The Dhaka Mass Transit Company Limited (DMTCL) has requested a 10-year extension of VAT exemption on metro rail passenger services until 2036.
In a letter sent to the National Board of Revenue (NBR) through the Road Transport and Highways Division, DMTCL proposed keeping the exemption in place from July 1, 2026 to June 30, 2036.
The current VAT waiver on metro services is set to expire on June 30, 2026.
DMTCL said metro rail is a uniform public transport service with no class-based fare system, making VAT imposition unjustified. It also noted that globally, metro systems are rarely profitable based on fare income alone, with governments typically providing subsidies.
The company highlighted that the service is environmentally friendly, as it runs entirely on electricity and reduces dependence on fossil fuels. Once fully operational, MRT Line-6 is expected to cut annual carbon emissions by over 200,000 tonnes and reduce traffic congestion, air pollution, and noise levels.
According to estimates, full operation of the line could save around Tk 8.38 crore daily in travel time costs and Tk 1.18 crore in vehicle operating costs, contributing positively to the economy.
DMTCL also said the metro rail project is still ongoing and has not yet been fully handed over to the company. The project is scheduled to run until December 2028.
It added that large foreign loans taken for the project are being repaid regularly through the government. So far, over Tk 106 crore has been paid in installments.
The company described metro rail in Bangladesh as an “infant industry” that requires long-term tax relief, citing international examples such as metro systems in India that operate without VAT for extended periods.
DMTCL also noted rising electricity costs, with tariffs increasing multiple times in recent years. Currently, it spends around Tk 6 crore monthly on electricity, while fares have not been increased to keep the service affordable.
The company further pointed out that collecting VAT through automated ticketing machines at stations would be complex and costly.
Considering these factors, DMTCL urged the authorities to extend the VAT exemption to ensure the metro rail remains affordable, efficient, and sustainable for commuters.