“The proposed budget is focused on rescuing the economy from the downfall due to coronavirus pandemic. Hence, it is a business-friendly one ... It is ambitious but positive,” he said while talking to the media at a virtual briefing.
In an immediate reaction, the DCCI chief said the budget is an inclusive one despite it is a huge expenditure budget which aims to increase investment, stimulus to the entrepreneurs, and ensure social safety net.
"Implementing this huge budget is a big challenge and therefore, we need to reconsider revenue collection target," he said.
The DCCI chief said they welcome the facility of whitening black money and noted that the pressure on the internal economy will be looming due to the pandemic.
"Our doctors are suggesting that the infection in Bangladesh might peak in August and so it will be challenging for the internal economy,” he added.
Mahmud said further incentives are required to take the economy forward.
“Incentives announced earlier were instantaneous and aimed at stabilising the economy. We are yet to conduct an economic assessment on the overall situation which might take place in August. To reach the GDP target proposed for the coming fiscal year, more stimulus packages are necessary,” he said.
The DCCI President said that the budget has focused GDP growth of 8.2 percent and inflation of 5.4 percent. He praised the initiative to increase investment and create employment through the budgetary proposals.
The decision of reducing corporate tax was hailed by the DCCI president.
He urged the government to widen its tax net, pending tax collection, and increase manpower of the National Board of Revenue to help collect additional revenue at the field level.
“In order to maintain the flow of private investment, it is necessary to increase the revenue without imposing new tax burden on the existing taxpayers,” Mahmud added.
He recommended more budget allocation for the health sector in the Annual Development Programme (ADP).
“The highest allocations in the ADP have been given to the Local Government and Rural Development, Road Transport and Highways Department and Power Department. But in the current context, considering the coronavirus outbreak, the allocation in the health sector should be further increased,” he said.
‘Cut source tax’
The DCCI urged the government to reconsider its decision to increase source tax in export industries.
“Global export demand has declined in the aftermath of the coronavirus outbreak. All export-oriented industries will face challenges if the source tax is increased to 0.5 percent,” said Mahmud.
He also requested to impose reduced one percent source tax on local LCs used for importing essential commodities.
Mahmud further said VAT calculation should be based on the product’s value addition or its profit and urged for automated VAT return system as well as simplification of refund system.
Individual income tax limit has been increased to Tk 3 Lakh from existing Tk 2.5 lakh. DCCI appreciates the decision. The lowest limit of tax rate is 5 percent and the highest tax rate is 25 percent. It may ease burden on taxpayers and more taxable people will be encouraged to pay tax, he said.
Corporate tax has been slashed to 2.5 percent for non-listed companies in the private sector. But he suggested cutting corporate tax a bit so that entrepreneurs may sustain in the post-coronavirus situation.
He also thanked the government for increasing time limit of paying tax and vat without penalty.
But 0.5 percent tax on annual turnover of Tk 3 crore for an individual businessman will increase his cost of doing business, Mahmud said.