The National Board of Revenue (NBR) has exempted value-added tax (VAT) on Dhaka metro rail ticket sales till the end of this year.

A circular, signed by Md Badruzzaman Munshi, second secretary of the VAT policy wing of NBR, revealed the information on Monday.

The exemption will stay effective till December 31, 2025, the circular noted.

The metro rail is the most ‘modern and popular public transport’ in Bangladesh and is playing a significant role in reducing traffic congestion as well as saving working hours of people, the NBR circular said.

Due to the above-mentioned reasons, the revenue board believes that the travel costs need to be made affordable to make the Metro rail more popular.

Under the current VAT and Supplementary Duty Act, a 15 per cent VAT is applied to air-conditioned transport services.

Initially, the VAT exemption was granted in 2023 to support the service`s launch. To encourage the use of the transportation system, Dhaka Mass Rapid Transit Company (DMTCL) requested the NBR to exempt metro tickets from VAT. Following the request, the revenue authority has waived the VAT on metro fares until June 2024.

The NBR did not extend the VAT exemption beyond the deadline and notified the DMTCL of this decision on April 4. However, the decision to impose the VAT was not implemented and the transport service enjoyed the facility till December 2024.

Meanwhile, on 4 July, in an inter-ministerial meeting, the then DMTCL Managing Director MAN Siddique requested a deferral of VAT on fares until 2032.