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Tuesday, May 26, 2009

Extra VAT makes consumers pay more

The New Age : Extra VAT makes consumers pay more

Consumers at supermarkets have to pay more than the maximum retail prices marked on the products due to additional value added tax imposed by the National Board of Revenue.Apart from meat, fish, fruits and vegetables, supermarket shoppers are charged additional 1.5 per cent VAT on top of MRPs that already include the same tax at the rate of 15 per cent. The consumers, however, are not charged the extra VAT at the retailers other than supermarkets.

If a person at supermarket makes a purchase worth Tk 1000, he or she will have to pay additional Tk 15 VAT, which is in addition to MRPs specified on the products. But, if the consumer purchases the same products from shops other than supermarkets, he or she will not have to pay the additional Tk 15.Even, it is possible to have little discounts on MRPs at the retailers. They can do so by minimising some of the commission they get from the companies.

‘I really don’t understand why I am charged more than the prices mentioned on the products. This is very unfair,’ Saidur Rahman, an occasional supermarket shopper, told New Age.‘Under no circumstances, one should be charged more than the prices specified on the products,’ he added.Mahbubul Haque, a regular shopper at Trust Family Needs supermarket in Uttara, said that prices should be same everywhere.

When approached on her exit from Uttara Branch of Nandan supermarket, Shahnaz Begum told this correspondent that she was aware of the extra taxation and hoped it should not happen.When asked about the reason for shopping at supermarket despite being charged more, she replied, ‘I get everything under one roof. Service and atmosphere are also good around here.’

About charging VAT on top of MRP, the supermarket officials said they are simply abiding by the order of the NBR.‘Apart from fresh items, we have to pay 1.5 per cent VAT on every product. We are giving NBR what we are realising from customers,’ Mizanur Rahman, the managing director of Trust Family Need, told New Age.

Replying to a question, he said that on many occasions customers want to know the reasons of charging extra VAT in addition to MRP and they do not seem to be happy with the answer they get.Mizan admitted that his store is losing customers due to imposition of extra VAT. ‘Why people will come to me when they can buy the same products cheaper. The government should address the issue.’

Masud Rana, deputy manager of Nandan supermarket’s Uttara branch, said, ‘We are obligated by the law to pay VAT and that is why we are charging the customers.’A senior official of that store requesting anonymity said that affluent people come to supermarkets for shopping and that they are not bothered about the additional 1.5 per cent VATThe Consumer Association of Bangladesh president, Borhan Ahmed, said he is not aware of the issue as no one has yet reported.

He, however, said that consumers must not be charged more than MRPs. ‘If this is the case we will request the commerce minister to take measures.’An NBR senior official, who requested anonymity, said the law states that apart from agricultural products 1.5 per cent VAT has to be paid for everything and supermarkets are just doing that.

When reminded that retailers do not charge anything in addition to MRPs, he said they are violating the law. ‘Law says there must be VAT for every sale.’Replying to a question, he admitted that there is no enforcement of the law at retailer level.

The official, however, said that based on locations and sizes there are fixed lump sum amounts the retailers have to pay every year as VAT. ‘For instance upazila-level retailers have to pay Tk 1,200 as VAT every year.’Couple of retailers in the capital said they pay Tk 4,200 each year as VAT.



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