The construction industry is set to receive a big blow once the newly-imposed VAT and other taxes on steel industry comes into effect from the upcoming fiscal year (2019-20, said steel manufacturers.
“It’ll have a big impact on the overall development works in both the public and private sectors as steel contributes about 15-20 percent to overall cost,” Khorshed Alam, president of Bangladesh Association of Construction Industry (BACI), told UNB.
In the proposed national budget, industry insiders said, about Tk 10,350 incremental taxes were proposed as VAT and other taxes at various levels of production and steel sale for which the retail price of each metric ton (MR) of steel rod will go up to Tk 73,000-75,000 from the existing price of Tk 63,000-65,000.
About the taxes proposed for the steel industry, Bangladesh Steel Manufacturers’ Association (BSMA) said now Tk 1400/- per MT VAT is applicable on MS rod sales. Of this, Tk 300 VAT on scrap, Tk 450 fixed VAT on billet sales, Tk 450 on MS rod sales and Tk 200 VAT on retail sales.
But in the new budget, Tk 1,750 was proposed as VAT on crap, Tk 2000 as VAT on billet sales, Tk 2,000, fixed VAT on MS rod sales and Tk 3,300 on retail sales.
As a result, the overall cost will go up by Tk 7,650 per MT of steel rod, said Shekhor Ranjan Kar, chief of finance of BSRM Steel, the largest steel mills in the country.
BSMA leaders said they will have to pay another amount of Tk 4,650 as advance income tax (AIT) at different stages against the existing Tk 1,950 which means the additional expense will go up by Tk 2,700.
“So, in total, we’ve to pay an additional amount of Tk 10,350 per ton of steel rod,” said a top BSMA leader.
Khorsed Alam said the overall development works in both public and private sectors will see a slower growth due to a huge potential impact on construction material costs.
“It’ll deal a severe blow to the government contractors who’ve already won civil contraction contracts if they don’t have any cost adjustment provision. Otherwise, he said, they will face losses affecting works.
Founder president of Bangladesh Steel Mills Association (BASMA) Sheikh Masadul Alam Masud said the millers have already brought the tax and duty-related anomalies to the notice of the National Board of Revenue (NBR).
“If they don’t take any corrective measures to reduce the taxes, we’ll hold a press conference to make it public,” he added.