The new revenue target is about Tk1,00,000 crore higher than the current fiscal
The revenue collection target for FY20 has been set at Tk3,97,000 crore, in order to reduce dependency on foreign aid and grants.
The National Board of Revenue (NBR) has been tasked with collecting Tk3,41,700 crore, while the non-NBR sector will collect Tk17,000 crore, and the non-tax sector Tk37,500 crore, reports UNB.
According to a senior NBR official, the government is set to increase revenue collection through the expansion of the income tax and VAT net, to implement the budget with the country’s own resources.
Finance Ministry and NBR sources said the government has been trying hard to reduce dependency on foreign aid and grants for the last couple of years.
The new VAT law will be implemented from July, with 5%, 7% and 10% slabs.
Sources also hinted that the finance minister may announce cuts to the income tax and corporate tax rate in the upcoming budget. Emphasis will be given on expanding the tax net to improve revenue collection.
The budget deficit target has been set at 5%.
Finance Minister AHM Mustafa Kamal said: "The new budget will be announced on June 13 and the new VAT law will be implemented as there is no other way to increase revenue collection."
"The tax GDP ratio in the country is not more than 10%, whereas it is more than 15% in any other country. Everyone has to pay VAT for the sake of improving revenue collection," he added.
The development budget for FY20 has been set at Tk 202,721 crore - 21.39% higher than the current fiscal year.
In March, the National Economic Council approved the revised annual development program for the current fiscal year at Tk1,65,000 crore, cutting the original outlay by Tk8,000 crore or 4.62% due to slower progress in project implementation and resource constraints.
The upcoming budget will have some initiatives to increase foreign investment. It will also have steps to attract foreign investment to the capital market, sources said.
The automation process of savings certificate sales will start from the next budget, in which money from the savings certificates will go directly to the linked bank accounts of individuals.
Complying with the ruling party's electoral pledge, the budget will include some big initiatives for the development of rural areas. The allocation to eradicate poverty in the rural areas will also be increased.
GDP growth has been targeted at 8.5% in the next fiscal year, while the inflation rate target will be 5.5%, with multimodal steps to increase credit flow for production.