What is Truncated rate?
A truncated rate is a VAT rate lower than the standard 15 per cent, applied to specific goods or services. Supplies at a truncated rate generally come with restricted or no input tax rebate.
A truncated rate is a VAT rate lower than the standard 15 per cent, applied to specific goods or services. Supplies at a truncated rate generally come with restricted or no input tax rebate.
In Bangladesh
Restaurants, some construction work and a range of services sit on truncated rates, and the applicable rate is sector specific. Getting the rate right per item matters more here than a single standard rate would suggest.
An example
A restaurant charging a truncated rate on food does not claim input tax rebate on its purchases in the way a standard rated trader would, so the rate on the bill and the treatment of purchases have to move together.
In SORS ERP
Tax structures, rates and exemptions are configurable per item in SORS ERP, so a business with a mix of standard, truncated and exempt supplies charges the right rate at the point of sale rather than correcting it afterwards.
Also called
- In Bangla
- হ্রাসকৃত হার
- Also
- Reduced rate
Questions
Answered plainly, including where the answer is no.
Does a truncated rate mean less paperwork?
No. You still issue tax invoices, keep the registers and file the return. What changes is the rate charged and, usually, the restriction on claiming input tax rebate against those supplies.
See SORS ERP running on your own numbers
A 30-minute demo in Bangla or English, with your products, your VAT setup and your questions.