The government plans to reduce duty benefits in several sectors – which are enjoying a reduced duty or import-free facility for their expansion, the country’s economic boosting and employment generation – to make industries competitive ahead of LDC graduation and alignment with the International Monetary Fund’s (IMF) recommendation.
With this move, the government through the upcoming national budget for FY2024-25 may impose a higher duty, reduce tax benefits and in some cases, it may repeal or amend the previous provisions and SROs, according to finance ministry officials involved in the preparation of the budget.
Power generation companies, including Rampalpower plant, members of parliaments (MPs), establishments in economic zones and hi-tech parks, industrial raw material importers and referral hospitals may see a higher duty on their imports.
However, such a move may hurt industries and establishments that have already invested in special areas. It may also reduce further foreign direct investments (FDIs) at a time when the country requires more to combat the ongoing economic strain.
Power cos may see 5% duty
Various power generation companies and power plants, including Rampal power plant, Matarbari Coal-fired power plant, and rental power companies, now enjoy a zero per cent duty on the import of plant, equipment and erection materials, which is likely to increase to 5 per cent.
To this end, the government is going to issue an SRO and this reduced facility will end in June 2028.
Vehicle isn’t capital equipment
At present, industries import vehicles as capital equipment under a concessional facility provided to industrial plants for the development of industrialisation. In the upcoming fiscal year, the provision may be amended.
The government may include some necessary equipment needed for industries and exclude vehicles as these are not really capital machinery but are included in the existing notification.
1% duty on industrial raw material imports
To end the culture of tax evasion at all levels, the government may recommend fixing import duty (CD) at 1 per cent instead of the existing 0 per cent.
Besides, the government may also propose to delete from this notification some products that are not actually raw materials of industry but are included in the existing notification.
Prefabricated building materials
Currently, there is an import duty of 5 per cent on various types of components used in the construction of prefabricated buildings. In FY25, the government may propose to raise the import duty to 10 per cent.
Besides, the self-tapping screw product is mentioned in the relevant notification table. But as this type of screw is a consumable product, the government may propose to exclude it from the notification.
Operating CNG, LPG filling stations
Import of CNG conversion kits, cylinders and other machinery and equipment for setting up and operating CNG or LPG filling stations may become costlier from the upcoming fiscal year.
Currently, there is a 3 per cent import duty. The government may propose to increase it to 5 per cent.
EZs industries see higher duty on vehicles
Establishments situated in economic zones can currently import vehicles and capital machinery under concessional or exemption facilities at zero duty.
From FY25, these establishments may become subject to pay or clear all duties other than import duty like other citizens of the country.
Besides, import duty on capital components and construction materials may be fixed at 1 per cent, and import of goods used in development by the developer of the economic zones, instead of the existing zero per cent.
Hi-tech park developers to see 5% duty
At the country's hi-tech parks, establishments can now import capital parts and construction materials at zero per cent duty, but it may be fixed at 1 per cent in FY25.
However, in case of import of goods used in development work by the developers of the hi-tech park, the duty may increase to 5 per cent from the existing zero per cent.
Besides, there is currently zero per cent import duty on vehicle imports by companies located in hi-tech parks but in that case, import duties may get exempted and all other duties may get imposed.
25% import duty on MPs’ vehicles
The government plans to reduce the existing exemption of all types of customs taxes on the import of cars by MPs.
In that case, the government is going to propose an import duty of 25 per cent on vehicle imports and continue the exemption of all other duties and taxes.
For this purpose, the government also plans to repeal the existing notification from 2010 and issue a fresh notification.
Energy-saving lamp makers may see 10% duty
LED lamps and energy-saving lamp manufacturers can now import their materials at zero per cent import duty.
But the government is going to take their existing duty break away by imposing a 10 per cent import duty on materials specified in the relevant import notification.
At the same time, the government may recommend that some of the products mentioned in the existing notification be excluded from this notification of import of materials as they are mainly intermediate or fully prepared products.
The period of validity of reduced duty benefit notification may be specified as this is to keep it in force till June 2026.
Higher referral hospital costs
Healthcare expenditure of patients — who rely frequently on high-end hospitals for advanced, international-level treatment facilities — may rise from FY25 as import duties on treatment machinery and equipment are likely to witness a significant increase.
Such healthcare facilities are currently enjoying import facility of treatment machinery and equipment at 1 per cent, and they do not have to clear any other duty, VAT or supplementary duty. However, the import duty may rise to 10 per cent from FY25.
AC, refrigerator manufacturers to see 15% duty
Currently, air-conditioner (AC) manufacturing companies can import compressors at subsidised rates as per the existing notification. However, as low-income people do not use ACs, the government is going to recommend withdrawing the reduced rate on its import duty.
Apart from this, at present, compressors required for the production of refrigerators are produced in the country. That’s why the government may recommend the withdrawal of compressors from the existing notification for industrial establishments.
Regarding AC manufacturing companies for revenue collection, the government in FY25 plans to increase the import duty of various types of steel sheets mentioned in the relevant notification to 10 per cent from 5 per cent.
Also, the government plans to amend the same notification by increasing the import duty on those products from 10 per cent to 15 per cent.
Meanwhile, generator assembling and manufacturing companies may become subject to 1 per cent import duty, instead of the existing zero per cent, on their raw materials specified in the relevant import notification.
