Metro-rail ticket to remain tax-free for next FY

Staff Reporter :
The National Board of Revenue (NBR) is going to exempt Value-Added Tax (VAT) on Metro-Rail tickets with a view to popularizing the service, officials said.

As per the NBR rules, a 15 per cent VAT is applicable on AC and non-AC railway services and the revenue board did not exempt on air-conditioned and first class non-AC railway ticket services as per the section-26 of the Value Added Tax and Supplementary Duties Act, 2012.

But popularizing the metro-rail service, the revenue board has decided to keep the service out tax till June 30, 2024, the NBR officials said.

Earlier, Shaukat Ali Sadi, Commissioner of the Customs, Excise and VAT Commissionerate, Dhaka (South), has sent a letter to the authority of the Dhaka Mass Transit Company Limited asking them to cut 15 per cent VAT against the Metro-rail tickets.

In replying to the letter, the authority of the Mass Transit Company informed that from the experience of operation of metro-rails in different countries, it is proved that the service will not be profitable by depending on income of tickets.

Usually, the operational cost is met through the government subsidy in the countries. Following this, we have already requested the Finance Ministry to allocate Tk 1,000 crore to meet operational and maintenance costs of the MRT Line-6.

It also informed that Bangladesh is losing around Tk 40,000 crore annually only for traffic jam in Dhaka city. So, the country will be freed from the financial losses if the MRT network starts to come into operation successfully.

And the saved money can be invested in different development activities then, the company said.

Besides, the metro-rail service is equal for all and there is no classification. So, VAT is not applicable here, although a 15 per cent tax is applicable on tickets of AC and first class passengers of the Bangladesh railway, the authority said.

NBR officials said VAT has been exempted as the Metro-rail is directly engaged in public service and non-profitable one.

“Besides, Metro-rail is yet to be operational fully and become very public friendly. So, if VAT is imposed on metro rail fare, it will be burden for the people. Considering the overall situation, VAT of rail fare has been exempted,” the officials said.

Situation will say whether the NBR will impose VAT on it or not from FY’ 25, the officials said.