How advance income tax will be collected from motorcycle owners

The National Board of Revenue (NBR) is considering a proposal to impose Advance Income Tax (AIT) on motorcycle owners in the upcoming national budget, triggering widespread discussion over how authorities would implement the measure.

The proposal has raised questions because many motorcycle owners do not have taxable income or Tax Identification Numbers (TINs), although they legally own registered bikes across the country.

NBR officials said the government is reviewing the possibility of bringing motorcycles and other vehicles currently outside the tax network under an advance tax system from the next fiscal year.

At present, motorcycle owners pay an annual tax token fee and renew the token every year. Authorities are now considering collecting advance income tax alongside the existing token system.

Former NBR chairman Badiur Rahman welcomed the proposal and described it as logical, provided authorities set the tax rate at a reasonable level.

“The idea is good and rational. However, the tax rate must remain realistic. The NBR has to decide whether it will collect the tax through TIN numbers or another mechanism,” he told BBC Bangla.

However, the proposal has already sparked strong reactions among motorcycle owners and riders after reports about the possible tax surfaced in the media.

A group of riders recently staged a demonstration in front of the NBR headquarters and submitted a memorandum demanding the withdrawal of the proposed tax.

Critics argue that many people use motorcycles as an affordable means of transport or for professional purposes despite having limited incomes. They fear the new tax could place an additional financial burden on lower and middle-income groups.

Officials, however, believe the measure could help expand the country’s tax net and improve revenue collection from sectors that currently remain outside direct taxation.

The proposal remains under discussion, and the government has yet to announce any final decision regarding the implementation process or tax structure.

How NBR plans to collect the tax?

The National Board of Revenue (NBR) is considering several methods to collect Advance Income Tax (AIT) from motorcycle owners as part of efforts to expand the country’s tax network.

According to the latest data from the Bangladesh Road Transport Authority, nearly 4.9 million registered motorcycles currently operate across the country.

Recent media reports said NBR officials proposed bringing motorcycles and auto-rickshaws under the advance income tax system during a meeting with Finance Minister Amir Khasru Mahmud Chowdhury. Officials also proposed increasing the existing advance income tax on high-engine-capacity vehicles.

Officials involved in budget preparations said the NBR has already reviewed the proposal internally and is currently considering collecting the tax through Tax Identification Numbers (TINs).

“We are reviewing the matter. Collecting the tax through TIN numbers appears to be the better option because it would gradually bring more people under a structured tax system,” an NBR official told BBC Bangla.

Former NBR chairman Badiur Rahman said motorcycle owners should also contribute to the tax system, even if many of them do not fall within the minimum taxable income bracket.

“Motorcycle registration already follows a legal process. The NBR will determine how to collect the tax. Whether it comes as a general tax or advance income tax, the rate must remain reasonable,” he said.

TIN, or Tax Identification Number, serves as a unique number that identifies taxpayers in Bangladesh. Authorities already require TINs for many business and financial activities.

However, officials are also discussing an alternative approach that would allow authorities to collect AIT alongside the existing annual tax token fee without requiring TIN registration.

Supporters of the idea believe this system could allow a large number of motorcycle owners to pay advance tax easily while gradually encouraging them to join the formal tax network.

What tax rates NBR may impose on motorcycles?

The National Board of Revenue (NBR) is considering a tier-based advance income tax structure for motorcycles and auto-rickshaws in the upcoming national budget, according to officials involved in the process.

Media reports quoting NBR officials said Finance Minister Amir Khasru Mahmud Chowdhury is likely to place the new proposals before parliament in June during the budget session.

Under the proposal, motorcycles with engine capacities up to 110cc may remain outside the new advance income tax system.

Officials are discussing an annual tax of Tk2,000 for motorcycles between 111cc and 125cc. The proposed rate may rise to Tk5,000 for motorcycles up to 165cc, while bikes above that category could face an annual advance tax of Tk10,000.

A senior NBR official confirmed to BBC Bangla that discussions on the proposed rates are ongoing.

Authorities are also considering bringing battery-run auto-rickshaws under the tax system, although officials still do not know the exact number of such vehicles operating across the country.

According to the proposal, battery-run auto-rickshaws operating in city corporation areas may face an annual tax of Tk5,000, while operators in municipal areas could pay Tk2,000 and those at union level Tk1,000.

Officials indicated that vehicle owners may need to register their vehicles with union parishads, municipalities or city corporations and pay the advance tax alongside licence fees if authorities finalise the proposal.

Meanwhile, motorcycle owners and riders staged demonstrations and formed a human chain in front of the National Board of Revenue headquarters in Agargaon on Sunday, protesting the proposed tax.

In a memorandum submitted to the NBR chairman, protesters said the proposal had created concern among millions of motorcycle users across the country.

Speakers at the protest argued that motorcycle prices in Bangladesh already remain higher than in neighbouring countries. They also said many people now rely on ride-sharing and delivery services for their livelihoods, and additional taxes would place extra pressure on ordinary citizens.

Several riders in Dhaka also criticised the proposal. “I already pay the annual tax token fee. Imposing another tax would be unfair,” said Shahabuddin, a motorcycle rider in Gulshan.

Another rider, Rafik Ullah, said, “Extra taxes may make sense for luxury users, but motorcycles are our source of income. Why should we pay more tax?”