Dhaka, June 10 -- The government is set to reduce the source tax on local cotton purchases to 0.5 per cent from the current 1.0 per cent, a move aimed at easing input-cost pressures on the country's textile sector.

The proposed measure will also extend the reduced 0.5 per cent source tax rate to a wide range of agricultural and industrial raw materials procured through local letters of credit (LCs), according to finance ministry officials involved in the budget preparations.

The expanded list of commodities includes raw hides, organic fertilisers, pesticides, poultry feed, soybean meal, molasses, oilcake, and handicraft products.

Officials said the proposal had already been approved at a high-level meeting chaired by Prime Minister Tar...