The Dhaka Mass Transit Company Limited (DMTCL) has requested a 10-year extension of the value-added tax (VAT) exemption on metro rail passenger services.
The state-run operator argues that the move is essential to keep fares affordable and ensure long-term operational sustainability.
In a recent letter to the Road Transport and Highways Division, DMTCL requested that the matter be forwarded to the National Board of Revenue (NBR). The operator has recommended extending the existing waiver from 1 July this year until 30 June 2036.
The current 15 percent VAT exemption on tickets is scheduled to expire on 30 June.
Describing the metro rail as an “infant industry,” the DMTCL stated that the service still requires policy support, considering its long-term financial viability and the purchasing capacity of commuters.
The company presented 17 arguments in favour of maintaining the waiver, noting that metro systems worldwide are seldom profitable based solely on fare revenue. Typically, ticket sales cover up to 65 percent of operating costs, with the remaining expenses subsidised by governments.
The operator also highlighted technical challenges in imposing VAT. As there are no passenger classes in the metro system, the tax would have to be uniformly applied to all fares.
Adding a 15 per cent VAT would raise the first fare slab to Tk23 and the second to Tk34, creating complications for automated ticket vending machines that currently operate in multiples of Tk 10. Managing smaller denominations would require significant technical modifications.
Beyond operational concerns, the DMTCL emphasised the broader economic benefits of the service.
According to a survey, once MRT Line-6 is fully operational, commuters are expected to save Tk8.38 crore daily in travel time and Tk1.18 crore in vehicle operating costs. The metro rail is also helping to reduce traffic congestion and ease pressure on Dhaka’s road network.
Bangladesh’s first metro rail line was inaugurated on 28 December 2022, initially running from Uttara North to Agargaon. Services were later extended to Motijheel on 5 November 2023.
Despite being a fully air-conditioned service, metro rail tickets have remained exempt from VAT since its inception. According to DMTCL, approximately 400,000 passengers currently use the metro rail on a regular basis.
