NBR seeks to impose VAT on metrorail tickets from July

A 15 per cent Value Added Tax (VAT) is likely to be imposed on metrorail tickets from July this year.

Currently there is a VAT waiver on metrorail tickets, which will expire on 30 June.

The National Board of Revenue (NBR) is not interested in continuing this facility since, according to the terms of the International Monetary Fund (IMF), all types of tax rebates should be reduced, said sources from the VAT department of NBR.

A discussion is going on in the policy making level of NBR about imposition of VAT on metrorail tickets.

As per the current VAT Act, any air-conditioned railway ticket is subject to 15 per cent VAT. Metrorail is fully air-conditioned and a public transport.

The NBR had discussed with the metrorail company authority early last year regarding the imposition of VAT on metrorail tickets.

Responsible sources said that there was a new meeting between senior officials of NBR and the metrorail company regarding the imposition of VAT in February this year. In that meeting, the proposal to impose a 15 per cent VAT on tickets was again presented. But the metrorail authorities did not agree to that proposal.

Later, the metrorail authorities wrote a letter to NBR chairman Abu Hena Md. Rahmatul Muneem, presenting their arguments against any imposition of VAT on the metrorail tickets.

Speaking about this, Dhaka Mass Transit Company Limited (DMTCL) secretary and director Abdur Rauf told Prothom Alo that there is a law to impose 15 per cent VAT on air-conditioned train tickets. But all those trains have normal compartments apart from the air-conditioned ones. Passengers have an option to choose the type of compartment. But the entire metrorail is air-conditioned. All the passengers have to buy the same ticket there. Besides, metrorail is now a fully public transport where common people travel.

A top official of NBR’s VAT department told Prothom Alo that there will be a meeting with the metrorail authority again after the Eid-ul-Fitr. There is pressure on the VAT department to increase tax collection. Currently, there is pressure to reduce the tax exemptions given in various sectors.

VAT should not be levied on metrorail tickets, say analysts.

Speaking about this, Policy Research Institute (PRI) executive director Ahsan H Mansur told Prothom Alo that it would not be right to impose taxes that put pressure on the people. Any imposition of VAT on tickets will result in an increase in the price of tickets. Whether the passengers could bear it or not, should be taken into consideration.