Govt to introduce flat 3% source tax for high voltage cables

   The government plans to impose a fixed 3% source tax for local high-voltage cable producers, who earlier had to pay source tax from 2% to a maximum of 7%. 

Local entrepreneurs said imposing a 3% flat rate for the tax deducted at source (TDS) on the production of high-voltage cables in the upcoming budget will benefit the industry.

Currently the government's mega projects use high voltage cables, a large part of which is imported from abroad. Moreover, the government's initiative to set up underground power transmission lines will increase demand for high-voltage cables in the country.

As such, entrepreneurs are investing in this sector, which investment will increase further in the near future, according to industry insiders.

BRB Cable Industries Ltd, the country's biggest cable manufacturer, has already invested heavily in high-voltage cable manufacturing facilities.

The company has set up a high-voltage cable manufacturing plant in Kushtia at a cost of Tk1,000 crore. The factory has a capacity to manufacture products worth about Tk2,000 crore per year.

Md Rafiqul Islam Rony, BRB Cable Marketing Head, told TBS that the government's underground power transmission line installation project will use 132 KV to 400 KV cables.

All power transmission lines in the big cities will go underground, while demand for 11 KV and 33 KV cables will decrease. So BRB Cables has made a large investment to produce such cables, he explained.

Another cable producer – BBS Cables – is currently manufacturing 133 KV to 245 KV cables at its Factory Unit-2.

Golam Habib, Company Secretary of BBS Cables, told TBS, "Our company is currently producing 1,600 tonnes of cable per year, most of which is bought by the government. A reduction in tax at sources will have a positive impact here."

Meanwhile, sources at Partex Cables said the firm is currently focusing more on the production of 11 KV and 33 KV cables because the two grades of cables are in high demand.

The cable market in Bangladesh is growing at an average pace of 20% per year, thanks to nationwide electrification coupled with massive infrastructural development and burgeoning industries, including SMEs and the housing sector.  

Industry insiders say the size of the domestic cable market has grown from Tk2,000 crore to Tk12,000 crore over the past one decade. More than 120 companies, including big brands, have come forward with hefty investments, creating over 50,000 jobs in the sector.