The association will also call for reducing source tax to 0.25 per cent
The Bangladesh Textile Mills Association (BTMA) will request the government today to increase alternative cash incentives from 4 per cent to 7 per cent for the upcoming fiscal year, to fight the economic fallout of the Covid-19 pandemic.
The association will also call for reducing source tax to 0.25 per cent from the existing 0.50 per cent for the next fiscal year.
The platform of textile mill owners will place a set of demands to the National Board of Revenue (NBR) for the tax regulator's consideration ahead of the national budget in June, to help the textile sector turnaround from the pandemic.
In a pre-budget meeting with the NBR on Wednesday, all these issues would be discussed in the presence of the textile sector people.
Alternative cash incentives came down to 4 per cent due to gradual cuts in the last few years. With the existing rate and adjustment of some benefits, millers were competitive but the ongoing pandemic has left the sector people in tough competition, Mohammad Ali Khokon, president of BTMA, told Dhaka Tribune.
In consideration of the devastating impact of Covid-19 pandemic, a 4 per cent alternative cash incentives is not enough for the sector, said the business leader.
After the LDC graduation, there will be new challenges for the sector due to erosion of duty benefits enjoyed as a least developed country, Khokon said.
"Considering the benefits of cash incentives for the sector, we are urging the government to increase it to 7 per cent and withdraw tax on incentives," he added.
In fiscal 2018-19, the tax at source was set at 0.25 per cent and it was affordable. But in fiscal 2019-20,mit was increased to 0.50 per cent.
Export earning from the apparel sector have witnessed a negative growth due to the pandemic, which also hit the backward linkage industry badly, Khokon said.
"In the given context, we need a cut. The government should set source tax at 0.25 per cent for the next fiscal year," he added.
Meanwhile, the textile millers also demanded withdrawal of 2 per cent tax on purchase of cotton from local sources.
They also called for withdrawing 5 per cent advance import tax on pet chips as it will increase the prices of yarn.
On top of that, textile entrepreneurs also urged the government to remove 5 per cent value-added tax on all kinds of fabrics made of man-made fibre at production level.
They also called to set Tk 3 as VAT per yard on all kinds of yarn made of any kind of fibre. Currently, they have to pay Tk 4 per yard.