Staff Reporter :
The National Board of Revenue might withdraw its earlier decision to start realising 15 percent value-added tax (VAT) on metro tickets, which was set to begin on July 1.
Taking into consideration the consumers’ interests, the tax authority would either refrain from imposing VAT on the service or reduce VAT to 5 percent for the upcoming fiscal year (2024–25), said a NBR official.
The revenue administration earlier informed the management of the Dhaka Mass Rapid Transit Company Ltd.
(DMTCL) about its unwillingness to extend the VAT exemption. From the very beginning of the operation of Metro Rail, the service’s VAT was exempted by the NBR. In a letter to DMTCL last month, the NBR the NBR said numerous development projects are underway to attain the goal of becoming a developed nation by 2041.
The government has to ensure funds to implement the projects, which are mainly coming from direct and indirect taxes.
The revenue administration stated that tax benefits are given to various sectors on different occasions to promote the development of domestic industries, reduce import dependence, and support small and cottage industries.
However, to improve the revenue-to-GDP ratio needed to finance the state’s development activities, it is gradually withdrawing exemptions from various areas, said the NBR. “It means that the areas of exemptions are being reduced,” said the NBR in the letter to the DMTCL explaining its inability to continue the VAT exemptions beyond June 30 this year.
The NBR lifted VAT from ticket fares for commuters on December 28, 2022, to encourage commuting on metro rail, which has had huge popularity since the beginning. The DMTCL sought a continuation of exemption from the NBR last month.
“However, responding to the DMTCL plea and other consumers’ rights organisations, the NBR is now backtracking from its VAT imposition decision and would continue the exemption for now,” said the official. He said that there is a possibility to reduce the VAT rate for the metro in the next budget, which could be 5.0 percent.
He further said the 5 percent rate could also be exempted as per the decision of the government.
However, the NBR official further said, “There are nearly 0.25 million people travelling through the metro every day now. If the VAT becomes 5 percent and a passenger pays Tk 50 a day, that could bring Tk 240 million in additional revenue from the metro.
Passengers Welfare Association Secretary General Mozammel Chowdhury said the decision to impose VAT on metro tickets would be suicidal.
“Metro fare is already much higher than in other countries. People are travelling through this amid severe traffic jams and mismanagement on the city roads. The hike in fare further could minimise the number of passengers,” Mozammel told The New Nation. Terming the decision of imposing VAT on metro tickets as a discriminatory one, Centre for Policy Dialogue (CPD) Distinguished Fellow Prof. Mustafizur Rahman said, “Imposing VAT only on metro tickets but relaxing this on importing products for the Rooppur Nuclear Project would be biassed, and the government should refrain from it.”
He said the NBR should learn to realise taxes from the formal sector rather than putting emphasis only on VATs.
