15pc VAT to be imposed on metro rail tickets from July

The National Board of Revenue (NBR) has decided to withdraw the tax exemption enjoyed by the Metro Rail authority from July this year.

To this end, NBR sent a letter to Dhaka Mass Transit Company Limited (DMTCL) on Thursday.

As per the new order, ticket price for the shortest distance, for example from Motijheel to Secretariat or TSC, will be Tk 23, up from Tk 20. Similarly, ticket for the longest distance would cost Tk 115, up from Tk 100.

NBR would impose 15 per cent VAT on each passenger journey after the existing exemption provision expires on June 30.

Meanwhile, NBR had provided a VAT exemption on metro rail ticket prices last year, considering the service was not fully operational.

The NBR has declined to provide further exemption. In its response in Thursday’s letter, NBR said along with continuing to provide money for the huge development activities, graduation of the country from LDC and raising the tax-GDP ratio to the desired level, the exemption benefits given by taking into consideration the capacity of various sectors are being gradually withdrawn, i.e. the area of exemption is being narrowed.

As per the law, a 15 per cent VAT is applicable to both AC and non-AC railway services. As metro rail is fully temperature-controlled, a 15 per cent VAT is applicable to this service.