The government has decided to extend the tax exemption on metro-rail tickets for another year in the upcoming fiscal budget, aiming to keep fares affordable for commuters.
Currently, metro rail tickets are exempt from the 15 per cent Value Added Tax (VAT), a facility that is set to expire on June 30, 2026.
However, the exemption is now expected to continue through the next fiscal year.
A senior official of the National Board of Revenue (NBR) said Finance Minister Amir Khosru Mahmud Chowdhury had approved a proposal from the VAT wing to maintain the exemption in the public interest.
"We have proposed the VAT exemption as around 450,000 people commute daily by metro rail," the official said.
He said the NBR was exploring the possibility of offering a long-term exemption on metro rail tickets as extending tax benefits every year created uncertainty.
Under the existing VAT law, passengers using air-conditioned public transport are subject to a 15 per cent VAT on tickets.
However, in the case of metro rail, the NBR considers it difficult to impose such a tax due to its significant impact on commuters.
The official also noted that the government would not earn a substantial amount of revenue from metro rail tickets even if VAT was applied. Recently, Dhaka Mass Transit Company Limited (DMTCL), the operator of the metro rail system, sought a 10-year extension of the VAT exemption to ensure fare affordability and operational sustainability.
The agency described the mass transit system as an "infant industry," emphasising the need for continued policy support, given its long-term financial requirements and the limited capacity of commuters to bear additional costs.
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