The government’s proposal to sharply raise advance income tax (AIT) on commercial vehicles in the FY2025-26 budget has sparked intense concern among transport operators, who warn it could lead to higher transport costs and passenger fares.

In his budget speech on June 2, Finance Adviser Dr. Salehuddin Ahmed proposed revised AIT rates for 13 types of commercial vehicles, marking the first increase in six years. The hike—ranging from 25% to 88%—will affect buses, trucks, vans, taxis, and other freight and passenger vehicles.

The new rates are set to take effect from July 1, following expected parliamentary approval on June 22.

Transport operators say the proposed hike ignores the realities of a struggling sector plagued by rising fuel costs, maintenance expenses, and flat fares. Many fear the upfront tax burden will cripple small and mid-sized vehicle owners.

“This move will create a financial blow for us. It’s suicidal,”
— Subhankar Ghosh Rakesh, Secretary, Bangladesh Bus Truck Owners Association

Though NBR officials argue the AIT is adjustable against final income tax, many small operators operate on narrow profit margins and lack formal income records—meaning the AIT becomes a non-refundable expense in practice.

Officials from the National Board of Revenue (NBR) claim the measure is fiscally necessary and that operators can claim tax credits at year-end.

However, economists caution that without a parallel mechanism to improve enforcement and provide relief to small operators, the hike may translate into inflationary pressure on goods and commuter services.