Finance Minister AHM Mustafa Kamal is scheduled to announce the budget in parliament on June 13
Aiming to invigorate the promising export sector, an ailing stock market, and cooling property markets, the upcoming budget is likely to announce a number of incentives to rekindle the business and investment environment, said sources involved in preparing this year’s national budget for parliamentary approval.
The incentives include enhanced subsidies, tax cuts and fiscal stimulus to take the economy to an 8.5% growth rate in financial year 2019-20.
Finance Minister AHM Mustafa Kamal is scheduled to announce the budget in parliament on June 13.
Realtors and land developers have long been demanding a reduction of registration fees, including the Value Added Tax (VAT) and other taxes on the sale and transfer of property, like apartments or land, so as to stimulate the slowing real estate market. According to sources, the upcoming budget is likely to almost halve the current aforementioned costs.
Currently, total fees for flat registration are 14% to 16%, and 17% for land registration. The fee is imposed on the deed value of property.
A budgetary measure is also likely to be announced for the first time for the resale of existing (not new) flats.
National Board of Revenue (NBR) officials think a secondary property market boom would stimulate the economy further if registration fees for used flats were rationalized.
Presently, registration costs remain the same for both new and used flats.
The proposed budget is set to raise the tax-free income ceiling for cash dividend income from stocks to Tk50,000, up from the current ceiling of Tk25,000.
“He (finance minister) is serious about reviving the morale of stock investors in the upcoming budget. A number of budget incentives are in the offing to streamline capital markets,” a top NBR official told Dhaka Tribune.
“The market (capital market) will act positively after the announcement in the proposed budget,” he hoped.
Officials concerned at the finance division under the Ministry of Finance said the subsidy outlay in the budget would be around Tk45,000 crore for the next fiscal year, up from Tk38,500 crore earmarked for the current fiscal year.
The highest subsidy amount of Tk9,000 crore is likely to be allocated for the agricultural sector, with some allocation expected to be earmarked for farm mechanization.
The budget is also likely to announce a 1% export subsidy for the apparel sector, in addition to the 4% now applicable for receipts coming from non-traditional markets. The amount to be earmarked is likely to be Tk9,000 crore, which is now around Tk3,500 crore.
Presently, 26 export-bound items, including apparel goods, get export subsidies of anywhere between 2% and 20%.
In the current budget, export sector subsidies amount to Tk5,000 crore. Of the total, Tk500 crore is allocated for jute and jute goods.
The power sector subsidy is likely to be earmarked at Tk10,000 crore, and the energy (including LNG) sector is likely to get Tk9,000 crore, sources said.
The proposed budget is reportedly set to announce an incentive for foreign exchange remitters, as the government is desperate for more remittances to handle the foreign exchange demand to manage rising import payments.
A subsidy of 2-3% is likely to be offered in the budget for remitters. Under the planned scheme, recipients of remittance will get 2-3% extra local currency on the remitted amount.
For this purpose, an amount of Tk3,000 crore will be allocated in the budget.
Source: Dhaka Tribune.