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Published : 11 Jun 2026, 06:48 PM
The government has proposed several fiscal changes in the 2026-27 budget to discourage the use of petrol, diesel, or CNG-powered vehicles and accelerate the adoption of electric vehicles (EVs).
The budget framework plans to raise the overall tax incidence on internal combustion engine vehicles by roughly 23 percent, while offering diverse benefits, including cuts to import duties and advance income tax, for EV manufacturing equipment.
Finance Minister Amir Khosru Mahmud Chowdhury rolled out the new fiscal outline in parliament on Thursday.
He said the government would issue a notification offering duty and tax concessions to support domestic production of environmentally friendly electric vehicles and locally made EV components as an alternative to fossil fuel-dependent transport.
For manufacturers that locally produce the body, welding, painting and assembly of three-wheel and four-wheel EVs, the budget proposes exemption from all duties and taxes on imported materials and parts aside from a 3 percent customs duty.
Companies carrying out assembly and painting operations with lower local value addition will receive exemption from all duties and taxes except a 15 percent import duty.
The finance minister also proposed full exemption from all duties and taxes, except an additional 5 percent VAT, on imports of raw materials and inputs for local electric bus and truck manufacturing industries.
The concessions are proposed to remain in force until Jun 30, 2031.
The budget also proposes lower advance income tax on the registration and renewal of electric vehicles.
The minister said the existing advance income tax of Tk 200,000 would be reduced to Tk 25,000, Tk 50,000, Tk 75,000 and Tk 100,000 for EVs with capacities of up to 200KW, 300KW, 400KW and above 400KW respectively.
The National Board of Revenue has already granted exemptions from all duties and taxes on electric buses imported for schools, colleges, universities and similar educational institutions, while other electric buses and trucks enjoy exemption from all levies except VAT.
The budget proposes extending those benefits until Jun 30, 2030.
For imported EVs, the total tax burden is proposed to fall from 93 percent to 64 percent for vehicles priced up to US$25,000 and to 80 percent for those costing up to US$50,000.
Amir Khosru has also proposed lower duties on imported plug-in hybrid electric vehicles (PHEVs).
For new PHEVs, supplementary duties on vehicles up to 2,000cc would be reduced depending on category, while regulatory duty on new vehicles up to 1,800cc would be scrapped entirely.
As a result, the total tax burden on brand-new PHEVs up to 1,800cc would drop from 93.16 percent to 73.43 percent.
For brand-new PHEVs up to 2,000cc, it would fall from 132.36 percent to 96.10 percent.
The budget also proposes removing all duties and taxes on imports of EV chargers and charging stations.
The senior BNP leader said a widespread charging network was essential for smooth EV operations and proposed cutting the total tax burden on chargers and charging stations from 39.75 percent to zero.
To attract investment in the e-bike industry, he proposed expanding concessional facilities for both local e-bike manufacturers and assemblers, as well as vendors producing parts and components domestically.
At the same time, the minister moved to raise duties and taxes on conventional fossil-fuel vehicles, describing them as “highly harmful” to the environment.
He said the overall tax burden on imported internal combustion engine vehicles with engine capacities between 1,200cc and 1,600cc would rise from 132.36 percent to 155.88 percent to discourage the use of diesel, octane and petrol-powered cars and encourage environmentally friendly electric transport.
