A Taxpayers"39"Cases Must Furnish Proof of Return Filing

 Environmental Surcharge(ES)

 What is the Environmental Surcharge(ES) with the rate in Bangladesh?

What Is an Environmental Surcharge?

The Environmental Surcharge is a special levy imposed on certain industries, goods, or services that cause environmental harm.
It is a form of environmental tax collected by the National Board of Revenue (NBR) under the Value Added Tax (VAT) and Supplementary Duty Act, 2012.

This surcharge aims to:

·        Discourage environmentally harmful production or consumption.

·        Generate funds for environmental conservation projects.

·        Promote cleaner technologies and sustainable industry practices.

Here are the details rate that applies for the Environmental Surcharge-

Engine  capacity of Motor car	Rate
Up to 1500 CC or75KW	Tk.25,000
Exceeding 1500CC or 75 KW but not 2000CC or 100KW	Tk.50,000
Exceeding 2000CC or100 KW but not 2500CC or 125KW	Tk.75000
Exceeding 2500CC or125  KW but not 3000CC or 150KW	Tk.1,50,000
Exceeding 3000CC or 150 KW but not 3500 CC or 175KW	Tk.2,00,000
Exceeding 3500 CC or 175 KW	Tk.3,50,000

·        Environmental surcharge for the Electronics motor car has been proposed to be withdrawn from AY-2026-2027

·        Environmental surcharge is payable to all taxpayers having more than one motor car, and such surcharge will be exempted on the motor car with the lowest applicable surcharge. 

        An Environmental surcharge will be collected during registration or fitness renewal.

Legal Framework and Implementation in Bangladesh:

The Environmental Surcharge in Bangladesh was introduced through the Finance Act 2014, later incorporated into the Value Added Tax and Supplementary Duty Act, 2012 (as amended).

·        Administering Authority: National Board of Revenue (NBR)

·        Applicable from: Fiscal Year 2014–2015

·        Legal Reference: Chapter Ten, Section 55 of the VAT & SD Act, 2012

This levy applies mainly to industries listed as “polluting sectors” by the Department of Environment (DoE).

Tax Implications:

The Environmental Surcharge is an advance income tax (AIT) that is non-refundable and cannot be adjusted or offset against any other tax or surcharge due by the taxpayer. Failure to pay on time results in recovery by the Deputy Commissioner of Taxes during the tax return processing.

Challenges in Implementation:

·        Lack of awareness among small industries.

·        Difficulty in monitoring pollution levels accurately.

·        Inconsistent enforcement by environmental authorities.

·        Limited data on how surcharge funds are utilized.

12. Conclusion:

The Environmental Surcharge in Bangladesh represents a step toward green taxation and sustainable industrialization. While implementation challenges remain, its long-term potential lies in reducing pollution, promoting responsible industry practices, and building a cleaner, greener economy.

Free Asked Questions(FAQ):

Q: What is the Environmental Surcharge in Bangladesh?
A: The Environmental Surcharge is an additional tax levied by the Bangladesh government on the import of specific goods that are considered polluting or harmful to the environment. It is collected by the Customs Authority to discourage the use of such products and to fund environmental protection projects.

Q: Who has to pay the Environmental Surcharge?
A: Importers of goods that are listed in the annual Finance Act are liable to pay the Environmental Surcharge. It is mandatory and must be paid during the customs clearance process at the port of entry.

Q: How is the Environmental Surcharge rate determined?
A: The rate is announced each year in the national budget (Finance Act). It can be a percentage of the product's value (ad-valorem) or a fixed amount per unit (specific duty), depending on the type of goods.

Q: Where does the money from the Environmental Surcharge go?
A: The collected revenue is deposited into the government's Environment Pollution Charge Fund, managed by the Ministry of Environment, Forest and Climate Change (MoEFCC). It is intended to be used for projects like waste management, river restoration, afforestation, and environmental awareness campaigns.

Q: Is the Environmental Surcharge the same as VAT or Customs Duty?
A: No, it is a separate and distinct charge. It is levied in addition to Customs Duty, VAT, Supplementary Duty, and other taxes applicable to imported goods. Its specific purpose is environmental, not general revenue generation.

Q: What are some common products subject to this surcharge?
A: Common items include polyethylene granules (for plastic bags), various plastic products, tobacco items, used lead-acid batteries, and certain types of vehicles and chemicals. The list is updated annually in the budget.

Q: What happens if an importer does not pay the Environmental Surcharge?
A: Failure to pay the Environmental Surcharge will result in the goods not being cleared by Customs. The consignment will be held at the port, and the importer may face penalties, fines, and seizure of the goods under the Bangladesh Customs Act.