The National Board of Revenue is set to revise down the value-added tax (VAT) and supplementary duty (SD) on a number of items including mobile phone usage, internet services, medicine, clothes and restaurants as public outcry became deafening.

The previous VAT and SD rates will be restored for many of the goods and services, The Daily Star has learnt from NBR officials involved with the proceedings.

As per the latest decision, the NBR may restore the SD on mobile phone usage to the previous rate of 20 percent from 23 percent, while the SD on broadband internet will be withdrawn effective from January 9 of this year. The NBR had slapped a 10 percent SD on broadband internet service.

Regarding the trade VAT on medicine, it is likely to be restored to the previous rate of 2.4 percent from 3 percent.

The VAT rate on restaurants is also expected to return to the previous 5 percent from 15 percent, Mohammad Belal Hossain Chowdhury, member (VAT policy, current charge) at the NBR, told The Daily Star.

Only 3- to 5-star hotels will remain under the 15 percent VAT rate as they claim the input tax credit.

"We will issue an order in this regard soon," he said.

The move follows mounting pressure from restaurant owners, who had threatened to strike indefinitely in response to the increased VAT.

As part of their protests, a group of people yesterday thronged in front of the NBR headquarters in Agargaon and demanded a rollback to the previous VAT rate.

The VAT on own-brand clothes will be brought down to 10 percent from the existing 15 percent. Earlier, the VAT on own-brand garment outlets was 7.5 percent.

Considering the high inflation, VAT on the garment sector has been reduced slightly, an NBR official said.

Meanwhile, the NBR is likely to reduce the VAT rate on sweet shops to 10 percent. It was earlier increased from 7.5 percent to 15 percent.

In addition, the VAT rate on non-AC hotels is likely to be reduced from 15 percent to 10 percent. It was 7.5 percent earlier.

The NBR yesterday exempted the VAT on e-books to lower costs for students, said Md Bodruzzaman Munshi, second secretary for VAT policy at the NBR.

The decision is expected to ease the financial burden on students and promote access to educational resources, Munshi said.

Previously, students had to pay 15 percent VAT at the import stage and 5 percent at the local stage.

Meanwhile, Finance Advisor Salehuddin Ahmed yesterday defended the VAT price hike when accosted by reporters after a meeting of the advisory council committee on government procurement at the secretariat.

"We have increased the prices of a few items through VAT. How many phone sets and foreign fruit juices do people buy? Why should we reduce VAT on imported fruit juices?"

He said he does not think that the prices of goods will increase only because of the additional VAT.

"Today, we reviewed the impact of medicines, clothing and other daily necessities on the common people. You will know later. And the price impact in some places may have been due to VAT. It was also due to the supply system. There is manipulation."

Asked what happened at the governor's retreat of the Islamic Development Bank that Salehuddin attended in Saudi Arabia this week, he said: "The organisation gives us a huge amount of money, especially for gas and fuel oil. This time, we have requested money to pay for fertiliser as well and they have agreed to do so."