VAT soon to be imposed on metro rail tickets

The National Board of Revenue has decided to withdraw the tax exemption enjoyed by the metro rail authorities from July 2024.

There will be 15% VAT imposed on the metro rail tickets, according to a letter sent by NBR to Dhaka Mass Rapid Transit Company (DMTCL) on Thursday.

According to the letter, along with continuing to provide money for the huge development activities, graduation of the country from LDC and raising the tax-GDP ratio to the desired level, the exemption benefits given by taking into consideration the capacity of various sectors are being gradually withdrawn, i.e. the area of exemption is being narrowed.

The NBR had provided a VAT exemption on metro rail ticket prices in 2023, considering the service was not fully operational and they were to provide the VAT exemption till June this year.

DMTCL recently wrote to NBR to extend the period of VAT exemption, but NBR rejected this application.

An official at NBR told media, according to the law, a 15% VAT applies to both AC and non-AC railway services. Section 26 of the Value Added Tax and Supplementary Duty Act 2012 does not provide exemptions for passenger transport – both temperature-controlled (AC) and first-class non-AC railway services.

As metro rail is fully temperature-controlled, a 15% VAT applies to this service, added the official.

The NBR official also mentioned that after a 15% VAT imposition, the minimum distance ticket price will be Tk23, up from Tk20 currently, while the maximum distance ticket price will be Tk115, up from Tk100.