Bangladesh government’s federal budget that was announced today brought several changes for the iron and steel industry. Government changed the tax structure by implementing a flat 15% VAT and changing import duty structure on several key steel making raw material.
Key highlights of the budget
1. Government has proposed massive investment in power sector by panning to set up 42 new power plants which will produce 11,124 MW power. There are 33 power plants which are under construction and will produce 11,214 MW electricity.
2. 15% VAT implemented. Earlier steel-rods were taxed under special category which had lower VAT rate.
3. Govt proposes to open special ship breaking industrial zone which will be more environmental friendly
4. Regulatory duty (RD) imposed on imports of Scrap, Sponge, Pig iron, Ship breaking, Billets and Mild Ingots
5. Specific duty removed from Scrap, Sponge, Pig iron and Mild Ingots
Proposed Changes in Duty Structure are:
| Chapter (HS Code) |
Product | Specific Duty (SP) in Taka (BDT) |
Custom Duty (CD) |
Requlatory Duty (RD) |
VAT | Remarks* | |
| 72021100, 2100, 3000 |
Ferro Manganese/ Ferro Silicon/Silico Manganese |
Old | 0 | 5% | 0 | 0 | Imports will cost high |
| New | 0 | 0 | 15% | 15% | |||
| 7201 | Pig Iron | Old | 1,000 | 0 | 0 | 0 | Imports will cost high |
| New | 0 | 0 | 5% | 15% | |||
| 7203 | Sponge Iron | Old | 1,000 | 0 | 0 | 0 | Imports will cost high |
| New | 0 | 0 | 5% | 15% | |||
| 7204 | Scrap | Old | 1,500 | 0 | 0 | 0 | Imports will become cheap |
| New | 0 | 0 | 5% | 15% | |||
| 8908 | Ship Breaking Scrap | Old | 1,500 | 0 | 0 | 0 | No major change |
| New | 0 | 0 | 5% | 15% | |||
| 7206 | MS Ingot | Old | 7,000 | 0 | 0 | 0 | Imports will become cheap |
| New | 0 | 0 | 20% | 15% | |||
| 7207 | MS Billet | Old | 0 | 0 | 20% | 15% | Imports will become cheap (Earlier tariff value was fixed at $400/t) |
| New | 0 | 0 | 20% | 15% |
* Based on todays market value
1 USD = 80.5 Bangladeshi Taka
Source: SteelMint Research
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