Tax increases on mobile bills, medicines, and restaurants have been canceled

The National Board of Revenue (NBR) announced on Wednesday the withdrawal of tax increases on mobile bills, restaurant meals, medicine purchases, and broadband internet use through four separate notifications.  

Additionally, proposed VAT increases on non-branded clothing and vehicle repair workshops have been canceled, reinstating the previous duty rates for these goods and services after just two weeks.  

Under the revised notifications, VAT rates for branded clothing, non-AC residential hotel rentals, and branded sweets have been reduced to 10%, down from the previously announced 15%, though higher than the 7.5% rate that was in effect until January.  

In comparison to the Awami League regime, the interim government has raised duties on three consumer goods and services while leaving the tax rates for six other items unchanged. However, the tax hikes introduced two weeks ago for 90 other products and services are likely to remain in place.  

Specific rollbacks include a reduction of the supplementary duty on mobile bills from 23% back to 20%, the cancellation of a newly introduced 10% supplementary duty on broadband use, the restoration of the VAT on medicine purchases to 2.4%, and the reinstatement of a 5% VAT on restaurant bills.  

Furthermore, VAT on non-branded clothing sales has been returned to 7.5%, and VAT for vehicle repair workshops has been restored to 10%.  

The government initially raised taxes and duties on about 100 goods and services on January 9 to improve the country’s tax-to-GDP ratio, meeting an IMF condition for a $4.7 billion bailout package. However, the increases sparked protests from citizen groups and business owners, who expressed concerns about worsening inflation, prompting this rollback.