Source tax halves on essential food supplies

The National Board of Revenue (NBR) has sought to halve source tax on incomes from the supply of essential commodities to contain spiralling inflation.

The suppliers of essential foods such as rice, wheat, potato, onion, maize, edible oil, salt and sugar now face a 2 percent source tax on the letters of credit opened by local businesses through banks.

The rate of source tax, also known as Tax Deducted at Source (TDS), has been proposed to 1 percent from fiscal year 2024-25, beginning in July.

Finance Minister Abul Hassan Mahmood Ali proposed the measure in the Finance Bill-2024 at the parliament today.

The move comes as inflation continues to persist unabated, despite measures taken by the Bangladesh Bank and the government to rein in runaway prices.

In May, food inflation hit double digits to 10.76 percent, further diminishing the purchasing capacity of the low-income segment of the population.