VAT refund if import reaches Tk1 lakh

Businessmen will get the VAT refund if their taxable import payment reaches Tk1 lakh.  

The National Board of Revenue (NBR) will make the refund as per the VAT and Supplementary Duty Act 2012.

The refund will be applicable on products and services under 15 percent VAT regime, according to the new VAT law effective from July 1 this year. But it will not be available for the remaining seven stages of VAT. 

The Finance Division has not accepted the VAT refund fund proposed in the current fiscal year's budget, according to a special directive from Internal Resources Division (IRD) circulated on Thursday.

However, importers can claim refund through the existing economic code. 

Refund refers to input tax credit. Businesses can reduce their tax liabilities by claiming credit to the extent of tax paid on goods and services during purchases.

"To refund input tax, the new Budget and Accounting Classification Systems, (BACS) has been introduced," said Md Tariq Hassan, second secretary to the NBR's VAT policy. 

"If goods are imported through opening of Letter of Credits for domestic use, input tax refund will be available," he added.

According to the new law, businessmen can take refunds from the field-level customs, excise and vat commissionerate offices. 

According to the VAT law-1991, businessmen could ask for VAT refunds within six months of export.

The refund included VAT payment for raw materials used in production, product import duty and VAT paid on gas and electricity bills. Businessmen had to apply for refunds through the Duty Exemption and Drawback Office (DEDO).

But due to the manual VAT collection process, businessmen had to face hassles in getting the refund even after submitting applications.

Exporters got refund worth Tk103 crore in fiscal year 2017-18, Tk96 crore in fiscal year 2015-16, Tk114 crore in fiscal year 2014-15 and Tk108 crore in fiscal year 2013-14.