Budget 2026-27
VAT on gold may be halved to Tk 5,000 per bhori, how much will price drop?
If the fixed VAT is imposed, around Tk 4 billion could be collected from this sector. Currently, VAT collection stands at less than Tk 1.5 billion.
Currently the price of 22-carat gold per bhori in the domestic market is nearly Tk 229,000.
Currently, a 5 per cent Value Added Tax (VAT) is levied on the total sales price for gold or jewellery transactions in the country. Due to the rising price of gold, the actual VAT amount under this percentage system has increased significantly. Consequently, this method is failing in proper VAT collection.
In response to demands from traders, the National Board of Revenue (NBR) is therefore planning to introduce a fixed VAT instead of a percentage-based one. A source concerned revealed that a VAT of Tk 5,000 per bhori might be imposed under this new arrangement.
At present, the price of one bhori of 22-carat gold in the domestic market stands at around Tk 229,000. Buying gold at this price means consumers currently have to pay nearly Tk 11,500 in VAT per bhori at the 5 per cent rate. If the fixed VAT amount comes into effect in the upcoming budget, customers will only need to pay Tk 5,000 when purchasing each bhori of gold.
Traders point out that sales are already low due to the high price of gold. On top of that, the 5 per cent VAT imposes an additional burden on consumers. For this reason, VAT is not being collected properly. Businessmen and revenue sector insiders believe that if a fixed rate of VAT is introduced now, overall collection could see a slight increase.
Speaking on condition of anonymity, an NBR official stated that less than Tk 1.5 billion is currently collected in VAT from this sector. If the fixed VAT is implemented, revenue from this sector could rise to around Tk 4 billion.
Speaking on condition of anonymity, an NBR official stated that less than Tk 1.5 billion (150 crore) is currently collected in VAT from this sector. If the fixed VAT is implemented, revenue from this sector could rise to around Tk 4 billion (400 crore). Traders have already given assurances to this effect.
Therefore, introducing a fixed VAT amount will create a win-win situation for all parties involved.
According to NBR sources, the government collected Tk 1.38 billion (138 crore) in VAT from gold sales in the last 2024-25 fiscal year, even though there are approximately 40,000 jewellery shops across the country.
Letter from gold traders
Ahead of the budget, the Bangladesh Jewellers’ Association (BAJUS), an organisation of gold traders, proposed a fixed VAT amount during pre-budget discussions with the NBR. The organisation sent a letter to the finance minister on 13 May reiterating the same demand.
The letter stated that if a fixed VAT is imposed, around Tk 4 billion (400 crore) could be collected annually from this sector.
Currently, not even 10 per cent of VAT is being collected, but we want 100 per cent collection. Therefore, if a fixed minimum VAT is imposed, it will not put pressure on consumers, and the revenue collection will increase as well.Enamul Haque Khan, president, BAJUS
According to the letter, out of 40,000 jewellery shops in the country, 8,000 have VAT registration. Among these registered businesses, only 1,500 regularly pay VAT.
The letter noted that if a minimum VAT is introduced, many more establishments will come under the VAT net. To bring a larger number of shops into the tax bracket, BAJUS demanded fixing the VAT at Tk 2,000 per bhori.
Speaking on the issue, BAJUS President Enamul Haque Khan told Prothom Alo, “Currently, not even 10 per cent of VAT is being collected, but we want 100 per cent collection. Therefore, if a fixed minimum VAT is imposed, it will not put pressure on consumers, and the revenue collection will increase as well.”
Enamul Haque Khan added that no VAT is levied on gold brought in from abroad. As a result, people now buy gold when travelling overseas.
Traders say that most gold shops outside major shopping malls do not have VAT registration. BAJUS is keen to assist the government in bringing them under the tax net.
VAT experts, however, oppose the imposition of a minimum VAT. They argue that BAJUS, as a large organisation, is floating these ideas merely to gain popularity among its members
Regarding this, Samit Ghosh, former vice-president of BAJUS and owner of Fancy Jewellers, told Prothom Alo, “Most shops outside Dhaka lack VAT registration. If a fixed VAT is introduced, we will actively assist the government to boost VAT collection.”
What the experts say
VAT experts, however, oppose the imposition of a minimum VAT. They argue that BAJUS, as a large organisation, is floating these ideas merely to gain popularity among its members, but in reality, they will not be able to compel 40,000 establishments to pay VAT.
When asked, Md Abdur Rouf, chairman of the Bangladesh VAT Professionals Forum, told Prothom Alo, “BAJUS has no control over 40,000 establishments. Moreover, they will not be able to keep their promise. Therefore, I do not believe that introducing a minimum VAT will yield much benefit.”