Metro travel set to get pricier as NBR plans VAT reimposition

The journey by Dhaka Metro Rail is likely to become costlier from July as the National Board of Revenue plans to reimpose value-added tax (VAT) on the tickets from the fiscal 2024-25, according to NBR officials.

An NBR official, wishing to remain anonymous, told The Business Standard that as per government directive, the NBR provided a VAT exemption on metro rail ticket prices last year, considering that the service was not fully operational.

"Now, the NBR intends to withdraw that waiver with the goal of realising more revenue from this sector," he said, adding that they will convene a meeting with Dhaka Mass Transit Company Limited (DMTCL) to inform them of the decision.

He also mentioned that it will help the revenue board realise about Tk100 crore annually from this service.

The official said, as per the law, a 15% VAT is applicable to both AC and non-AC railway services. Section 26 of the Value Added Tax and Supplementary Duty Act 2012 does not provide exemptions for passenger transport – both temperature-controlled (AC) and first-class non-AC railway services.

As metro rail is fully temperature-controlled, a 15% VAT  is applicable to this service, added the official. 

The NBR official also mentioned that after a 15% VAT imposition, the minimum distance ticket price will be Tk23, up from Tk20 currently, while the maximum distance ticket price will be Tk115, up from Tk100.

DMTCL Deputy Project Director (Public Relations) Nazmul Islam Bhuiyan told TBS that currently, an average of 2.7 lakh passengers travel on the metro rail daily.

He also mentioned that around three lakh cards have been issued by DMTCL so far, but they do not have updated information on how many passengers are using the rapid pass.

According to sources, the maximum number of passengers recorded in a single day so far was 2.75 lakh.

Based on estimates, if an average of 2.7 lakh passengers spend Tk50 each, the total amount stands at Tk1.35 crore.

With an additional 15% VAT imposed, NBR will be able to collect an extra Tk20.25 lakh in revenue daily. Consequently, additional revenue of around Tk74 crore will be added to the revenue account annually.

Initially, DMTCL operated the MRT-6 from Uttara North Station to Agargaon, but currently, it is running from Uttara North Station to Motijheel Station. DMTCL aims to extend operations up to Kamalapur Station by 2025.

Metro to run more frequently: Quader

Steps are underway to increase the movement frequency of metro rail in view of growing commuters' dependence on its service, Road Transport and Bridges Minister Obaidul Quader said on Monday.

Talking to reporters at his office, he said the coach numbers could not be increased due to technical reasons, but steps were taken to run a train every eight minutes, while the current frequency is 10 minutes.

There is no metro rail with more than five coaches anywhere in the world, but the metro rail in Bangladesh has already been running with six compartments, he said.