Corporate loan clients escaping tax by submitting two different financial reports might be in trouble! NRB and IRD bringing a new policy for corporate loan clients!

In 2075/76, the budget mandated a provision to present same financial reports to both Tax Department and bank while applying for loan. However, due to lack of infrastructural set up, this provision took almost a year to get implemented. The same provision is now in discussion among authorities of NRB and commercial banks.

Business people will not be able to send two different banking and financial reports to tax office and bank. Inland Revenue Department is working to stop such system. In order to implement the provision, the Inland Revenue Department called CEOs of banks and financial institutes for a meeting on Monday. During the meeting, the director of department; Mr. Bishnu Nepal requested banks to cooperate in the process. The director of Compliance Department of NRB, director Mr. Bambahadur Mishra and President of Bankers’ Association Gyanendra Dhungana agreed on the provision.

The CEOs of commercial banks received a demo form in the meeting. The form includes all the necessary details that should be filled by the customers while applying for loans. After the form is filled up and submitted to Inland Revenue Department, a unique code number is assigned. The customers should provide the specified code number to the bank while applying for loan. The credit officers then access the portal of Inland Revenue Department and take necessary details of the customers. The credit approval file will be based on the details installed from the Inland Revenue Department’s server.

Some business people are found to show higher profit while applying for loans in banks but less profit in the tax department. This loophole helps these business people to pay escape tax obligations. In order to stop such fraudulent activity, the provision will be implemented in the near future.

However, due to absence of infrastructures in several regions of the country, the provision might not be implemented in all the regions in the first stage. NRB and IRD are continuously discussing to first implement this policy only to those loan clienteles who require loan above a certain monetary limit.

Similarly, there are currently, 1.4 million credit loan accounts. So, NRB and IRD are finding out a solution to include these accounts in the process in order to confirm transparency in tax payment by the business people.