Govt publishes gazette reducing VAT on LPG

The government has issued a gazette notification exempting Value Added Tax (VAT) and duties at the local production and business levels of liquefied petroleum gas (LPG) to ensure a steady supply of the fuel.

At the same time, the National Board of Revenue (NBR) has withdrawn advance tax at the import stage and instead imposed a 7.5% VAT.

The directives were issued on Monday through two separate notifications.

The decision follows a proposal approved by the Advisory Council on 5 February, in response to the LPG cylinder price doubling nearly twice the government-set price.

According to the NBR press release, under the existing system, a 7.5% VAT is applied at the local production and business levels of LPG, and a 2% advance tax is levied at the import stage.

The NBR stated that, following the application of the LPG Operators Association of Bangladesh and recommendations from the Ministry of Power, Energy and Mineral Resources, the government has withdrawn the 7.5% VAT at production and business levels and the 2% advance tax at import level until 30 June this year.

Meanwhile, a 7.5% VAT has been imposed at the import stage.

The tax authority said that, from the date the notifications take effect, the measure will reduce the effective tax burden on consumers by around 20% compared with previous rates.

Earlier, in early January, supply disruptions, alleged manipulation, and operations at various locations had led businesses to stop selling LPG cylinders. To restore normal supply, the Ministry of Power, Energy and Mineral Resources had recommended a 10% VAT on LPG imports and exemption of VAT and duties at the local production level, which the NBR acted upon.