Taxes raise on fossil-fuel vehicles
The government has moved to reshape the country’s transport sector through sweeping tax reforms targeting fossil-fuel vehicles, while offering major incentives for electric mobility, as part of the national budget for the 2026-27 fiscal year.
Finance Minister Amir Khosru Mahmud Chowdhury, presenting the budget before the Jatiya Sangsad on Thursday, said the new measures are designed to reduce carbon emissions, ease pressure on imported fuel, and strengthen long-term energy security.
Under the proposals, tax incidence on internal combustion engine (ICE) vehicles is set to rise sharply.
For cars with engine capacities between 1200cc and 1600cc, the total tax incidence will increase from 132.36 per cent to 155.88 per cent.
Officials said the move is aimed at discouraging reliance on petrol and diesel-powered transport.
In contrast, electric vehicles are set to benefit from significant cost reductions.
The total tax incidence on imported EVs priced up to USD 25,000 will fall from 93 per cent to 64 per cent, making them more accessible in a market still heavily dependent on fossil fuels.
The budget also reduces Advance Income Tax on EV registration and renewal. For electric vehicles with capacity up to 200 kilowatts, the current Tk 200,000 charge will be replaced with a Tk 25,000 fee, a move expected to lower ownership costs substantially.
To support infrastructure development, the government has also removed taxes on EV chargers and charging stations, cutting the rate from 39.75 per cent to zero.
Authorities say this is intended to accelerate the rollout of a nationwide charging network.
The Finance Minister said the reforms are part of a broader transition towards cleaner transport and reduced dependence on imported energy.
The policy direction also aligns with wider environmental goals, including afforestation and restoration of natural water systems, as the country positions itself for a more climate-resilient economic model.
Officials described the package as a structural shift in transport taxation, signalling a gradual but firm move away from fossil fuels in favour of electric mobility.
