NRB to cut source tax on essential food

The government is likely to reduce source tax on incomes from the supply of essential cooking items to contain surging inflation.

Officials said suppliers of essential food commodities such as rice, wheat, potato, onion, maize, edible oil, salt and sugar face a 2% source tax on the proceeds from the supply of the commodities.

The rate of source tax, also known as Tax Deducted at Source (TDS), may be reduced to 1% from FY25, beginning in July, sources said.

The National Board of Revenue (NBR) may propose a reduction as a part of its tax-related proposals for the next fiscal year to be placed along with other budgetary measures.

The move comes as inflation continues to sustain unabated.

In April, food inflation hit double digits to 10.22%, a five-month high, further diminishing the purchasing capacity of the low-income segment of the population.

Although overall inflation eased in April month-on-month, annual average consumer prices rose to 9.73% until April from 9.69% a month ago.

Average inflation in April last year was 8.64%, according to the official data.

To contain prices, the Federation of Bangladesh Chambers of Commerce and Industry, in its proposal for tax measures for the next fiscal year, suggested that the government withdraw TDS on the proceeds from the supply of essential commodities, reasoning that it fuels prices.

Also, the NBR may reduce the source tax rate to 5% on a number of items from 7% next fiscal year.