to promote the local plastic and packaging industry.
Another proposal is to reduce the duty on import of washing and cleaning agent for the paper industry.
The Finance Minister continued reading, “I propose to reduce the existing customs duty rate on the import of base oil, the main raw material of the lube-blending industry, to promote the local industries. In addition, the minimum value for base oil, lubricating oil and liquid paraffin has been proposed to be rationalized.”
The budget for FY 2020-2021 proposed to reduce the tax on imported farming machineries. The customs duty on roller chain, ball bearing, steering wheel parts (rim), blower for grain dryer, coated electrodes of base metal has been proposed to be reduced from 10 percent to one percent and the customs duty on tires and tubes has been proposed to be reduced from five percent to one percent.
To provide incentives to the emerging LPG cylinder and auto tank manufacturing industry, the Finance Minister proposed to extend concessionary tax benefits on several new raw materials and rationalize existing tax benefits.
“To combat the outbreak of the COVID-19, special notification has been issued as an interim mechanism before budget to exempt all import duties and taxes on coronavirus testing kits, masks and personal protective equipment (PPE) and on the raw materials required to locally produce hand sanitizers, masks and PPE,” said the Minister adding, “To further strengthen the health sector, I propose to reduce import duty on essential raw materials for locally producing autoclave machines used for sterilizing medical instruments,” Finance Minister AHM Mustafa Kamal read in his budget speech.
As a result, the prices of the import of face masks, PPEs, gloves, safety eye glasses, various chemical products and medical equipment will go down.
Tariffs and VAT have been waived on corona virus detection kits production raw materials, chemicals and equipment used for research. As a result, the price of these will also drop.
Prices can be reduced for hospital ICU, CCU and other equipment used in emergency medical services. To encourage emergency ambulance services, VAT on all related equipment may be waived.
In order to attract more local companies for research and production of ventilators, special tariffs and VAT exemptions have been included in the budget. So the prices of these products will go down.
Advance tax on locally produced small scale industrial raw materials have been reduced. As a result, prices of small industrial products will go down. Tariff exemptions could reduce the prices of poultry, dairy and fisheries and firefighting equipment.