The cost of owning high-end vehicles is set to increase from the next fiscal year, as the government is going to propose higher advance income tax rates on cars with larger engine capacities.
Under the budget for fiscal year 2026-27 to be presented today, owners of cars and jeeps with engine capacities above 2,500cc will have to pay an additional Tk50,000 in annual advance income tax.
Advance income tax is paid annually by vehicle owners based on the type of vehicle and engine capacity.
Under Bangladesh’s budgetary rules, any increase in tax becomes effective immediately after the budget is presented, while tax reductions take effect only after the budget is passed.
As a result, the revised rates will come into force immediately following the budget announcement today.
The proposed rates for vehicles with engine capacities below 2,500cc remain unchanged. Owners of private cars and SUVs below 1,500cc will continue to pay Tk25,000 annually, while those with engines between 1,500cc and 2,000cc will pay Tk50,000.
Vehicles with engines between 2,000cc and less than 2,500cc will continue to be subject to an advance tax of Tk75,000.
However, the annual advance tax for vehicles with engine capacities of 2,500cc to less than 3,000cc is being increased from Tk1.50 lakh to Tk2 lakh.
For vehicles with engines between 3,000cc and 3,500cc, the tax is proposed to rise from Tk2 lakh to Tk2.50 lakh.
The budget also proposes increasing the annual advance tax on vehicles with engine capacities exceeding 3,500cc but not more than 4,500cc from Tk3.50 lakh to Tk4 lakh.
For vehicles with engines above 4,500cc, owners will be required to pay Tk5 lakh annually in advance income tax under the proposed budget.
The government has also proposed an annual advance tax of Tk40,000 for microbuses and double-cabin pickup vehicles.
Abdul Haque, president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA), told TIMES of Bangladesh, “Cars with more powerful engines consume more fuel. The government is discouraging cars that consume more fuel to reduce fuel consumption.”
He said vehicle owners pay the advance tax each year when renewing fitness certificates and tax tokens. After depositing the amount through a bank, owners receive a tax payment receipt.
