The Finance Bill-2014 has been passed in Parliament with several amendments, including the one that retains the scope of investing undisclosed income or ‘black money’ in real estate.
They also include the imposition of a surcharge on mobile phone use.
The bill was passed during Saturday’s session, presided over by Speaker Shirin Sharmin Chaudhury.
Finance Minister AMA Muhith presented the bill that included the government’s financial proposals and amendments to several laws in his concluding speech.
It was passed by a voice vote in the presence of Prime Minister Sheikh Hasina, Leader of the Opposition Raushon Ershad and Jatiya Party chief HM Ershad.
On Saturday, Industries Minister Amir Hossain Amu gave the first speech on the budget proposal. The prime minister followed after Raushon.
Muhith on June 5 placed the Finance Bill along with his Tk 2.5 trillion budget proposal for the 2014-15 fiscal, which is likely to be passed in Parliament on Sunday.
The new fiscal starts on July 1.
Regarding the prime minister’s recommendations, the finance minister said, “I don’t consider the prime minister’s seven recommendations on income tax, VAT and duty as mere recommendations, I see them as orders.”
“My budget proposal was placed following her (prime minister) approval and support. That’s why I considered her recommendations as orders.”
Surcharge on mobile phones
The government has decided to impose a surcharge on mobile phone use, even though the idea had not found a place in the proposed budget.
“Funds raised from this surcharge will be spent on education and health,” Hasina told Parliament while discussing the budget.
She said the import tax on mobile phones were somewhat higher. “You may consider reducing tax on import of mobile phones,” she said, addressing the finance minister.
Presenting the 2014-15 budget, Muhith had proposed levying a 15 percent VAT on the import of mobile phones to “help the local industry flourish”.
Muhith accepted the prime minister’s proposal and announced the imposition of the surcharge.
But he did not specify the rate.
Scope to whiten black money stays
The 2014-15 budget will provide for the legalisation of undisclosed income as in previous budgets – a provision, the finance minister had said, would not be allowed when he presented the budget proposal.
The move comes as no surprise not only because the previous budgets had offered such scope but also because powerful lobbies have been pushing such facilities.
Muhith on Saturday told Parliament undisclosed income or ‘black money’ could be invested in real estate by paying a ‘certain amount’ of tax per square metre of property bought.
He, however, did not indicate the tax rate.
Muhith had been against giving such leeway to launder black money, though many were in favour of pumping black money into infrastructure as investment.
He had earlier said such provisions do not help the economy.
The previous 2013-14 budget had also offered the scope to legalise black or untaxed money by making real investments for a fine.
Under that, Tk 5,000 in tax is mandatory for one square metre (just over 10 square feet) for houses on three katha plots (200 square metres) or smaller in Gulshan, Baridhara, Banani, Motijheel and Dilkusha.
For plots over three kathas in these areas, the stipulated tax is Tk 7,000 per square metre.
For buildings or apartments — on three kathas or less — in important areas in Dhaka and Chittagong, the applicable tax rate is Tk 4,000 per square metre in the case of a building or apartment the plinth area of which does not exceed two hundred square metres.
For real estate over three kathas, the tax is Tk 5,000 per square metre.
Muhith on Saturday announced retaining ‘this facility’ in the real estate.
‘Gain tax’ withdrawn
A proposal to tax profits made in the stock market has been scrapped in the new budget.
The capital gain tax has been withdrawn to help the wobbling capital market flourish.
The finance minister told Parliament the step was taken in keeping with the prime minister’s proposal.
“The prime minister has recommended keeping the income from stocks free of tax to help the market flourish and encourage investment,” he said.
The minister on Saturday proposed increasing the tax-free profit margin and 10 percent tax rebate for listed companies which provide 30 percent or more dividends instead of 20 percent.
The government has taken a slew of measures to revive the capital market that has been on a downward spiral since the 2011 debacle.
It proposed a five-year tax exemption for the bourses and raised the tax-free dividend income ceiling for individuals from Tk 10,000 to Tk 15,000 to bring back investors.
In the proposed 2014-15 budget, Muhith recommended a 3 percent capital gain tax on market profits ranging from Tk 1 million to 2 million, and 5 percent on profits over Tk 2 million.
Safeguarding local industry
The finance minister has withdrawn his proposal of duty cut for some commodities including soap and toothpaste, a move he said was to allow the local industries flourish.
“I propose to raise the import duty from 15 percent to 20 percent, as it was before, for toothpaste, soap, detergent, razor and stainless steel blades, upon the prime minister’s instruction,” said AMA Muhith.
“On the same consideration, I propose to make the supplementary duty of float-glass and cosmetics to 45 percent, like before, from the 30 percent I had proposed,” he added.
Duty cut for cars up to 1800 cc
The budget had proposed a 60 percent supplementary duty (SD) for imports of brand-new hybrid cars up to 2500 cc.
On Saturday, Muhith revised the SD for hybrid cars up to 1800 cc to 45 percent and 60 percent for cars between 1801 cc and 2500 cc.
Tax cut on profits from flat sales
The budget proposed a Tk 90 per square feet tax-at-source on profits of apartment sales. It was revised to Tk 55.76 on Saturday.
Another good news for the construction sector is the duty cut for graphite electrode used for billets. It has been decreased 10 percent from the existing 25.
Billets are the key ingredient for manufacturing steel rods. The 5 percent regulatory duty on this has been also withdrawn.
In his closing budget speech on Saturday, Finance Minister Muhith said: “I believe the budget proposal, including the amendments, will gear up the country’s development.
“It will substantially prop up the growth and improve the living standard of people.”
Source: bdnews24
