Finance minister proposes extending metro rail VAT exemption by two years

Salahuddin also proposes a 25 percent discount on metro rail fares for senior citizens

Finance Minister Amir Khosru Mahmud Chowdhury has proposed extending the existing VAT exemption on metro rail travel for another two years.

He made the proposal in his budget speech for the 2026-27 fiscal year on Thursday.

Under the existing VAT law, a 15 percent VAT is applicable on tickets for any air-conditioned rail service.

Although the metro rail is fully air-conditioned, no VAT has been imposed on the service since its launch in December 2022.

The National Board of Revenue (NBR) attempted to impose VAT on metro rail services in July 2024.

However, the move was eventually dropped following public opposition and government intervention.

The NBR has since continued to grant VAT exemptions through periodic notifications.

In its latest notification issued in December, the exemption was extended until Jun 30, 2026.

Alongside the proposed two-year extension, the finance minister announced plans to allow senior citizens aged over 65 to travel on trains free of charge.

He also announced a 25 percent discount on metro rail fares for them.

Khosru said the government aims to build a modern mass transit network through six metro rail lines, along with a monorail-based feeder network connected to the metro system.