VAT returns, payments to be submitted monthly again; businesses not happy

The government has backtracked on its decision introduced in the latest budget to allow VAT returns and payments to be submitted every three months instead of every month.

Under the revised decision, businesses will once again have to submit VAT returns and pay the applicable VAT to the government treasury every month.

The Cabinet approved the amendment at its meeting today (28 September), according to a press release issued by the Prime Minister's Office (PMO).

Business leaders reacted to the decision, saying submitting VAT returns every month is a hassle for businesses.

According to National Board of Revenue (NBR) sources, the decision to allow VAT returns and payments to be submitted every three months had affected revenue collection. Following a letter from the NBR, the government reviewed the matter and decided to restore the previous system of monthly VAT return submission.

"Following the Cabinet's decision, VAT returns will have to be submitted, and payable VAT will have to be paid every month as under the previous system," a senior official of the NBR's VAT wing told The Business Standard, requesting anonymity.

He said, "The decision to submit VAT returns every three months has slowed down the pace of VAT collection."

According to NBR sources, VAT collection fell by around 20% in July and August in FY27 compared with the same period of the previous fiscal year.

The PMO press release said, "The provision requiring the submission of returns within no more than 15 days after the completion of every three tax periods has been replaced by the provision requiring the submission of returns within 15 days after the end of each tax period."

'Regressive and ill-considered decision'

Businesspeople had welcomed the decision to allow VAT returns and payments to be submitted every three months, as they viewed it as a positive step towards improving the ease of doing business. At the same time, it would have helped reduce the cost of doing business.

Business leaders say submitting VAT returns every month is a hassle for small businesses. They have to incur additional costs to prepare the necessary documents and communicate with VAT offices.

Allowing businesses to submit returns every three months would have reduced these hassles and given them more time to make the necessary preparations.

But with the return to monthly filing, the previous complexities will come back, they opined.

Taskeen Ahmed, president of Dhaka Chamber of Commerce and Industry (DCCI), told TBS, "The government's decision to revert to monthly VAT return submission, after declaring quarterly submission, is deeply disappointing of the commitment made to the business community."

"This is a regressive and ill-considered decision that will significantly increase compliance burdens, administrative costs and operational pressure on businesses, particularly SMEs," he added.

Taskeen further noted that such policy inconsistency undermines business confidence and makes the business environment harder and more unpredictable.

He also urged the government to reconsider this decision immediately and uphold its earlier commitment to quarterly VAT return submission.