The National Board of Revenue (NBR) is planning to introduce a 15% value-added tax (VAT) on metro rail tickets in the fiscal year 2025. However, the Metro Rail Authority argues that they are already subject to VAT, as well as taxes on income generated from ticket sales and overall revenue.
Industry insiders ask if there is a justification for re-imposing VAT on tickets or not.
Meanwhile, if the NBR's plan to add VAT to metro rail tickets is implemented in the upcoming budget, it would result in increased government revenue. However, it would also make the metro rail commuting more expensive for passengers.
According to calculations following a 15% VAT imposition, the minimum ticket price for the shortest distance would rise to Tk23 from the current Tk20, while the maximum distance ticket price would increase to Tk115 from Tk100.
An NBR official, requesting anonymity, explained that previously in accordance with government directives, the NBR granted a VAT exemption on metro rail ticket prices last year, citing the service's incomplete operational status. Now, the NBR aims to revoke that exemption with the objective of generating more revenue from this sector.
NBR sources also informed that they will arrange a meeting with Dhaka Mass Transit Company Limited (DMTCL) to inform them of the decision.
DMTCL Deputy Project Director (Public Relations) Nazmul Islam Bhuiyan told Dhaka Tribune that: “Till now (February 13, evening), we have not heard anything from NBR about this issue. I came to know about VAT on tickets from you. But I don't think there is any scope to apply VAT to tickets separately. Because we are paying or will be paying annual VAT tax on our overall income.”
Bhuiyan also noted that, in the past two weeks, an average of 2.75 lakh passengers have been using the metro rail daily, with the highest recorded number of passengers reaching 2.95 lakh in a single day. Regarding ticket sales revenue, he emphasized the continuous growth in passenger numbers. He explained that as train intervals decrease, passenger numbers are expected to rise further. Therefore, projecting future income solely based on last year's data may not be accurate.
Estimating based on the current passenger volume, if each of the 2.75 lakh passengers spends Tk50 on average, the total revenue amounts to Tk1.37 crore. Bhuiyan also mentioned that approximately three lakh cards have been issued by DMTCL, though they lack updated data on rapid pass usage.
Regarding taxation, an official mentioned that according to NBR VAT Law, a 15% VAT applies to both AC and non-AC railway services, as outlined in Section 26 of the Value Added Tax and Supplementary Duty Act 2012. Since metro rail services are fully temperature-controlled, they fall under this VAT regulation.
Adding a 15% VAT would generate an extra Tk20.25 lakh in revenue for the state coffers, contributing an additional Tk74 crore annually.
