Homebuyers looking for mid-sized flats can brace themselves for a helping hand from the government, which is considering slashing the value-added tax on apartments between 1,101 square feet (sft) and 1,600 sft.

The indirect tax, which falls on the shoulders of consumers, is expected to be reduced to 2 percent for fiscal 2018-19 from 2.5 percent in the outgoing year, said a senior official of the National Board of Revenue yesterday.

However, those who plan to buy up to 1,100-sft flats are going to face increased cost as the VAT rate is expected to rise to 2 percent from 1.5 percent this fiscal year.

Buyers of old and used flats are also likely to face higher cost because of imposition of 2 percent VAT on re-registration value of the apartment, said officials.

Finance Minister AMA Muhith is likely to unveil the measures in the parliament tomorrow in his budget speech for next fiscal year.

The VAT measures come at a time when the Real Estate and Housing Association of Bangladesh has been demanding reduction in registration cost of flats.

At present, the registration cost hovers around 14 to 16 percent of the flat price depending on size.

REHAB in its pre-budget proposal for fiscal 2018-19 demanded the cost be halved to 7 percent, saying that the high registration cost is putting off apartment sales. Realtors said flat registration cost is higher in Bangladesh compared to Saarc countries.

REHAB, among others, demanded 1.5 percent VAT on the value of property in its proposal.

Officials said the VAT rate for flats above 1,601-sft is likely to remain unchanged at 4.5 percent next fiscal year.