DHAKA: National Board of Revenue (NBR) has made the value added tax (VAT) mandatory in passport issuance and renewal, said sources concerned.

Confusion arose on VAT collection in issuance and renewal of passport at division and district tax regions. Concerning departments sent letters to the NBR to clarify the matter.

In response to the query, NBR’s VAT wing explained the issue through a letter recently.

NBR sources confirmed the matters.

A reliable source of NBR said that passport is not included in the list of either the exempted supplies or imports of the ‘First Schedule’ or the services of the ‘Second Schedule’ in Value Added Tax Act, 1991.

According to Section 14 of the Act, passport issuance and renewal is not exempted from VAT whereas 15 percent Vat will be applied on it in accordance to Section 3(1) and Section 18(unwa) of the Act.

Meanwhile, 1 percent bank commission and 15 percent VAT (service code S 046.00) remain imposed on the passport and visa fees.

Sources said a letter was sent to the NBR’s VAT wing from its Khulna Division Commissioner, Dhaka (east and north zone) Customs, Excise & VAT Commissionerate, and several districts three month ago.

Another letter was also sent to the Department of Immigration and Passport (DIP) asking it to submit a report on VAT collection in issuance and renewal of passport.

Recently, DIP has submitted the report. Following the report, a letter signed by the NBR’s second secretary Hasan Tarek Rikabdar (VAT act and Policy) was issued. 

The letter contained the clarification on 15 percent mandatory VAT collection in issuing and renewing passport with explanation of the Act.

Sources said some 16,000 application submission, renewing and issuing of passports are being processed in a working day at 67 passport offices inside the country while 2,500 at Bangladesh missions abroad.

State-owned Sonali Bank and five private banks collect the passport fees. These banks take 15 percent VAT on the fees. 

The banks allegedly take VAT, but do not mention it on the money receipt. The money is embezzled by a group of dishonest official and employees of the banks.

NBR found evidences in support of the allegations received from the tax regions and moved for collecting the VAT.

At present, payment of VAT is cited on the money receipt.

NBR secretary M Showkat Hossin (VAT policy) told banglanews that issuance and renewal of passports were under the VAT, complexity in VAT collection appeared at several districts including Khulna.

He said that report was sought from the passport department three month ago and following the report, letter has been issued to clarify the VAT collection.

However, VAT collection has been going on, Showkat added.

BDST: 1335 HRS, SEP 04, 2014