VAT exemption on metro rail passenger services

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Eati Akter

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The National Board of Revenue (NBR) has exempted Value Added Tax (VAT) on metro rail passenger services. This exemption will remain in effect till June 30, 2024. Recently, a special order of the Board of Revenue informed about this decision.
According to the order, Metrorail is the first state-of-the-art public transport in Bangladesh. Metrorail will play an important role in decongesting traffic as well as saving working hours. In order to make this type of public transport more popular at the initial stage of the introduction of Metrorail, it is necessary to make the cost of travel in this public transport affordable. The National Board of Revenue, by virtue of sub-section (3) of section 126 of the Value Added Tax and Supplementary Duties Act, 2012 (Act No. 47 of 2012), exempts the value added tax leviable on metrorail services up to 30 June 2024.
This order will be deemed effective from 28 December 2022. Last March, Dhaka Mass Transit Company Limited (DMTCL) sought VAT exemption stating that no Value Added Tax (MUSAC) or VAT is applicable on metro rail passenger services as there is no classification of passengers. In such a situation, Customs, Excise and VAT Commissionerate Dhaka (South) seeks the direction of the Board of Revenue to collect VAT from DMTCL.
As per NBR Act, Value Added Tax (MUSC) or VAT is applicable at the rate of 15 percent on AC and non-AC railway services. However, DMTCL’s claim was that as there is no classification of Metrorail and passengers of Metrorail, no tax would be applicable on passenger services. NBR exempted VAT on the passenger service of the transport in compliance with the demand of the Metrorail authorities.

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