Steel, rod get costlier

Steel products are set to become more expensive as the government has announced raising the Advance Income Tax (AIT) and value-added tax (VAT) by over 40% at the import and production stages — 20-23% at import and 20% at production — while scrapping the existing fixed import tariffs. 

Consumer rod prices are expected to go up to around Tk1,400 per tonne.

At present, the government collects a fixed import duty of Tk1,500 per tonne on imported steel scrap and Tk2,200 per tonne in VAT on billet and rod production, totalling Tk3,700. Under the hike, these will go up to Tk5,000 or more per tonne.

Industry insiders, however, argue that instead of increasing taxes, the government should consider a cut, as any hike under current conditions could be "disastrous" for the steel sector.

Sk Masadul Alam Masud, president of the Bangladesh Steel Mills Association, told The Business Standard, "Due to a slowdown in development projects and taka's devaluation, steel and rod prices have soared, causing nearly a 30% demand drop. If taxes are raised significantly, it would be disastrous for the sector."

"Such a sharp increase in VAT and AIT will drive up prices further, reducing consumer purchasing power. As a result, demand in the individual, private, and housing sectors would decline, putting the entire industry under renewed threat," he added.