NBR revises LPG tax structure

The National Board of Revenue (NBR) has restructured the VAT on liquefied petroleum gas (LPG) to reduce the tax burden on consumers and stabilise the domestic fuel market.

The NBR has withdrawn the 7.5 percent VAT at the production and trading stages of LPG, as well as the 2 percent advance tax on imports.

Instead, it has imposed 7.5 percent VAT at the import stage of LPG, according to two separate notifications issued on Monday.

As a result of the restructuring, VAT on LPG will be applicable only at the import stage.

The NBR said the VAT burden on consumers will decline by one-fifth due to the restructuring.

“Due to this decision, the overall VAT burden will decline, as VAT will now be effectively collected at the import stage,” said Bodruzzaman Munshi, second secretary (VAT Policy) at the NBR.

Explaining the mechanism, he said that at the import stage, VAT of 7.5 percent (Tk 7.5) would be paid on a base value of Tk 100. At the production or trading stage, VAT would be imposed on the value addition.

“For instance, if Tk 20 is added to the original value, bringing the total to Tk 120, VAT would be calculated on the full amount, and the net payable VAT would stand at around Tk 9,” he said.

He added that the measure would also help curb VAT evasion by streamlining collection at the initial stage of the supply chain.

The revenue authority said it has decided in the public interest to stabilise the market and keep LPG -- widely used in households and industry -- within consumers’ purchasing power.

The new measures will remain in force until June 30, 2026.

The revenue administration’s move came following an application from the LPG Operators Association of Bangladesh and recommendations from the Ministry of Power, Energy and Mineral Resources.