15% VAT to be imposed on metro rail tickets soon

The National Board of Revenue has decided to withdraw the tax exemption enjoyed by the Metro Rail authority from July this year.

There will be 15% VAT imposed on the Metro Rail tickets, reads a letter sent by NBR to Dhaka Mass Rapid Transit Company (DMTCL) today (4 April).

The letter reads that along with continuing to provide money for the huge development activities, graduation of the country from LDC and raising the tax-GDP ratio to the desired level, the exemption benefits given by taking into consideration the capacity of various sectors are being gradually withdrawn, i.e. the area of exemption is being narrowed.

The NBR had provided a VAT exemption on metro rail ticket prices last year, considering the service was not fully operational. And they were to provide the VAT exemption till June this year.

DMTCL recently wrote to NBR to extend the period of VAT exemption, but NBR rejected this application.

"Now, the NBR intends to withdraw that waiver with the goal of realising more revenue from this sector," a NBR official previously said.

The official said, as per the law, a 15% VAT is applicable to both AC and non-AC railway services. Section 26 of the Value Added Tax and Supplementary Duty Act 2012 does not provide exemptions for passenger transport – both temperature-controlled (AC) and first-class non-AC railway services.

As metro rail is fully temperature-controlled, a 15% VAT  is applicable to this service, added the official. 

The NBR official also mentioned that after a 15% VAT imposition, the minimum distance ticket price will be Tk23, up from Tk20 currently, while the maximum distance ticket price will be Tk115, up from Tk100.