VAT on sweets may be cut

The National Board of Revenue (NBR) could cut value-added tax (VAT) on sweets by half to 7.5 per cent, according to officials of the finance ministry.

This means consumers are likely to be able to buy sweets cheaper from the next fiscal year of 2023-24.

The tax collector considers slashing the existing indirect tax on sweets encouraged by increased revenue collection from restaurants.

The NBR reduced VAT on food bills at nearly all types of restaurants to 5 per cent in this fiscal year of 2022-23. The exceptions are hotels of a three-star rating or more.

Earlier it was 10 per cent for restaurants with AC and 5 per cent for non-AC ones.

"We are seeing higher VAT collections from restaurants after we cut the rate. So, we are considering slashing the VAT rate on sweets. This will enable people to buy sweets at a reduced VAT," said a senior finance ministry official.

The latest data on the collection of VAT, which is paid by consumers during purchase of goods and services, is not available.

The NBR's annual report for 2019-20 showed that it received Tk 40 crore in VAT from sweets stores, down 26 per cent year-on-year.