The government is expected to propose a new policy in the fiscal year 2021-22 budget to make it easier to collect advance income tax on electric car registrations. In light of the growing popularity of such vehicles, the National Board of Revenue (NBR) has recommended amending Section 68B of the 1984 income tax legislation to clarify the tax treatment of electric vehicles, according to finance ministry sources.
AHM Mustafa Kamal, the Finance Minister, is slated to present the proposal to Parliament on Thursday during the budget session. Due to the absence of needed provisions in the finance legislation, the Bangladesh Road Transport Authority (BRTA) is now unable to collect advance income tax from electric vehicles. BRTA collects this charge from private vehicle owners upon registration and renewal of fitness certificates.
In the current finance act, advance income tax rates are determined by the engine capacity of vehicles, expressed in cubic centimeters (cc), although electric vehicles lack an engine and their motor capacity is expressed in kilowatts.
According to NBR officials, the new policy would easily bring electric vehicles into the tax net. The revenue board has recommended a new metric for evaluating electric vehicles, deeming 20cc to be the equivalent of 1kw.
Tax officials stated that the new budget would include electric automobiles in the advance income tax net. Abdul Haque, head of the Bangladesh Association of Reconditioned Vehicle Importers and Dealers, applauded the move. He stated that calculating the motor capacity of electric vehicles is challenging and that this step will simplify registration and revenue collection.
Private car owners are required to pay advance income tax at several rates, ranging from Tk25,000 to Tk200,000, under the finance laws. According to the current budget proposal, the advance income tax on an electric vehicle with a 75kw motor capacity will be Tk25,000, the same as the advance income tax on a car or jeep with a capacity of less than 1,500cc.
On the other hand, the maximum tax on a motor vehicle will be Tk200,000 if its engine capacity exceeds 175kw. This vehicle will be classified as a car or a jeep with a displacement greater than 3,500cc.
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Additionally, the NBR recommended imposing an advance income tax of Tk50,000 on motor vehicles with a capacity of 75kw to 100kw, Tk75,000 on motor vehicles with a capacity of 100kw to 125kw, and Tk125,000 on motor vehicles with a capacity of 125kw to 150kw. On a motor vehicle with a capacity of between 150kw and 175kw, the tax will be Tk150,000.
According to the Motor Vehicle Rules 1984, an electric vehicle is defined as one that is solely powered by one or more electric motors that receive traction energy from a rechargeable battery mounted in the vehicle. Batteries-powered bicycles and rickshaws are not included in this category.
The BRTA has already taken steps to finalize its criteria for electric vehicle registration and operation. In November 2018, a draft of the guidelines titled Electric Vehicle Registration and Operation Guidelines was created.
Capacity (1kw=20cc) | Tax (BDT) |
Below 75kw | 25,000 |
75-100kw | 50,000 |
100-125kw | 75,000 |
125-150kw | 1,25,000 |
150-175kw | 1,50,000 |
Above 175kw | 2,00,000 |
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