Metro rail VAT exemption extended

The government has proposed extending the current value-added tax (VAT) exemption on metro rail services for another two years in a move aimed at keeping urban public transport affordable for commuters, Finance Minister Amir Khosru Mahmud Chowdhury said while presenting the national budget for the FY27 in Parliament on Thursday.

“Under existing tax regulations, passengers travelling on air-conditioned railway services are required to pay 15 percent VAT on tickets. Although metro rail services are fully air-conditioned, the government has not imposed VAT on fares since commercial operations began in December 2022,” he said.

The proposal comes after an earlier attempt by the National Board of Revenue (NBR) to introduce VAT on metro rail tickets in July 2024. The move was later withdrawn following public criticism and intervention by the government.

Since then, the NBR has continued to grant temporary VAT exemptions through successive notifications. The latest notification, issued in December, extended the exemption until June 30, 2026.

Alongside the proposed continuation of the VAT waiver, the finance minister announced additional transport benefits for elderly citizens. Under the proposal, people aged above 65 years will be allowed to travel on trains free of charge and will receive a 25 percent discount on metro rail fares.

Highlighting the government’s long-term transport strategy, Khosru said efforts are underway to develop a modern mass transit network centred on six metro rail lines. He added that a monorail-based feeder network connected to the metro system is also planned to improve urban mobility and connectivity.