The government has reduced Value Added Tax (VAT) on domestic Liquefied Petroleum Gas (LPG) cylinder production from 15% to 5% - a drop of nearly 67%.
Officials of the VAT wing of the National Board of Revenue (NBR) said a Statutory Regulatory Order (SRO) was issued on September 24 waiving VAT on domestic production of iron and steel LPG cylinders.
According to the gazette notification, domestic cylinder manufacturers will avail this facility till June 30, 2021.
Officials expect that the waiver will lead to a drop in the consumer-end prices of iron and steel cylinders, widely used in the country by both households and businesses.
Local producers also benefit from VAT exemption on import of raw materials and different components of the cylinders.
Bashundhara Group, Omera, TK Group, and JMI Group are among the country's leading manufacturers of LPG cylinders.
In 2016, the government exempted VAT on import of iron and steel LPG cylinders. That facility expired in June this year.
The speedy depletion of natural resources has driven the government to discourage domestic consumption of piped natural gas in favour of bottled LP gas.
In the present scenario, domestic manufacturers can meet 30-35% of the total demand for cylinders, while the rest is imported.