Metro rail commute to get costlier as NBR declines to extend VAT exemption

Metro rail commuters are expected to be required to pay 15 percent VAT on their ticket fares from July 1 as the National Board of Revenue (NBR) plans to discontinue the exemption.

The revenue administration has already informed the management of the Dhaka Mass Rapid Transit Company Ltd (DMTCL) about its unwillingness to extend the exemption.

The NBR, in a letter to DMTCL, said currently numerous development projects are on to attain the goal of becoming a developed nation by 2041. 

The government has to ensure funds to implement the projects, which are mainly coming from direct and indirect taxes.

The revenue administration said tax benefits are given to various sectors on different occasions to promote the development of domestic industries, reduce import dependence and support small and cottage industries.

However, to improve the revenue-GDP ratio needed to finance the state's development activities, it is gradually withdrawing exemptions from various areas, said the NBR.

"It means that the areas of exemptions are being reduced," said the NBR in the letter to the DMTCL explaining its inability to continue the VAT exemptions beyond June 30, this year.

The NBR lifted VAT from ticket fares of commuters from December 28, 2022, to encourage commuting on metro rail which has had huge popularity since the beginning.

The DMTCL sought a continuation of exemption to the NBR last month.