Metro rail: VAT exemption on tickets extended for 6 more months

The National Board of Revenue (NBR) has extended the duration of the value added tax (VAT) exemption on metro rail services.

In a notification, the NBR stated that the VAT exemption for metro rail services has been extended by a further six months.

Previously, the NBR had granted VAT exemption on metro rail tickets until 31 December 2025. The notification states that, following a recommendation from the ministry of road transport and bridges and in the public interest, the duration of this exemption has been extended until 30 June 2026.

Earlier, at a meeting of the Advisory Council held on 11 December, it was decided that the facility of VAT exemption on metro rail tickets would be continued. In line with that decision, the NBR issued a notification on the matter yesterday, Tuesday.

Under the prevailing VAT law, there is a provision for the imposition of 15 per cent VAT on tickets for any air-conditioned railway service. The metro rail is fully air-conditioned and constitutes a form of public transport.

However, since the start of metro rail operations, VAT has not been imposed on this service at the request of its owning company, Dhaka Mass Transit Company Limited (DMTCL).

Metro rail services from Uttara to Agargaon started in December 2022. The metro rail is now operating fully up to Motijheel and in the future it is planned to be extended up to Kamalapur.

Since the beginning of 2023, the NBR had undertaken initiatives to impose VAT on metro rail tickets.

On 22 January of that year, the then commissioner of the Dhaka South VAT commissionerate, Shawkat Ali Sadi, wrote to Dhaka Mass Transit Company Limited (the metro rail company) calling for the imposition of VAT.

Subsequently, several meetings were held with the metro rail authorities. However, the NBR ultimately refrained from imposing VAT.