The government has finally ensured a value-added tax (VAT) exemption for the Dhaka Metrorail until the end of this year, similar to previous years.
Extending the VAT exemption, the National Board of Revenue (NBR) issued a notification on Monday.
"The Metrorail is the 'most modern and popular public transport in Bangladesh', significantly contributing to reduced commuting times and playing a crucial role in alleviating traffic congestion," the NBR said in its circular.
Due to the above-mentioned reasons, the NBR deemed it necessary to 'reduce travel costs' by utilising the train service. The exemption will remain effective until December 31, 2025, the circular added.
Under the current VAT and Supplementary Duty Act, a 15 per cent VAT is applied to air-conditioned transport services. Due to the exemption, passengers will not need to pay the VAT.
To encourage the use of the transportation system among city residents, the Dhaka Mass Rapid Transit Company (DMTCL) requested the NBR to exempt metro tickets from VAT. Following the request, the revenue authority had waived the VAT on metro fares until June 2024.
The NBR did not extend the VAT exemption beyond the deadline and notified the DMTCL of this decision on April 4. However, the decision to impose the VAT was not implemented, and the transport service continued to enjoy the facility until December 2024.
In an inter-ministerial meeting on July 4, the DMTCL authority requested a deferral of VAT on fares until 2032. Former DMTCL managing director MAN Siddique requested that no VAT be imposed on Metrorail services until 2032, highlighting the complications of collecting VAT.
