SME Foundation has urged the National Board of Revenue (NBR) to raise annual turnover limit of small and medium enterprises to Tk60 lakh for VAT exemption facility.
Under the current rule, one SME firm making over Tk40 lakh turnover annually needs to pay value added tax.
The foundation said if the limit is raised, it will save many crippling firms from closures.
According to SMEF, many of the enterprises are also facing difficulties to avail of the tax benefits given particularly under the Value Added Tax (VAT) rule.
It said the SME firms failed to compete with the imported products because of the existing tax and VAT rate.
SMEF placed 41-point budget proposals to NBR, giving special focus on plastic, electronics, leather, agricultural goods manufacturing and light engineering items.
The foundation said manufacturing volumes of the SMEs have been lower due to high operating costs.
Quoting from the law, the foundation said small and cottage industry gets VAT exemption if it has annual turnover below Tk60lakh with an annual investment below Tk40lakh.
SME Foundation demanded the annual turnover ceiling should be increased to Tk1crore and annual investments at plants to Tk60lakh to protect small businesses.
SMEF also urged the NBR to make a number of changes in the VAT and tax structure as many of the enterprises had to shut their businesses.
“The situation has become very tough for cottage industries to sustain at the market under the existing VAT rate,” said SMEF.
It demanded fixing 3% VAT on the sale of manufactured products for the enterprises who do not get VAT rebate.
It sought temporary withdrawal of 15% VAT to help the industry continue.
SMEF said the VAT rebate on electricity, telephone and insurance services used by the small manufacturing enterprises should be increased to 100% from 80% and 15% VAT on Internet should be withdrawn.
It also demanded exemption of 15% VAT on the import of gas generator and generator parts.
The SME Foundation demanded increase of supplementary duties on import of plug socket, holder, and raw materials for manufacturing plastic and melamine products including Urea Moulding Compound, Urea Resins, and Thiourea. It demanded to raise it from 20-25% to 100%.
For the import of machineries needed for general small and medium enterprises, SME Foundation demanded to set zero percent duty from 2% duty on machinery import.
It urged the NBR to reduce import duty from 25% to 5% on components of toy including spring, friction, electronic device, light and music item.
