Amending income tax law to protect the steel industry

It is necessary to make some changes to the income tax law for the sake of business management and continuity of the steel sector, as traders are constantly facing various problems, including global inflation.

Thousands of crores of investment of traders are at risk if the law is not amended. We want cooperation and sincerity of the relevant ministries of the current business-friendly government, which will help traders to keep their investment safe. It will save a lot of foreign currency, and the steel sector will have a great impact on the overall economy of the country.

There is a provision to deduct 2% source tax on sale of rods, and Tk500 source tax per tonne on import of scrap, which are included in the minimum tax. In this system, the source tax exceeds the income tax payable for a business in a fiscal year. The excess amount of tax paid as per law in a year cannot be adjusted with the tax payable in the next fiscal year. Consequently, every year traders have to pay more tax than they actually should, which is not desirable in any way.

Therefore, it is necessary to make the source tax Tk200 per tonne in the case of scrap imports, withdraw the source tax on the sale of rods, abolish the provision of minimum tax at source at the import level, and adjust the additional tax paid in a year with the next fiscal year's income tax.

According to the law, steel factories have to pay 0.6% minimum tax (turnover tax) on the sale of goods, whether they make profit or not. This exceeds the income tax payable. However, there is a provision to pay income tax only on income. Hence, turnover tax on sales of steel industry can be reduced to 0.2%.

Besides, as per Section-56 of the Income Tax Act, 7.5% source tax is deducted when Bangladesh flagged ships pay fuel price to foreign sellers. However, in the case of buying fuel from domestic suppliers, the source tax is 0.6%. For this reason, foreign companies are not interested in selling fuel at prevailing prices to our ships. They sell fuel to us at a 7.5% increased price.

In this situation, we are forced to buy fuel at an increased price, which increases the cost of managing shipping businesses. If this continues, it will become difficult to manage the business. Therefore, all payments to foreign sellers for things purchased by Bangladesh flagged vessels should be exempted from source tax to encourage the earning of foreign currencies.

Moreover, there is a provision of deducting Tk500 source tax per tonne in the case of importing scrap vessels, which is included in minimum tax. This exceeds the income tax payable by the importing company and there is no scope of adjusting it with the taxes payable in the next fiscal year.

Therefore, in case of importing scrap vessels, it is necessary to make the source tax Tk200 per tonne, withdraw the provision of minimum tax, and allow an adjustment of the additional tax paid in a fiscal year to the next fiscal year's income tax in order to save traders from incurring any financial loss.

This will create a business-friendly environment and traders will be interested in more investments, resulting in a creation of new jobs.