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Tuesday, 10 June 2008

Encouraging news for ICT sector and SMEs

This year's budget has encouraging incentives for the Information and Communication Technology sector and gives income tax relief for Small and Medium Enterprises, reports bdnews24.com.

In a bid to promote ICT sector, the government has proposed that income generated from software development, data entry, data processing and call centers will be tax free from July 1, 2008 to June 30, 2011.

A reduction of duty on computers and its peripherals has also been proposed in the budget for FY 2008-09.

The existing rate of duty of 5 percent on computers and its accessories has been cut to three percent, said the finance adviser in his budget speech.

The budget also proposes to include the entire telecom infrastructure sub-sector, excluding that for mobile phones, under the purview of the tax holiday scheme.

An allocation of Tk 262 crore has been proposed in total for the ministry of science and information & communication technology.

At present there is no income tax relief for SMEs. The new budget proposes tax-free income for manufacturing, defining small and medium enterprises as "entities having an annual turnover not exceeding Tk 2,400,000".

Exporters of handicrafts will also enjoy tax-free income from July 1, 2008, to June 30, 2011.

"In the interests of expansion of the SME sector", according to the finance adviser, the budget proposes raising the upper limit of VAT-free investment in capital machinery for cottage industries.

The limit will be raised from Tk 70,000 to Tk 150,000, and the annual turnover limit for coming under the definition of a cottage industry will be raised to Tk 2,400,000 from Tk 2,000,000, "in the hopes of seeing the SME sector flourish," said the finance adviser in his budget speech.

VAT the government also proposes to withdraw VAT from the production stage of handmade biscuits and handloom fabrics from artificial fibres, to "provide impetus to small labour intensive and employment friendly industries."

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