Inter-factory transfer of raw materials to be taxable: NBR
Manufacturing industries will have to pay VAT for transferring raw materials from one factory to another, according to a clarification of the revenue board.
However, the manufacturing units will get rebate on the paid VAT as per the VAT law (section-46).
The manufacturers will not be able to change shapes, nature, criteria or quality of the raw materials imported, purchased, earned or procured in other way before transferring to their other factory units.
The National Board of Revenue (NBR) has issued the clarification for the manufacturing units not having central VAT registration.
The clarification has been issued following requests by several manufacturing companies, including Nasir Group of Industries and Heidelberg Cement Bangladesh limited.
There were confusions over the issue as many of the manufacturing units are not centrally registered under the VAT wing.
As per VAT law, central registration of VAT is optional for manufacturing companies.
In the clarification, the VAT wing of the NBR defined some process to shift raw materials from one factory to another by same manufacturing units.
The units will have to give a declaration on input-output coefficient in VAT 4.3 form before transferring the raw materials without any change.
On the basis of the declaration, the company will pay VAT at a rate of 15 per cent and shift the raw materials through VAT-6.2 chalan/invoice.
Receiver of the raw materials in other factory will have to register the details of the raw materials in the purchase account book or VAT-6.1 form.
Talking to the FE, a senior VAT official said there was no clear guideline or clarification in the new VAT and Supplementary Duty Act-2012 on interchange of raw materials from one factory to another by a same company not having central registration.
In the previous VAT law-1991, there was a clarification on this type of transfer, he added.
The NBR has issued the clarification as per the VAT law and VAT rules-2016, he said.
