BSMA leaders said they will have to pay another Tk4,650 in advance income tax (AIT) at different stages against the existing Tk1,950 which means the additional expense will go up by Tk2,700
The construction industry will suffer a huge blow once the newly-imposed VAT and other taxes on the steel industry come into effect in the upcoming 2019-20 fiscal year, said steel manufacturers.
"It'll have a big impact on overall development work in both the public and private sectors, as steel accounts for about 15-20 percent of overall costs," Khorshed Alam, president of Bangladesh Association of Construction Industry (BACI), told UNB.
In the proposed national budget, industry insiders say, about Tk10,350 in incremental taxes were proposed as VAT and other taxes at various levels of production and steel sales because of which the retail price for each metric ton (MR) of steel rod will go up to Tk73,000-75,000 from the existing price of Tk63,000-65,000.
About the taxes proposed for the steel industry, Bangladesh Steel Manufacturers' Association (BSMA) said now, VAT of Tk1400/- per MT is applicable for MS rod sales. Of this, Tk300 VAT applies to scrap metal, a Tk450 fixed VAT is imposed on billet sales, Tk450 on MS rod sales, and Tk200 VAT at the retail point of sale.
But in the new budget, Tk1,750 was proposed as VAT on scrap metal, Tk2000 as VAT on billet sales, Tk2,000, fixed VAT on MS rod sales, and Tk3,300 on retail sales.
As a result, the overall cost will go up by Tk7,650 per MT of steel rods, said Shekhor Ranjan Kar, chief of finance at BSRM Steel, the largest steel mill in the country.
BSMA leaders said they will have to pay another Tk4,650 in advance income tax (AIT) at different stages against the existing Tk1,950 which means the additional expense will go up by Tk2,700.
"So, in total, we've to pay an additional Tk10,350 per ton of steel rods," said a top BSMA leader.
Khorshed Alam said overall development work in both public and private sectors will see slower growth due to the tremendous potential impact on construction material costs.
"It'll deal a severe blow to government contractors who've already won civil contracts if they don't have any cost adjustment provisions. Otherwise, he said, they will face losses, affecting their work.
Founder president of Bangladesh Steel Mills Association (BASMA), Sheikh Masadul Alam Masud, said millers have already brought the tax and duty-related anomalies to the notice of the National Board of Revenue (NBR).
"If they don't take any corrective measures to reduce the taxes, we'll hold a press conference to make it public," he added.