VAT and Nation Building Tax implemented from today
Tuesday, 01 November 2016 - 8:34
The Ministry of Finance announced that the amendments to the Value Added Tax and the Nation Building Tax will be effective from today.
Accordingly, the 11 per cent VAT has been increased up to 15 per cent.
VAT has been imposed on several goods including cigarettes, liquor, telephone services, electrical equipment, jewellery and powdered milk.
However, it is significant that 82 essential commodities have been exempted from VAT.
Drugs, OPD services, surgical services and dialyses have been exempted from VAT, but fees for consulting doctors and medical specialists as well as private hospital rooms have been categorized as taxable services.
Sale of real estate and 31 food items including sugar, dhal, dried fish, vegetables, fruits, potatoes, red onions, big onions and chilies have been exempted from VAT as well.
In addition, diesel, petrol, kerosene, mobile phones, construction equipment, computer and computer accessories, fishing gear and several other goods have also been exempted from VAT.
The VAT Amendment Bill passed in parliament has reduced the turnover limit of retail and wholesale VAT registration in one quarter to 12.5 million rupees from 100 million rupees.
At the same time, the average taxable turnover limit for a quarter year has also been reduced to 3 million rupees from 3.7 million rupees.
Cigarettes, liquor, telephone services, electrical equipment, jewelry and powdered milk were exempted from VAT in the past.
However, prices of such goods are likely to rise as VAT has been imposed on them under the new amendment.
Although the existing 2 per cent Nation Building Tax remains unchanged, the taxable turnover limit for a quarter year has been reduced to 3 million rupees down from 3.75 million rupees.
Telephones, communication services and electricity have been included in the Nation Building Tax.
The ministry of Finance stated that new VAT on electricity would not affect the electricity tariffs.