A significant decrease in women visiting beauty salons amid the Covid-19 pandemic has led to a lower value-added tax (VAT) payment for fiscal year 2020-21.
This has adversely affected meeting the government's annual revenue collection target, given how the parlours often fetch a sizable collection of VAT for the state coffers.
There are a total of 265 beauty salons under Dhaka South VAT Commissionerate, who were able to collect Tk3.37 crore in FY21, 30% less than the figure in the previous fiscal.
The reason why it is alarming is because Dhaka South VAT Commissionerate is the National Board of Revenue (NBR)’s largest VAT collecting unit in the country.
Also Read - 10 companies responsible for 40% of total VAT in FY21
There are 61,362 VAT-registered institutions under this zone, which is one-fifth of the total in the country.
However, the overall revenue collection in Dhaka South has increased by 17%, fetching Tk9,132 crore, even amid the pandemic.
SM Humayun Kabir, commissioner, Dhaka South VAT Commissionerate, said: "Even during the pandemic, we registered a 17% growth in revenue collection by increasing supervision."
“However, some sectors have already suffered and less revenue has been collected from them,” he added.
The pandemic has caused most profits to plummet, as people have refrained from heading outdoors except for emergencies.
A prime example for this is sweet shops, who also deposited 15% lower VAT in FY21, compared to the previous fiscal.
A total of 785 registered sweet shops in Dhaka South paid Tk5 crore in VAT, but in FY20 they had paid Tk6 crore.
There is 7%-15% VAT on hotel-restaurant services. Under Dhaka South Commissionerate there are 1,613 restaurants and 191 hotels.
In FY21, Tk48 crore was collected from these hotels and restaurants. The figure was Tk54 crore in FY20.
Khandaker Ruhul Amin, chief adviser of Bangladesh Restaurant Businessmen's Association, said: "It goes without saying that there has been no business in the last one year. Restaurants had to remain closed for a large duration during the last fiscal."
Also Read - Dhaka West VAT Commissionerate fetches 3,000C revenue in FY21
Besides, furniture, airlines, television, batteries, and motor garages also deposited lower VAT than previous fiscals.
Those who did well
The manufacturing sector has sustained itself, with Tk16 crore collected from 684 plastic factories in and around Old Dhaka. In this case, the growth is 22%.
Additionally, the motorcycle business is also booming, as VAT collection from five motorcycle assemblies rose by a whopping 521%, about TK19 crore.
An injection syringe producing factory was reported to have paid about 51% more VAT than in previous years.
Dhaka South VAT Commissionerate also received double the VAT from 87 chemical factories in Old Dhaka.
The business of construction companies was also well, contrary to popular belief.
About Tk1,500 crore was collected from 84 companies in this sector last year, registering a 13% growth.
Apart from the manufacturing and service sectors, VAT has been collected from informal traders at around Tk400 crore. This sector has grown by 31%.
