VAT may be charged on metro rail fares

Metrorail fares are currently exempted from VAT (value added tax) until June 30. Finance Minister Abul Hasan Muhammad Ali did not say anything about the extension of the VAT waiver period in the proposed budget for the fiscal year 2024-25. This means, unless there is a new notification, 15 percent VAT may be levied on metro rail tickets from July 1.

That is, if there is no decision regarding VAT waiver on metro rail tickets by June 30, then the metro rail fare will increase.

However, according to sources from the Ministry of Finance and NBR, 5 percent VAT may be proposed on metro rail tickets.

When asked, an official of the finance ministry, who did not wish to be named, said, “We are initially proposing to impose 5 percent VAT.” A decision will be made after discussing the matter. VAT can be increased gradually. Such measures will play an important role in increasing revenue collection.

Metrorail from Uttara to Agargaon was launched in December 2022. Metrorail is running from last year to Motijheel in full swing.

From the beginning of 2023, NBR has taken the initiative to impose VAT on metro rail tickets. On January 22 of that year, Commissioner of Dhaka South VAT Commissionerate Shaukat Ali wrote a letter to Dhaka Mass Transit Company Limited (Metrorail Company) calling for the imposition of VAT.

Later NBR also held several meetings with Metrorail authorities. However, the NBR eventually backtracked on the imposition of VAT. In May 2023, the NBR had issued a notification stating that there would be VAT exemption on metro rail tickets till June 2024.