Dhaka, Jan 08 (V7N) — The interim government has announced a significant increase in income tax for the motorcycle, refrigerator, air-conditioning (AC), and compressor industries, doubling the rate from the current 10 percent. This decision comes alongside increased customs duties and VAT on over fifty products and services, reflecting the government's push to expand the tax net.

The new income tax rate will take effect in the fiscal year 2025-26, meaning companies in these sectors will face higher taxes on their earnings for the current fiscal year. A notification issued by the National Board of Revenue (NBR), signed by Chairman Abdur Rahman Khan on Tuesday, confirmed the move.

Currently, these industries are subject to a 10 percent income tax and a 2 percent advance income tax (AIT) on imports of machinery, parts, and materials—a provision initially planned to remain in effect until 2032.

Industry experts and insiders have expressed concern over the decision, warning of potential repercussions for businesses and consumers alike. They argue that the increased tax burden could lead to higher production costs, which would likely result in price hikes for motorcycles, refrigerators, and ACs.

"The added tax pressure will make it challenging for companies to maintain competitive pricing, and ultimately, consumers will bear the brunt of the increased costs," said an industry representative.

The NBR had hinted at the tax increase in a press release last Saturday, noting that steps were being taken to broaden the tax base in addition to VAT adjustments.

While the government aims to bolster revenue through these measures, the move has sparked debate about its potential impact on industrial growth and affordability for consumers in these key sectors.

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