NBR Considers 15% VAT on Metro Rail Tickets

The National Board of Revenue (NBR) is considering exempting metro rail tickets from the current 15% value-added tax (VAT) in an effort to reduce travel costs for passengers amid the evolving political climate.

NBR officials revealed that the VAT policy wing has already initiated internal discussions on the potential exemption. The proposal is now awaiting approval from the newly appointed NBR chairman before moving forward through formal channels.

"We are initially considering a VAT exemption on metro rail ticket fares. However, the proposal will be presented to the new chairman for approval. Once we have his consent, the formal process for issuing the exemption order will proceed," a senior NBR official told The Business Standard, requesting anonymity.

The official also noted that the exemption is being considered until next June.

Currently, under the VAT and Supplementary Duty Act, a 15% VAT is levied on air-conditioned transport services. To promote the metro rail as a preferred mode of transportation among city residents, the Dhaka Mass Rapid Transit Company Limited (DMTCL) requested the NBR to exempt metro tickets from VAT. Following this request, the NBR initially waived the VAT on metro fares until June 2024.

However, the NBR chose not to extend the VAT exemption beyond the June deadline and informed DMTCL of this decision on April 4. Despite the 15% VAT imposition, DMTCL opted not to pass this additional cost onto metro passengers.

An NBR official explained that if the 15% VAT is imposed, the minimum ticket price for a short-distance journey will increase from Tk20 to Tk23, while the maximum fare will rise from Tk100 to Tk115.

In a subsequent inter-ministerial meeting on July 4, DMTCL Managing Director MAN Siddique requested that no VAT be imposed on metro rail services until 2032, citing the challenges of collecting VAT under the current system. Siddique pointed out that adding VAT to ticket prices would require modifications to the existing ticket machines, which are costly and time-consuming to replace.

Despite repeated attempts to reach DMTCL Managing Director MAN Siddique for comment on Monday, The Business Standard was unable to make contact.

Since its launch in April 2023, the metro rail has been a vital transportation service for Dhaka, operating 196 times daily from 7:10 a.m. to 10:14 p.m. and serving approximately 300,000 passengers. According to DMTCL, the metro rail saves the public Tk8.38 crore daily in travel time costs and Tk1.18 crore in vehicle operation costs.

However, metro rail services have been suspended since July 20 due to vandalism at the Mirpur-10 and Kazipara stations during student protests demanding reforms to the government job quota system.

Muhammad Fouzul Kabir Khan, the newly appointed adviser to the Road Transport and Bridges Ministry, announced on Sunday that plans are underway to resume metro services within seven days.