The National Board of Revenue (NBR) lacks information on actual VAT collection from a large number of shops due to the lack of electronic fiscal devices (EFDs).
Experts said if EFDs are installed, both the traders and customers would be benefited as the system is very transparent and the revenue is directly deposited to the treasury.
Once the EFDs are installed, traders will be able to realize VAT from the customers easily as it is produced by machines automatically.
“At present, the traders and shop owners have been paying the VAT from their own income to survive their business and avoid harassment by tax officials,” said Md. Helal Uddin, president of Bangladesh Dokan Malik Samity.
He said around 50 per cent of shopowners who became defaulters were fined by NBR for not paying VAT as per the schedule that should be halted immediately for the greater interest of small traders.
The revenue board can fine Tk 10,000 if a shop does not pay the monthly VAT amount by the 15th of the following month, Helal said.
He said NBR has to expedite the installation of EFDs in shops to make the VAT collection process smooth and efficient.
NBR set a target to install 10,000 EFDs by June of FY 21, but the target was missed due to a delay in the import of EFDs amid the Covid-19 pandemic.
As per its revised plan, NBR targeted to set up 10,000 EFDs by June FY22. But the revenue authorities so far installed 3,393 EFDs, 30 per cent of the target, sources said.
According to the dokan malik samity, there are 2.2 million small and medium scale shops across the country. A good number of shops operating without EFDs are evading payment of VAT by taking advantage of the existing manual system.
As per NBR data, there are a total of 239, 000 VAT-registered businesses, including large, medium and small ones till June 2021.
Earlier, the NBR's VAT Wing had estimated that some 4 million businesses in the country are eligible for EFD installation.
Official sources said only 3 per cent of the total VAT comes from the domestic traders at retail and wholesale levels.
Former NBR chairman Dr. Muhammad Abdul Mazid on Saturday told the Daily Sun that both the traders and customers should pay VAT and tax willingly.
“There is a tendency of VAT evading in our country. In fact, if the revenue officials do not force to pay VAT, in most of the cases they (traders) forget to submit VAT to the treasury,” he said.
The former NBR chairman also said the government cannot install a large number of EFDs free of cost.