NBR hikes advance tax on bus, truck operators up to 88%

The government has proposed a sharp increase in the advance income tax from buses, trucks and other commercial vehicles in the upcoming fiscal year, a move that operators say could drive up transport costs across the board.

This hike, which would be up to 88 percent, would be the first increase in six years. The last adjustments were made in 2019 and 2014, both under the previous Awami League government.

In his budget speech on June 2, Finance Adviser Salehuddin Ahmed proposed the new rates, which cover 13 categories of commercially operated motor vehicles such as buses and trucks.

Currently, these tax rates range from Tk 4,000 to Tk 37,500 and are collected annually through the Bangladesh Road Transport Authority (BRTA) during registration or fitness renewals.

The National Board of Revenue (NBR) now proposes to raise these to between Tk 7,500 and Tk 50,000.

Transport operators say the hike will push up their costs, with a knock-on effect on consumer prices.

However, NBR officials insist that the hike should not affect fares, as the advance income tax (AIT) is adjustable against the operator's total income tax at the end of the year.

WHO WILL PAY WHAT

Under the proposed budget for fiscal year 2025-26, the AIT on buses with more than 52 seats is set to rise from Tk 16,000 to Tk 25,000. For smaller buses, with fewer than 52 seats, the tax may increase from Tk 11,500 to Tk 20,000.

Air-conditioned (AC) buses would face a tax of Tk 50,000, up from Tk 37,500.

Double-decker buses and AC minibuses or coasters are likely to see their tax jump from Tk 16,000 to Tk 25,000. For non-AC minibuses or coasters, the proposed rate is Tk 12,500, up from Tk 6,500.

The tax on prime movers could rise to Tk 35,000 from Tk 24,000.

For trucks, lorries and tank lorries with a load capacity over five tonnes, the tax is set to almost double, from Tk 16,000 to Tk 30,000.

Vehicles carrying between 1.5 and five tonnes may see a rise from Tk 9,500 to Tk 15,000, while those under 1.5 tonnes could face Tk 7,500, up from Tk 4,000.

Pickup vans, human hauliers and three-wheelers would also see their AIT rise to Tk 7,500, from the current Tk 4,000.

AC taxi cabs could face Tk 15,000, up from Tk 11,500, and non-AC cabs may pay Tk 7,500, up from Tk 4,000.

The budget is likely to be passed on June 22, with the new rates coming into effect from July 1.

'PASSENGERS WILL BEAR THE BRUNT'

Transport sector people, already in trouble due to rising costs and shrinking profit margins, fear that the proposed tax rise will hit both operators and passengers hard.

"The proposed tax hike means I have to bear the cost upfront, even though my income margin hasn't increased," said Subhankar Ghosh Rakesh, secretary of the Bangladesh Bus Truck Owners Association.

"Costs are rising, but our fares haven't. How are we supposed to absorb this?" he questioned.

"This move will create a financial blow for us. We're already in trouble. It would be a suicidal decision. We won't recover from it easily," Rakesh added.

He said that although the tax is adjustable later against income tax, 10 to 14 percent is withheld upfront, while many small operators have no other source of income.

"This will create an additional burden on passengers. We are preparing to send an official letter to the government in this regard," said the vehicle owners' association leader.

Preferring anonymity, a private bus owner also voiced frustration.

"We don't know why this decision was made or what the logic behind it was. No one consulted us. No meeting, no explanation," he said. "It feels like the entire transport sector is being punished for something we didn't even do."

He added, "The NBR has the authority to revise taxes. But in the past, they at least spoke to stakeholders before making such decisions. This time, we were left completely in the dark."

"Did anyone assess how this will impact passengers or operators?" he questioned.

OFFICIALS DOWNPLAY THE IMPACT

Speaking on condition of anonymity, a senior NBR official said the proposed increase was reasonable, given that tax rates had remained unchanged for six years.

"The amount is not significantly high, considering the booming transport business," the official said.

He said the AIT is adjustable against the operator's final income tax liability, so any immediate burden could be offset at the end of the year.

"When any tax rate increases, it may reduce the profit margin. Therefore, it is not logical to shift the entire burden onto passengers or consumers," the official added.

Snehasish Barua, managing director of SMAC Advisory Services Limited, said the hike might not raise the tax burden for businesses if their actual tax liability is higher than the AIT collected.

"However, if the actual tax is lower, the cost could rise, as the AIT works as a minimum tax. In those cases, operators may well pass on the extra cost to passengers," he said.