The National Board of Revenue (NBR) is contemplating a reduction in the VAT on gold jewelry from the current 5% to a fixed rate of BDT 5,000 per bhori. This move aims to enhance VAT collection from the gold jewelry sector, which currently stands at less than BDT 150 crore. If implemented, the new fixed VAT could potentially raise collections to BDT 400 crore annually. The current market price for 22-carat gold is approximately BDT 229,000 per bhori, resulting in a VAT of around BDT 11,500 per bhori at the 5% rate. The Bangladesh Jewellers Samity (BAJU) has advocated for this change, arguing that it would simplify VAT payments and increase compliance. However, VAT experts argue that the BAJU may not be able to enforce this on all 40,000 jewelry establishments. The NBR is expected to make a decision in the upcoming budget.
Current VAT Collection and Proposed Changes
Currently, the VAT on gold jewelry is collected at a rate of 5% of the total selling price. With the rising price of gold, the amount of VAT collected has increased, but compliance remains low. The NBR believes that a fixed VAT rate could improve collection efficiency. The proposed fixed VAT of BDT 5,000 per bhori is expected to simplify the VAT payment process for consumers and increase overall compliance. The BAJU has supported this proposal, stating that it would help bring more jewelry establishments under the VAT net. However, VAT professionals are skeptical about the effectiveness of this measure, citing the lack of control BAJU has over all jewelry businesses.
