The Need For an NBR- Approved VAT Management System

VAT-short form of value-Added-Tax, is a tax on the value added to goods and service.  In Bangladesh, the standard rate of the VAT is 15%. Applicable rate of VAT in case of import and supply is 15%, and in case of export is 0%. It provides reports that are required by the government. Customers can directly submit their final VAT returns to the government system with the help of VAT software.

VAT software is a unique accounting software which  simplifies all VAT operations of a single company or a group of companies. It is developed in compliance with the VAT act 2012, directly by the National board of revenue (NBR), ministry of finance, Republic of Bangladesh.

In recent years, the Government has become more proactive and careful about collecting VAT. Every financial transaction is affected by a Mushak. According to the business conditions, individual Mushak records are automatically generated at the end of every month. By using an automated/electronic system, it will be maintained well and effortlessly without any mistakes.

Which type of company requires using VAT software in Bangladesh?

Keeping track of value-added tax is no longer a challenge now in Bangladesh . Businesses with annual revenue of more than BDT 5 crore and also which are centrally registered are now required to use VAT software. 

According to the tax authorities, businesses with a single production or manufacturing unit will be able to obtain a central or single registration to comply with the VAT law as of the following fiscal year.

Until now, businesses that produced items in more than one unit and sold them through multiple sales centers could only register for one VAT registration.

However, businesses with just one manufacturing unit and one sales outlet were not permitted to register centrally for VAT. Instead, they were required to get separate registrations, which would have increased the cost of doing business for the company.

There are 3.58 lakh VAT-registered firms in Bangladesh, a very small number of which are centrally registered, according to the NBR.

There are few software firms which are enlisted for VAT software provider company in Bangladesh, Among them “Mediasoft Data systems Limited ” has been approved to provide VAT management software, according to NBR.

VAT Software Facilities

• Reduces time/resource: By automating the collection, preparation, and management of tax data, the compliance burden of VAT can be significantly reduced. 

• Automated complex calculation: VAT management system can automate your all tax related complex calculation. This also help you to reduces the risk of error and safeguarding your important documents. 

• Reduces spreadsheet dependency and risk of error: it  is estimated that up to 88% of spreadsheets contain errors. When you reduce your reliance on spreadsheet-based processes, you have fewer data points to manage and a lower risk of error. You can also easily manipulate data by using automatic filtering, allocation, and checking.

• Enables error checking/corrections:  VAT software can enhance trust in the process by scanning data at the point of ingress and searching for anomalies. These are then forwarded to the tax team for investigation, which expedites the review process.

• Performs data analysis: By comparing specific periods, you can see how the business operates on a regular basis, create more accurate forecasts, and compare projected liabilities or repayments.

• Simplified VAT operations : A complete VAT software can ease all of your VAT related operation. The burden of manual process is no longer an issue now. Manually doing everything takes a lot of time, effort, and concentration. So this automated system can solve all of the issues. 

The VAT, also known as the consumption tax, is the biggest stream of revenue. It constituted 39% of the Tk 103,350 crore in total taxes collected in the fiscal year 2020–21.

VAT and supplemental duty collections from domestic business activities from July through April of this fiscal year increased 13% year over year to Tk 84,916 crore.

According to the NBR, the indirect tax collection made up 37% of the total Tk 2,27,756 crore in tax receipts collected by the NBR until April of this fiscal year.

VAT Registers & Reports

o Mushak-4.3 (Input-Output Coefficient)

o Mushak-6.1 (Purchase Register)

o Mushak-6.2 (Sales Register)

o Mushak-6.2.1 (Purchase & Sales Register, Non Manufacturer)

o Mushak-6.3 (VAT Challan Patra)

o Mushak-6.4 (Contractual Manufacturing)

o Mushak-6.5 (Inter Transfer)

o Mushak-6.6 (VDS Certificate)

o Mushak-6.7 (Credit Note)  

o Mushak-6.8 (debit Note)

o Mushak-6.10 (Purchase-sales + 200k)

o Mushak-9.1 (VAT Return/ Dakhil Patra)

o TR- From 6 (Treasury Receipt)

Source: https://nbr.gov.bd