Government cuts VAT on LPG to stabilise market

Staff Reporter :

The government has announced a reduction in the overall Value Added Tax (VAT) on Liquefied Petroleum Gas (LPG) to stabilize the market and keep the essential commodity affordable for consumers.

According to a press release from the National Board of Revenue (NBR), under the previous system, a 7.5 percent VAT applied at local production and trading stages of LPG, while a 2 percent Advance Tax (AT) was levied at the import stage.

Recognizing LPG as a vital commodity for both industrial and household consumption, the government decided to rationalize the tax structure to ease the financial burden on consumers and ensure market stability.

The decision followed a formal request from the LPG Operators Association of Bangladesh (LOAB) and recommendations from the Ministry of Power, Energy and Mineral Resources. Consequently, two statutory regulatory orders (SROs) were issued on Monday.

Under the new framework, effective until June 30, 2026, the 7.5 percent VAT at the local production and trading stages and the 2 percent Advance Tax at the import stage have been withdrawn. Instead, a single 7.5 percent VAT will now be applied only at the import stage of LPG.

This restructuring eliminates multiple layers of VAT throughout the supply chain, meaning the tax will be collected just once at import. The NBR estimates that, as a result, the overall VAT burden on consumers will drop by approximately 20 percent compared to the previous system.

Officials said the move is expected to help maintain price stability in the LPG market, ensure uninterrupted supply, and provide relief to middle- and lower-income households that rely heavily on LPG for cooking and daily needs. Industrial users are also likely to benefit through reduced cost pressures and improved market efficiency.

The NBR emphasized that the measure has been implemented in the public interest and will remain in effect until June 30, 2026, unless further revised or extended.