Tax on motorcycle owners in the pipeline, but how justified is it?

A tax burden may soon fall on motorcycle owners in the upcoming budget. The government is considering bringing motorcycle owners under the income tax net. An advance income tax (AIT) may be imposed on them.

Those who earn a living through ride-sharing services using their own motorcycles, including drivers for services like Uber and Pathao, would also have to pay advance tax.

Advance tax means collecting money in advance on the assumption that a person has taxable income. This has raised the question: does riding a motorcycle necessarily mean a person earns taxable income?

At present, the tax-free income threshold is Tk 350,000. In other words, income tax is payable only if annual earnings exceed that amount.

Many motorcycle riders do not have taxable income. They do not have Taxpayer Identification Numbers (TINs) and are not required to submit income tax returns at the end of the year.

Many people are given motorcycles by their families simply for easier commuting.

Many students also ride motorcycles. They use income from private tutoring or temporary jobs to cover their bike expenses. Many delivery workers provide services using their own motorcycles.

Many people in rural areas also ride motorcycles. A large proportion of them remain outside the tax net. They too may now have to pay advance tax.

Motorcycle riders and entrepreneurs in the sector say there is no justification for collecting advance income tax from people who do not have taxable income. If the government ultimately proceeds with the decision, they argue, it would amount to forcibly taking money from people.

Matiur Rahman, president of the Bangladesh Motorcycle Assemblers and Manufacturers Association, told Prothom Alo that buyers already pay various taxes and duties when purchasing and registering motorcycles, and the amount is already quite high. Imposing advance tax on top of that would be unreasonable.

He added that motorcycle sales are already in very poor condition. Since companies were encouraged by the government to establish factories in the country, the sector has faced one setback after another and has been subjected to irrational policies. No discussions are being held with business owners, he said, adding that this is harmful to the industry.

Officials from the National Board of Revenue (NBR) recently held a meeting with Finance Minister Amir Khasru Mahmud Chowdhury regarding tax proposals for the upcoming budget of 2026–27 fiscal year. The proposal to bring motorcycle owners under the tax net was discussed at the meeting.

According to sources present at the meeting, there was consensus that advance tax should not be imposed on low-CC motorcycles.

However, motorcycles with engine capacities of 111–125cc may face an annual advance tax of Tk 2,000; motorcycles with 126–165cc engines may be charged Tk 5,000; and owners of motorcycles above 165cc may have to pay Tk 10,000 annually in advance income tax.

No discussion was held on how the advance tax would be collected. Officials from the NBR’s tax division are still reviewing the proposal to impose advance tax on motorcycle owners. The matter may be finalised at a meeting with the prime minister on customs and tax proposals.

At present, owners of CNG-run auto-rickshaws, private cars, jeeps, pickup trucks, buses and trucks are required to pay advance tax. Depending on the vehicle type, annual advance taxes ranging from Tk 2,500 to Tk 200,000 are collected per vehicle, and these are treated as final tax liabilities. Even if a vehicle owner has no taxable income, the money is not refunded.

Motorcycle owners are currently exempt from such advance tax. If imposed, it would similarly be treated as a final tax liability, like that of other vehicle owners. As a result, motorcycle owners would have to pay the advance tax even if they do not have taxable income.

A senior official from the NBR’s income tax division, speaking to Prothom Alo on condition of anonymity, said expensive motorcycles, including those made by Royal Enfield, are now available in the market. Wealthier individuals generally purchase higher-CC motorcycles, and the NBR is considering whether owners of such bikes should be brought under advance taxation.

Tax officials believe that a taxpayer’s social status, income level, and ownership of assets such as houses and vehicles can indicate whether they have taxable income. On this basis, the National Board of Revenue (NBR) collects advance tax from such taxpayers.

Tax officials assume that these individuals have taxable income and therefore there is no issue in collecting tax in advance. At the end of the year, taxpayers can adjust the advance tax paid when submitting their returns.

However, the question remains whether it is reasonable to assume that all motorcycle owners have taxable income.

Analysts say that withholding tax or advance tax collection is a relatively easy route for the NBR to raise revenue. Under pressure to meet revenue targets, the NBR has increasingly relied on this approach in recent years, imposing withholding or advance taxes in various sectors.

There are many professionals from whom sufficient tax is not being collected. Many TIN holders do not file returns. Unable to extract adequate tax from them, the authorities appear to be resorting to easier methods of collection.

Former NBR income tax policy member Syed Aminul Karim told Prothom Alo that children from wealthy families often ride expensive motorcycles, and imposing advance tax on them may be justified. However, he said it would not be appropriate to impose advance tax on motorcycle owners who are working people with no taxable income. “This needs to be considered carefully and rationally,” he added.

The number of motorcycles registered with the Bangladesh Road Transport Authority (BRTA) currently stands at around 5 million (50 lakh). However, this figure includes all motorcycles registered since independence, a portion of which are no longer in use.

According to data from two industry bodies—the Bangladesh Motorcycle Assemblers and Manufacturers Association (BMAMA) and the Motorcycle Manufacturers and Exporters Association of Bangladesh (MMEAB)—around 10 motorcycle manufacturing plants have been set up in the country since 2018.

Well-known Indian and Japanese motorcycle brands are now being manufactured locally, with an investment of approximately Tk 80 billion (8,000 crore) in factories.

Under the Motorcycle Industry Development Policy 2018, the target was set to produce 1 million (10 lakh) motorcycles annually by 2027. However, motorcycle sales are declining. Industry data show that 600,000 motorcycles were sold in 2022, which fell to 464,000 in 2025.

Subrata Ranjan Das, managing director of ACI Motors, which operates a motorcycle manufacturing plant with technical support from Japan’s Yamaha, told Prothom Alo that investors need a predictable policy framework. Frequent policy changes discourage investment.

He added that most people use motorcycles out of necessity because of the public transport crisis. They cannot afford cars because prices are too high. Motorcycles are also one of the main modes of transport used by sales representatives of corporate companies.

Calling motorcycles a lifeline for the country’s economy, Subrata Ranjan Das said the inconvenience caused to ordinary people by such taxes would outweigh the government’s financial gains, and the matter should therefore be considered rationally.

Many people in Dhaka earn a living by riding motorcycles. One of them is Suman Rahman, who was waiting for passengers in Karwan Bazar area on Wednesday.

When asked about the proposed advance tax, he said, “Riding a motorcycle for seven or eight hours a day takes a heavy toll on the body. The back, neck and other parts wear down. I don’t want to do this work anymore. The government should give me a job.”