The government has decided to abandon its proposed plan to impose advance income tax on motorcycles and battery-operated auto-rickshaws, providing relief to millions of vehicle owners ahead of the national budget.
Under the revised decision, no additional tax will be imposed on the two widely used modes of transport, according to sources at the Ministry of Finance and the National Board of Revenue (NBR).
Sources said NBR Chairman Abdur Rahman Khan held a second budget-related meeting with Prime Minister Tarique Rahman on Tuesday, during which the premier issued several directives aimed at protecting the interests of ordinary people.
Following those discussions, the NBR withdrew a number of proposed measures, including the plan to bring motorcycles and battery-operated auto-rickshaws under the advance income tax regime.
Under the original proposal, motorcycle owners would have been required to pay annual advance income tax ranging from Tk 2,000 to Tk 10,000, depending on engine capacity. Battery-operated auto-rickshaw owners would have faced taxes between Tk 1,000 and Tk 5,000, depending on location.
The measure had been considered for inclusion in the FY2026-27 budget and was expected to generate significant revenue for the government.
According to NBR estimates, motorcycles alone could have contributed nearly Tk 15.2 billion in annual revenue. Despite the potential earnings, policymakers ultimately opted to withdraw the proposal, citing public interest considerations.
The proposed tax had triggered criticism from motorcycle owners and users, who argued that they already pay substantial amounts through registration fees, road taxes, fitness certificates, insurance charges and fuel-related taxes.
They maintained that an additional advance income tax would place further financial pressure on middle- and lower-middle-income households that rely on motorcycles for daily commuting and livelihoods.
In response to the proposal, motorcycle owners organised demonstrations, human chains, memorandum submissions and protest programmes in front of the NBR headquarters, urging the government to reconsider the move.
Currently, advance income tax is applicable to vehicles such as private cars, jeeps, buses, trucks, pickup vans and CNG-powered auto-rickshaws. Motorcycles and battery-operated auto-rickshaws have never previously been included under the system.
Although the tax proposal has been withdrawn, owners of motorcycles with engine capacities exceeding 150cc will still be required to obtain a Taxpayer Identification Number (TIN) under the revised policy.
According to the latest data from the Bangladesh Road Transport Authority (BRTA), more than 4.87 million motorcycles are registered across the country. The proposal to bring this large user base under the advance tax net has now been shelved.
Finance Minister Amir Khasru Mahmud Chowdhury is scheduled to place the national budget for FY2026-27 in Parliament on June 11.
Sources said the budget size may reach around Tk 930,000 crore, up from Tk 790,000 crore in the current fiscal year. To support the expanded budget, the government is considering reforms in tax and VAT collection and measures to widen the tax base.
