VAT‚ excise duty collection fall short of target

KATHMANDU:

Collection of value added tax (VAT) and excise duties from the country’s various customs points has not been encouraging so far this year, which is raising the prospect of the

government lagging behind in meeting this fiscal’s revenue mobilisation target.

The government had set VAT collection target of Rs 40.93 billion and excise duty collection target of Rs 10.51 billion from various customs points for the first seven months of the current fiscal year. But it was able to raise only Rs 37.16 billion from VAT and Rs 10.34 billion from excise duty during the period, statistics of the Ministry of Finance show.

Since around 60 per cent of the total VAT and over 40 per cent of the total excise duties are raised from imported goods at customs points, the government failed to meet its total VAT and excise duty collection target in the seven-month period between mid-July and mid-February.

The government collected Rs 55.95 billion in VAT and Rs 24.26 billion in excise duties in the first seven months,

MoF data show. This was lower than the target of Rs 58.96 billion and Rs 24.48 billion, respectively, set for the period.

“VAT and excise duty mobilisation at customs points fell short of target largely because of falling import growth,” an MoF official said.

Although seven-month import data are yet to be made public, first half figures show import growth of 23.1 per cent as against 25.2 per cent recorded in the same period last fiscal. The lower import growth rate was the result of the

depreciation in the value of the Nepali rupee vis-a-vis US dollar which made foreign goods expensive, thus, reducing their demand in the local market.

As imports came under pressure and put a strain on VAT and excise duty collection, the government missed its revenue collection target in the first seven months of the current fiscal.

The government had forecast revenue collection of

Rs 192.38 billion in the seven-month period. But actual

mobilisation stood at Rs 188.91 billion during the period, MoF data show. The revenue collected so far is 53.29 per cent of the annual revenue collection target of Rs 354.50 billion.

Revenue mobilisation also came under pressure in the seven-month period due to a moderate hike in income tax collection. The government was able to collect income tax worth Rs 38.52 billion in the first seven months of this fiscal, which is slightly higher than the target of Rs 38.25 billion. But considering income tax growth rate of 28 per cent recorded in the seven-month period, this fiscal’s 11 per cent hike is being seen by MoF officials as ‘unsatisfactory’.

Similar is the condition with collection of customs duties. Customs duty collection stood at Rs 37.62 billion in first seven months, which was slightly higher than target of Rs 37.60 billion set for the period.

Among others, government raised Rs 23.42 billion from non-tax revenue, Rs 2.86 billion from various registration fees, Rs 2.53 billion from vehicle tax, Rs 279 million from education service fee, and Rs 270 million from health service fee.

Source: THT