NBR lifts VAT, SD on diaper, sanitary pad raw materials

The National Board of Revenue (NBR) has exempted Value Added Tax (VAT) and Supplementary Duty (SD) on import of raw materials for producing sanitary napkin and diaper in a bid to make their prices affordable.

The exemption came into force from Monday (July 01), and will remain valid until June 30, 2021.

The NBR VAT Wing waived the taxes on import of some seven key raw materials that are required for producing sanitary napkin and diaper.

The items are: re-seal/self adhesive tape, laminated sheet, film and foil, other sheets, film and foil (printed), air laid paper, textile back sheet (ADL), elastic back ear/elastic waist band, and knit loop tape.

However, VAT at a rate of 15 per cent will remain the same like the previous years on sale and import of finished products.

On import stage, there is 130.81 per cent tax on sanitary napkin, while it is 107 per cent on diaper.

VAT officials said the import tax on finished sanitary napkin and diaper remained unchanged in the budget for fiscal year 2019-20.

They also said a number of local companies have developed capacity to meet the domestic demands for diaper and sanitary napkin.

Officials expected that costs of diaper and sanitary napkin production will go down significantly with the latest exemption of VAT and SD.

As a result, locally produced diaper and sanitary napkin will become cheaper in the domestic market.

At present, a number of companies are manufacturing sanitary napkin and diaper in the country.

The NBR issued a Statutory Regulatory Order (SRO) regarding this exemption on June 30 by tagging some conditions.

As per conditions, the manufacturing companies must install necessary machinery in their factory premises for producing diaper and sanitary napkin.

Besides, the companies must have investment worth at least Tk 750 million each, own testing laboratory, clearance certificate from the Ministry of Environment, and must employ at least 250 local manpower in each manufacturing unit.

The companies will have to give a declaration to the divisional officer concerned on at least 30 per cent value addition of their products.

They will also have to give an undertaking on ensuring compliance of the conditions, and apply for the VAT and SD exemption to the NBR.

A three-member committee of the NBR, headed by second secretary of the VAT Wing, will inspect the factories, and submit reports with its observation before granting the exemption.

The board will offer the exemption upon fulfilment of all the conditions within 30 days of submission of the report. To enjoy the waiver, the companies will have to follow all the formalities regarding maintenance of accounts and submission of VAT returns.

In case of non-compliance of the conditions, the NBR will be able to withdraw the facility.

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