NBR to restore VAT and SD rates on mobile usage, internet, medicine and restaurants

The National Board of Revenue (NBR) is expected to revise the Value Added Tax (VAT) and Supplementary Duty (SD) on the usage of mobile phones, medicine, and restaurants, officials said on Thursday.

The revenue authority may restore the previous VAT and SD rates on these goods and services, a decision taken in response to public outcry after the government increased indirect taxes on nearly 100 products and services to boost domestic revenue collection and meet the conditions set by multilateral lenders.

As per the latest decision, the NBR may reduce the SD on mobile phone usage to the previous rate of 20 percent from 23 percent, and the SD rate on broadband internet to 5 percent from 10 percent, effective from January 9 of this year.

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, said Mohammad Belal Hossain Chowdhury, member (VAT policy, current charge) at the NBR.

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

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