DMTCL seeks exemption of VAT on Metro Rail tickets

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Staff Reporter :
The Dhaka Mass Transit Company Limited (DMTCL), responsible for operating the metro rail service, is advocating for VAT exemption on metro rail tickets.

The company has initiated various measures towards this end, aiming to ensure that VAT is not imposed on the tickets.

On April 4th, the National Board of Revenue (NBR) informed the metro rail company of its decision to impose a 15% VAT on metro rail tickets starting in July, which NBR Chairman Abu Hena Md. Rahmatul Munim informed DMTCL’s Managing Director M. A. N. Siddique by sending a letter.

Previously, the NBR had temporarily suspended VAT collection on metro rail tickets until June. However, it is unwilling to continue this exemption any further.

Upon learning of the decision to impose VAT, the metro rail company has been in a state of urgency.

Initially, they informed Road Transport and Bridges Minister Obaidul Quader about the NBR’s decision.

According to reliable sources within the metro rail company, efforts are underway to promptly hold discussions with the Finance Minister regarding the exemption of VAT.

Additionally, the metro rail company seeks to hold discussions with the NBR. It is anticipated that such talks will take place next month.

However, before reaching this stage, the rationality of not imposing VAT on tickets had been conveyed on multiple occasions during meetings.

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Abdur Rouf, Secretary and CEO of Dhaka Mass Transit Company Limited (DMTCL), stated to the media, “There is a provision to impose a 15% VAT on tickets for air-conditioned trains. However, metro rail is a public transport system. If VAT is imposed, it could create additional pressure on passengers.

We are trying to make the NBR understand this issue. We hope that the NBR will withdraw this VAT in the interest of the public.”

According to responsible sources within the metro rail authority, if no consensus is reached between the two government bodies (NBR and metro rail authority), it will be brought to the attention of the highest policymakers of the government for intervention.

According to VAT laws, there is a provision to impose a 15% VAT on air-conditioned train tickets. However, besides the air-conditioned compartment, there are other classes on regular trains. Passengers have the option to choose their preferred class. However, in the metro rail system, all passengers are treated equally, and everyone has to purchase the same type of ticket.

In addition, metro rail is now entirely a public transport system used by ordinary citizens.

An official from the VAT division of the National Board of Revenue said, “There is immense pressure on the NBR to collect revenue from the metro rail.

Additionally, there are conditions attached to the International Monetary Fund (IMF) loan agreement that require VAT to be imposed in various sectors. Considering these factors, the decision has been made to extend the VAT exemption period on metro rail tickets.”

Since its inception, the metro rail service has been providing services from Uttara to Agargaon since December 28, 2022. Last year, the service expanded to Motijheel. Currently, around 4.5 million passengers travel by metro rail daily. Until now, approximately 70 million passengers have used the metro rail service.

The total revenue generated from the sale of metro rail tickets has not been disclosed. However, it is estimated that approximately 4 million Mass Rapid Transit (MRT) passes have been sold so far. It has been reported that more than half of the passengers now use this pass.

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