Income Tax: Service sector pays more

KATHMANDU, AUG 16 - The service sector has emerged as the biggest income tax payer to the government even as the manufacturing sector have been reeling due to infrastructure- and labour-related problems.

Among the top 10 companies that were the highest income taxpayers last fiscal year 2011-12, only Surya Nepal could make it on highest taxpayers’ list this year. All the other companies are from the service sector with as many as seven banks and two telecom operators making the list.

However, the might of telecom giants has dwarfed others by the share size of tax they pay to the government. State-owed Nepal Telecom paying out Rs 5.64 billion is once again the highest income taxpayer to the government, according to the Inland Revenue Department. Ncell came second with the payment of Rs 1.48 billion.

Anup Ranjan Bhattarai, director at the wireless telephone directorate, said that the NT has been topping list for long due to its widespread customer base and transparency. “We don’t hide income and pay full tax. So, we have long become the top taxpayer,” Bhattarai said.

He, however, harboured doubts over the NT holding onto the top position for long unless it urgently acts in  bringing a strategic partner.

Among the banks, the Agriculture Development Bank came out on top paying out Rs 1.21 billion in income tax, followed by Nabil, Nepal Investment, Standard Chartered, Himalayan Bank, Bank of Kathmandu and the Rastriya Baniya Bank. Surya Nepal is in the eighth position, paying Rs 420 million in income tax.

A majority of banks making into the list of top 10 income taxpayers also reflects the progress of the banking sector over the last two decades. Bankers claim that their transparent account compared to other industries resulted in higher tax payment to the government. “As banks are more transparent, they are bound to pay the tax that should be paid,” said Ashoke Rana, the president of the Nepal Bankers’ Association.

Surya Nepal, the lone company from the manufacturing sector, making it to the top 10 income taxpayers also suggests the declining influence of the sector in national economy.

Source: The Kathmandu Post