Today, the finance minister will propose a budget of Tk 6 lakh 3 thousand 81 crore for the fiscal year 2021-22. Even if the budget is big, the income is less, so there will be more loans.
The whole environment of the last budget proposal was different due to the Corona epidemic, but this time it is the same. Finance Minister AHM Mustafa Kamal could not have imagined that he would have to enter the National Assembly again after examining the corona, disinfecting both his hands and finally putting a mask on his face.
This time too the finance minister will enter the parliament with a briefcase in compliance with all kinds of health rules. Today, on Thursday, Mustafa Kamal will present a budget proposal of Tk 6 lakh 3 thousand 81 crore for the next 2021-22 financial year. However, due to the Corona situation, this time the resources are less, so the borrowing is more.
In the current financial year, the National Board of Revenue (NBR) was responsible for collecting revenue of Tk 3 lakh 30 thousand crore. Knowing that it is not possible, it has reduced the target to Tk 3 lakh 1 thousand crore. But the company has collected 1 lakh 96 thousand 573 crore rupees in 10 months (July-April). 1 lakh 3 thousand 417 crore less than the revised target, which is to be raised in May and June – two months. The task is difficult.
With this weakness in the source of income, the budget is traditionally being increased. However, the finance minister is not giving additional targets to the NBR for the next financial year. It is being kept equal to the original target of the current financial year. According to finance department sources, in the next budget, the finance minister will propose to increase the monthly honorarium for heroic freedom fighters from 12,000 to 20,000. Apart from this, there will be talk of increasing the coverage of old age allowance and allowance for distressed women. Thinking of Corona in the current financial year, just as a special fund of Rs 10,000 crore was set up, there will be a similar fund in the next financial year. However, if there is a sudden need, the finance minister can announce a separate fund of Tk 5,000 crore so that the government can spend.
Rising costs and borrowings
But you have to spend. As the years go by, the pressure of increasing non-development expenditure comes. There is an increase in the salaries and allowances of government employees, there is also the interest expense of domestic and foreign loans. In the next financial year, the interest on the loan will have to pay 69 thousand crore rupees. In addition, there are development costs for the implementation of large projects. Again, due to Corona, the big spending on protection materials, from testing kits to vaccines, will continue in the next financial year as it did in the current financial year.
The finance minister further told Prothom Alo on Tuesday that he was budgeting for all sections of the society. It will be a life saving budget on the one hand, and a livelihood budget on the other. His budget is for everyone from marginalized people to businessmen and industrialists. Everyone will have a stake in it.
From which sources will the finance minister collect money to run the next financial year? According to the sources of the finance department, in the next financial year, about 2 lakh 15 thousand crore rupees will be borrowed from home and abroad. Of this, the target for taking low interest foreign loans is close to Tk 1 lakh crore. However, Tk 32,000 crore will be borrowed from the sale of high interest savings certificates. The target for borrowing from domestic banks is around Tk 6,000 crore.
As much discount for traders
In the next financial year, there will be more tax exemptions. There is good news for traders. Various tax exemptions are being given to keep the trade and business strong by cutting the corona. Big discounts are coming from corporates. The tax rate of a company not listed on the stock exchange may be reduced by two and a half per cent to 30 per cent. The tax rate of listed companies may also be reduced by 2.5 per cent to 22.5 per cent.
Besides, the tax rate of a single person company is being fixed at 25 percent. Mobile phone operators, cigarette manufacturers, banks — the high corporate tax rates in these sectors are unlikely to change. However, if a certain number of workers (at least 100 or 5 per cent of the manpower) are recruited from the backward communities including converted men and women, Vedas and Adivasis, 5 per cent discount can be given by corporate.
If the annual turnover of an organization is more than three crore rupees, it has to pay 50 percent tax on turnover irrespective of profit and loss. It can be reduced to 25 percent. Discounts may also be available for new entrepreneurs. The first three years of their business start-up may be taxed at 10 percent source, regardless of profit or loss.
On the other hand, the advance tax (advance VAT) on imports of manufacturing companies may be reduced by 1 per cent to 3 per cent to increase the cash supply of business entities during the coronation period. The amount of fine is being reduced if the VAT return is not given on time. It is learned that the interest rate on VAT money is being reduced from 2 percent to 1 percent.
Black money opportunities are being limited in the next budget. Stock market, land, cash, FDR-savings and other black money opportunities are being stopped. However, besides buying flats, black money opportunities will continue to be invested in economic zones and high-tech parks. However, the tax-free income limit of individual taxpayers is the same as before.
There will be good news for small and medium women entrepreneurs. At present, small and medium entrepreneurs, both men and women, do not have to pay any tax if their annual turnover is less than Tk 5 million. For women entrepreneurs, this limit may be increased to Rs 60 lakh.
New sector in tax vacation facilities
New sectors are being added to the tax holiday facility. Investment in hospital-clinics is coming under the tax holiday facility. If any entrepreneur builds a hospital outside the capital Dhaka, Chittagong, Narayanganj and Gazipur and the divisional city, he will get 10 years tax leave.
In addition to agricultural processing, fruit processing; Milk production; The dairy products and farm equipment manufacturing sector is also going to get tax holiday benefits for 10 years. Apart from this, if you set up a factory to make household electronic products such as AC, fridge, TV, washing machine, electric sewing machine, you will also get tax holiday benefits.
Five new service sectors in the IT sector are also being brought under the tax exemption facility. These are cloud services, system integration, e-learning platforms, e-book publishing, mobile application development services and freelancing.
Imposing some obligation
In addition to tax exemptions, in some cases the tax burden may also increase. The surcharge of such super-rich is increasing. If the assets are more than Tk 50 crore, 35 percent surcharge of income tax may be imposed.
At present the VAT payer does not have to file a return as well as a financial statement. The budget for the next financial year may be amended in this regard. Submission of one year financial report to the VAT office within six months may be made mandatory.
However, other levels of surcharge are being kept unchanged. Now a taxpayer can get a tax rebate of 25 per cent of his annual income or a maximum of Rs 1.5 crore. This maximum limit of individual investment may be brought down to one crore rupees. Profits from investing in sukuk bonds may be tax-exempt.
Again, if the income from fish farming is more than 30 lakh, the tax rate will increase. This rate may be 15 percent. At present, there is no need to pay income tax up to Tk 10 lakh from this sector. Provision may be made to pay 5 per cent tax from Tk 10 lakh to 20 lakh and 10 per cent tax from Tk 20 lakh to 30 lakh.
In addition, 5 percent advance income tax may be levied on the import of vegetables and fruits. If this tax is imposed, the cost of importing fruits may increase.
If up to 1800 cc cars are manufactured in the country, VAT-free facility for import of machinery is being extended till 2026. Similarly, VAT exemption on imports of raw materials for mobile phones, sanitary napkins and diapers has been extended for another two years till June 2023.
It is learned that the finance minister will end his budget speech with a surah of the Holy Quran. The part of the surah that will be mentioned means, ‘O Allah, I seek refuge in You from whiteness, insanity, leprosy and all kinds of incurable diseases.’