Online shopping will be excluded from the purview of the 5 percent value-added tax that was proposed on virtual businesses in the budget for 2018-19.

Rather the VAT will be applicable only on digital platforms such as Facebook, YouTube and Google.

NBR Chairman Md Mosharraf Hossain Bhuiyan shared the information in a post-budget press meet yesterday.

The remarks of Bhuiyan cleared the confusion which was created after Finance Minister AMA Muhith on Thursday proposed introduction of a 5 percent VAT on all virtual businesses, without giving any detail on the purview of the tax.

“It is a printing mistake and we will correct it when the budget will be passed,” Bhuiyan said.

“It would have massacred the sector if the VAT is introduced on online shopping,” said

Shameem Ahsan, chairman of eGeneration, the parent company of leading e-commerce venture bagdoom.com.

“It's a relief for us. Now we hope the ICT industry will continue its growth,” said Ahsan, who is also a former president of the Bangladesh Association of Software and Information Services.

ICT businesses have long been demanding withdrawal of income taxes for e-commerce ventures and now they plan to place the demand before Muhith once again, Ahsan said.

In 2015, the finance minister tried to impose a 4 percent VAT on e-commerce, which was withdrawn later following pressures from stakeholders.

“Every year we are burdened with some unnecessary pressure from the budget for e-commerce business,” Ahsan said.

“We have been demanding a long-term VAT exemption for the e-commerce industry.”

The country still has to go a long way to implement digitalisation in the true sense, said Razib Ahmed, founder president of the e-Commerce Association of Bangladesh.

“To achieve that, the industry needs to grow further. People are yet to become habituated to shop online and only a few lakh people use the channel now.”

The e-commerce players have also urged the government to exempt the digital shopping segment from all kinds of taxes until 2021, Ahmed said.

The Tk 2,000-crore e-commerce and online shopping industry is now growing at 50 percent a year.