Education, hygiene goods may get costlier; biscuit, cake cheaper

The government is likely to levy higher VAT on educational essentials, including ball pen, and hygiene products, including toilet and facial tissue and napkin, in the upcoming FY24 budget.

This will put consumers under more strain when it comes to maintaining hygiene amidst soaring inflation and economic headwinds. Besides, low-income parents will face difficulties in providing educational materials for their children.

Currently, there is no VAT on pen production. But in the FY24 budget, the government may impose a 15 per cent VAT on it.

The government may also increase VAT to 7.5 per cent from the existing 5 per cent on toilet tissue, napkin, facial or pocket tissue, and paper and kitchen towel, said finance ministry sources involved in budget formulation.

Meanwhile, the government plans to halve VAT on sweet to 7.5 per cent from the existing 15 per cent. Besides, handmade cake and biscuit producers are likely to continue enjoying much lower VAT.

The National Board of Revenue (NBR) is considering an extension of the VAT waiver enjoyed by cake and biscuit producers with more facilities amidst the sharp rise in raw material prices. In FY24, it may increase the zero VAT facility for per kg handmade biscuit production with a value of up to Tk 200, up from Tk 150, and for handmade cake with a value of up to Tk 300, up from Tk 250.

Plastic and aluminium-made table and cookware, among others, are likely to be costlier due to an increase in taxes in the next fiscal year while sweet makers may enjoy lower VAT, according to finance ministry officials involved in formulating the upcoming budget.

Moreover, the government may hike VAT on polypropylene staple fibre, plastic tableware and kitchenware, and aluminium kitchenware as these industries have enjoyed tax facilities and gained strength over the past few years, said ministry officials.

Polypropylene staple fibre manufacturers are now enjoying reduced VAT, but the government may impose a 5 per cent VAT at the production stage in the upcoming budget, while VAT on local plastic tableware and kitchenware as well as aluminium kitchenware is expected to be cut to 7.5 per cent from the existing 5 per cent, officials added.

Sweet as well as handmade cake and biscuit are potential sectors and there is a huge scope to raise income taxes by bringing these businesses under the tax net, finance ministry sources say.

Lower VAT may even help boost business, officials hope, adding some sweet and bakery companies evade taxes by concealing sales information. Most of the companies are still out of the VAT purview.