Sunday, 3rd May 2026
Khabor Wala Desk
Published: 3rd May 2026, 7:22 PM
In a significant move aimed at modernising the national transport fleet and promoting sustainable energy, the Cabinet has approved extensive customs and tax exemptions for the importation of new electric buses. Under the new directive, all associated import duties and taxes have been waived, with the exception of the 15 per cent Value Added Tax (VAT), which remains in force.
The decision was ratified during a Cabinet meeting held at 6:45 pm on Sunday, 3 May 2026, within the Cabinet Room of the National Parliament Building. The session was presided over by Prime Minister Tarique Rahman. Following the deliberations, a formal press release was issued by the Cabinet Division to outline the technical specifications and fiscal implications of the new policy.
The proposal was initiated by the Internal Resources Division (IRD) under the Ministry of Finance. It is designed to incentivise the transition from internal combustion engine (ICE) vehicles to electric vehicles (EVs) by drastically reducing the Total Tax Incidence (TTI) for commercial importers and transport operators.
The approved exemptions apply specifically to vehicles classified under HS Code 8702.40.00. To qualify for the tax relief, the imported vehicles must meet the following stringent criteria:
Seating Capacity: The vehicles must be configured with a minimum of 17 seats.
Condition: Only “Brand New” (completely new) electric buses are eligible; reconditioned or used electric vehicles are excluded from this specific scheme.
Usage Restrictions: The exemptions apply to buses imported for general transport purposes. The Cabinet Division noted that buses specifically intended for student transport were already subject to separate regulatory considerations, and the 15 per cent VAT applies to those utilised for other commercial or private operations.
The most notable aspect of this policy is the total removal of several heavy fiscal burdens that typically apply to vehicle imports. According to the Cabinet Division, the following duties have been completely waived:
Customs Duty (CD): The primary tariff on imported goods.
Regulatory Duty (RD): Additional duties often applied to regulate market supply.
Supplementary Duty (SD): Usually levied on luxury items or specific vehicle categories.
Advance Tax (AT): An upfront VAT payment collected at the port of entry.
Advance Income Tax (AIT): An adjustable tax collected at the source of import.
With these five components reduced to zero, the only remaining fiscal obligation for importers is the 15 per cent VAT. Consequently, the total tax burden for a qualifying brand-new electric bus will be capped at precisely 15 per cent.
The Cabinet Division further disclosed that this fiscal incentive is not limited solely to passenger transport. A separate notification is expected to be issued extending identical benefits to the importation of trucks with a load capacity of 5 tonnes or more. This expansion aims to decarbonise the logistics and freight sectors, which are major contributors to urban air pollution.
The current exemption facility is scheduled to remain valid until 30 June 2026. The government intends to monitor the uptake of this facility during this window to determine future fiscal policies regarding green energy transport.
Official statutory regulatory orders (SROs) are expected to be published by the National Board of Revenue (NBR) imminently to provide legal effect to the Cabinet’s decision. By aligning the nation’s import policy with global environmental standards, the administration seeks to reduce the country’s reliance on imported fossil fuels and decrease the carbon footprint of the public transport network. This move is also anticipated to lower the operational costs for transport companies in the long term, potentially leading to more competitive fare structures for the general public.
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