Metrorail rides to get pricier from July as NBR will not offer more VAT exemptions

NBR says to elevate the tax-GDP ratio the exemption benefits are being gradually withdrawn

The National Board of Revenue, or NBR, is not waiving the 15 percent VAT imposed on Dhaka Metrorail tickets anymore, meaning from Jul 1, the fare for the tube ride will go up.

On Thursday, the VAT department of NBR issued an order stating that although a 15 percent VAT had been imposed on Metrorail tickets, it was waived when the modern transport system was launched. Now, that exemption will no longer be provided.

And so, from Jul 1, Metrorail passengers will have to pay VAT on their tickets.

The NBR has informed the managing company, Dhaka Mass Transit Company Limited (DMTCL), about this through a letter.

The letter signed by Md Badruzzaman Munshi, the second secretary of the Excise and VAT Policy department, said the government needs to continually fund various development activities, mainly through direct and indirect taxes, to execute developmental activities for joining the ranks of developed countries under the 'Vision 2041'.

Tax exemption benefits have been extended across various sectors to bolster local industries, boost the production of alternatives to imports, and foster the growth of small and cottage industries, it read.

These measures aim to maintain the financial support required for significant development projects, facilitate the transition from Least Developed Country (LDC) status, and improve the tax-to-GDP ratio to a targeted level.

This involves assessing the effectiveness of different sectors and systematically phasing out these tax exemptions, effectively reducing the range of tax exemptions available, the letter added.

Based on this reasoning, the NBR has communicated its inability to extend the VAT exemption for Metrorail services beyond its expiration, which was initially set from Dec 28, 2022 to June 30, 2024.

The Metrorail service from Uttara to Agargaon was launched on Dec 28, 2022. Since last year, it has been fully operational up to Motijheel.

From the beginning, to encourage commuting via Metrorail, NBR had been providing VAT exemption to passengers. Last month, DMTCL had appealed to NBR to continue this benefit.

When asked for comments, the DMTCL Managing Director MAN Siddique told bdnews24.com: "We have seen this in the media, but we have not received any paper yet. We will give an official statement once we get the paper."