Govt’s fixed VAT coming to 16 retail sectors, including groceries

The government plans to bring 16 categories of businesses, including grocery stores, beauty parlours and restaurants, under a fixed Value Added Tax (VAT) regime in the 2026–27 fiscal year as part of its efforts to broaden the country's tax base. Finance Minister Amir Khasru Mahmud Chowdhury announced the initiative while responding to questions in Parliament on Wednesday.

The proposed VAT expansion will cover grocery stores, clothing retailers, confectionery shops, cosmetics outlets, plastic and ceramic household goods sellers, footwear retailers, hardware businesses, decorators, electronics dealers, furniture stores, beauty parlours, sweet shops, and restaurants. Mobile phone, air conditioner, refrigerator, oven, sanitary fittings, tiles, corrugated sheet, rod, and cement retailers have also been included in the plan. However, the government has not yet specified the amount of the fixed VAT that will be imposed on these sectors.

The finance minister noted that the proposal forms part of the draft Finance Bill for FY2026–27, which was presented in Parliament on June 11. The budget also proposes a withholding tax of Tk2 per Tk 1,000 on goods supplied to retail traders. The measures are aimed at improving VAT collection by incorporating new businesses and revenue sources into the formal tax system.

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Separately, the minister said the government has set a target of reducing inflation to 7.5 percent and raising economic growth to 6.5 percent in the next fiscal year. To support household purchasing power, the proposed budget includes Tk 144,338 crore for social safety net programmes, expanded food assistance, subsidised rice sales, and initiatives to strengthen food security and promote balanced regional development, including agricultural industrialisation in northern Bangladesh.

Source: BSS