The prices of rod may increase by Tk 10,925 per tonne as the upcoming budget has proposed to increase value added tax (VAT) and advance income taxes on different layers between production and sales of rod.
Finance minister AFM Mustafa Kamal proposed to increase VAT and taxes in his budget speech for fiscal 2019-20.Currently, a tonne of iron rod costs between Tk 62,000 and Tk 67, 000. Once the proposed plans are implemented, a tonne of iron rod may rise up to Tk 70,000.
Businessmen involved in rod production said if the rod prices rise above Tk 10,000, the cost of building construction will increase by 10-12 per cent.the increased prices will affect the 3,600 products and services related to the construction sector.It will even increase the construction cost of the government project either
The finance minister has proposed to increase some 5 per cent VAT on sales of scraps which are used as raw materials of iron rod. At present, businessmen pay Tk 300 as VAT for a tonne of iron scraps.
More 5 per cent tariff has been proposed for importing scraps.The VAT on sales of billet has been increased from Tk 450 to Tk 2,000, while same amount on the production of iron. Instead of Tk 200 per tonne on rod sales at retail level, 5 per cent VAT has been proposed.
Besides, at least 3 per cent advance income tax on scraps, billet and sales of rod has been proposed in the budget. In a gazette notification issued on Monday, the advance income tax on billet has been reduced to .5 per cent.
According to the Bangladesh Steel Manufacturers Association (BSMA), the cost of rod per tonne will increase by Tk 7,650 due to the increased rate of VAT and the advance income tax proposed at three layers will also increase Tk 3,250.
When asked about the matter BSMA chairman Monwar Hossain said, “Once a tonne of iron rod is increased by Tk 10,925, it will go beyond the purchasing power of the customers. It will create panic in the entire market.”
He also said the construction cost of the government infrastructure will also increase.Monwar Hossain cautioned that it would be difficult for the government to implement the Annual Development Programme (ADP).