The government is preparing to increase advance income tax rates on commercially operated motor vehicles in the upcoming 2026–27 financial year, alongside a broader restructuring of vehicle classification and an expansion of the tax net to include additional categories of transport and heavy equipment.
Under the proposed reforms, advance tax will be collected at the time of vehicle registration or fitness certificate renewal. Authorities are expected to make tax payment proof mandatory, meaning that registration or renewal will not be processed unless the prescribed tax has been duly deposited.
The revised structure introduces significantly higher tax rates across multiple vehicle categories, with increases ranging from approximately 50 per cent to over 200 per cent in certain cases. The government also plans to broaden the classification system to ensure that specialised and heavy-duty vehicles are appropriately taxed.
Revised Advance Tax Structure
Vehicle Category
Previous Tax (BDT)
Proposed Tax (BDT)
Change
52-seat bus
16,000
25,000
+9,000
Minibus (including AC variants)
11,500
20,000
+8,500
Coaster
16,000
25,000
+9,000
Truck (5–20 tonnes)
16,000
30,000
+14,000
Heavy truck (above 20 tonnes)
16,000
50,000
+34,000
In addition to these revisions, the government is introducing separate tax classifications for a wider range of vehicles. Newly included categories comprise tractors, dump trucks, covered vans, cargo vans, cranes, excavators, dredgers, road rollers, and concrete mixer vehicles. These specialised and heavy equipment vehicles will be subject to advance tax rates of up to BDT 50,000 depending on type and capacity.
Officials indicate that the objective of this restructuring is to modernise the taxation framework, improve compliance, and ensure that revenue collection better reflects vehicle usage intensity and market segmentation. The expanded classification is also intended to reduce ambiguity in tax assessment, particularly for industrial and construction-related machinery that previously fell outside clearly defined categories.
A further significant amendment concerns multi-year vehicle registration and fitness renewal. Under the proposed system, owners opting for extended validity periods will be required to pay advance tax for subsequent years by 30 June of each fiscal cycle. Failure to comply within the stipulated timeframe will result in accumulated arrears being added to the following year’s tax liability, effectively increasing the financial burden for delayed payments.
Analysts suggest that the reforms could have a notable impact on transport operators, particularly those managing heavy freight vehicles and construction machinery, where tax increases are most pronounced. At the same time, policymakers argue that the changes are necessary to align fiscal policy with evolving transport infrastructure demands and to strengthen overall revenue mobilisation.
The proposed adjustments are expected to be finalised as part of the upcoming budgetary framework for 2026–27, subject to legislative approval.
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