Reduced allocation for mega-projects will raise costs: FICCI
The Foreign Investors' Chamber of Commerce and Industry (FICCI) expressed concern about the reduction in funding for key megaprojects, claiming that it will slow implementation and raise the overall cost of the project.
FICCI suggests concentrating on enhancing the quality of spending instead of reducing the allocation for mega-projects. The chamber hopes that it could bring further efficiency as well as generate employment.
The organisation also expresses concern about bridging the deficit from banking sources, which may tighten the liquidity situation.
FICCI thanks Prime Minister Shiekh Hasina and Finance Minister AHM Mustafa Kamal for taking FICCI's suggestions into account when forming the current budget, reads a press release.
The chamber feels that the GDP growth target of 7.5% is achievable, among other things, the GDP investment ratio increases to the expected level.
The organisation appreciated the government's initiative to increase the budget allocation in the health, education, agriculture, food, and fisheries sectors.
The allocation will have a significant positive impact on the socio-economic development of the country, said the FICCI.
The highest allocation to the social security safety net is a great initiative as the current volatile situation creates immense challenges for the poor and middle-class people to ensure their livelihood. However, transparency, accountability, and capacity of the implementing authorities need to be ensured, they observed.
The chamber welcomed the reduction in corporate tax and said, upon considering the current economic condition and infrastructure, the proposed cash transaction limit must be increased.
The tax deduction at source from payment to the raw material supplier will be reduced to 4% from 7%, which will minimise the gap between statutory tax and the effective tax rate of those suppliers. The chamber said it still believes TDS should not be made applicable for the supply of raw materials.
The chamber believes that the reduced tax rate for all general industries exporting goods and services is an export-friendly initiative. The initiative will increase export diversification and bring down the trade deficit with other countries.
The chamber thanked NBR for including the concept of a start-up sandbox in the ITO, 1984.
Start-ups will be allowed to set off and carry forward losses over a period of nine years. This is a very good initiative by the government to encourage start-ups.
FICCI also appreciates the following changes in the VAT and Supplementary Duty Act: clear definition of identical and similar goods; business-friendly provisions; rules to directly transfer raw material from the port to the contract manufacturer; reduction of penalty from 100% to 50%; and a maximum of 100%.
The organisation also appreciated the rules that state VAT officials cannot impose a penalty for unintentional errors and cannot charge simple interest for more than 24 months.
FICCI also expressed concerns and said if the problem is not addressed, it will have an adverse impact on business and investment.
Disallowing legitimate business expenses will increase the tax burden of compliant businesses. The current TDS rate should have been rationalised.
"Considering the overall existing macroeconomic scenario, increasing inflation rate, we feel the tax ceiling for individuals should have been increased, which has not been changed for the last two fiscal periods", reads the release.
NBR should adopt a comprehensive IT strategy that will ensure digitisation of filing of corporate tax returns, audit selection by NBR, all notices to and from NBR, E-Assessment, E-Appeal, E-Tribunal, and internal processes within the circle, zone, and NBR.
The 5% VAT on broadband internet and handset trading will increase the prices of the internet and handsets, which will adversely affect the government's vision of digital Bangladesh.
