Govt cuts VAT on LPG to stabilise price

The government has reduced value Added Tax (VAT) on LPG in a move aimed at stabilising the market and keeping the essential fuel within consumers’ purchasing power.

In a press release issued on Monday night, the National Board of Revenue (NBR) said it had issued two separate notifications on February 16, effective until June 30, 2026, revising the existing VAT structure on LPG.

Under the previous system, 7.5 per cent VAT was applicable at the local production and trading stages, while a 2 per cent advance tax was imposed at the import stage.

Following an application from the Liquified Petroleum Gas(LPG)Operators Association of Bangladesh (LOAB) and a recommendation from the Energy and Mineral Resources Division, the government has withdrawn the 7.5 per cent VAT at the local production and trading levels as well as the 2 per cent advance tax at the import stage.

Instead, a uniform 7.5 per cent VAT has been imposed at the import stage.

According to the NBR, the restructuring means that while VAT will now be collected at the point of import, no VAT will be applicable on the value addition occurring at the local production and sales stages after import.

Officials said the decision was taken in the public interest, considering LPG is an essential commodity for both industrial use and household consumption.

The authorities expect the measure to help maintain price stability in the domestic market.

The NBR said that from the effective date of the notifications, the overall VAT burden on consumers purchasing LPG would decrease by around 20 per cent compared to the previous structure.

The revised VAT arrangement will remain in force until June 30, 2026, unless further extended or amended by the government.