7.5% VAT cut on sweets likely in FY24

The government is eying a 7.5 per cent VAT cut on sweets from the existing 15 per cent at selling stage in the upcoming budget for fiscal year 2023-34 (FY24) in a bid to widen the tax net and curb tax evasion.

This is a potential sector and there is a huge scope to raise income tax by bringing sweet businesses under the tax net, finance ministry sources say.

Some sweet companies evade tax by concealing sales information. Most of them are still out of VAT purview, officials said, adding that they expect the tax net to expand if the VAT is cut.

The National Board of Revenue (NBR) officials said the revenue collection is increasing day by day from the sector due to the local offices’ relentless efforts to bring them under scanner. However, there is still a huge opportunity to increase revenue from the sector, they added.

NBR member (VAT implementation and IT) Moinul Khan in a recent meeting with VAT commissionerates said the revenue collection grew to around 54 per cent within a few months after implementing the NBR’s directive on special monitoring in the sweet sector.

The department, on June 22 last year, instructed VAT commissionerates to increase monitoring of the sector to collect more revenue and follow-up the progress during the implementation as per the directive.

It also found that the revenue collection was up by 162 per cent in VAT Commissionerate, Jashore, 136 per cent in VAT Commissionerate, Sylhet, and 115 per cent in Vat Commissionerate, Cumilla.

During his meeting with the commissionerates, Moinul Khan said the scenario proved more monitoring can increase more revenue and it is possible to achieve the desired target through the scanning of sales of the sweet companies.

He instructed VAT Commissionerate, Chattogram to raise monitoring as the commissionerate saw 20 per cent rise during the period though there are well-known sweet companies including Flavors, Well Food, Dulce Cakes and Sweets, Banoful Sweet, Modhubon sweets and others located in the port city.

Besides, he directed Vat Commissionerate, Cumilla and Vat Commissionerate, Mymensingh to boost revenue from the sector by special monitoring.