'VAT threshold needs to be expanded'

KATHMANDU:

Business people from across the country have urged the government to expand the threshold of value added tax (VAT) from the existing Rs two million that was enacted 17 years back when the scale of business was modest.

During an interaction with the Ministry of Finance and Inland Revenue Department (IRD), today, organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), business people from various districts urged government to raise threshold to Rs 10 million.

“The government had set the threshold of Rs two million when they introduced VAT, but it has not yet been reviewed despite the size of businesses growing over the years,” said Dinesh Shrestha, vice president of FNCCI.

“At present the government is conducting a campaign to bring businesses with annual transaction of Rs two million under VAT net but we don’t see any logic behind it because such firms hardly make a profit of Rs 300,000 and government has provided income tax exemption for up to that amount.”

Likewise, business people have sought the Tax Settlement Commission at the earliest. Currently, the government has yet to collect Rs 50 billion in outstanding revenue dues which could be settled through commission.

Saurabh Jyoti, chairperson of the Revenue Committee of FNCCI said that taxpayers have been compelled to deposit 30 per cent of the tax amount at IRD for administrative review and 50 per cent of the amount if they go to the Revenue Tribunal. “A large chunk of the deposit remains idle till the cases are resolved,” said Jyoti, adding, “So, it would better if IRD removes this deposit provision because it is hindering genuine tax payers who want to have their tax claims reviewed.”

Shiv Shankar Agrawal, president of Chamber of Industries, Morang, requested the Large Taxpayers Office (LTO) to establish its branches in the major economic hubs because business people from outside the Valley are obliged to come to the Capital with their accounts if there is any confusion. “Though they have provided the e-filing system we have to come to the Capital with all accounts if there is any confusion.”

Responding to queries from the business people, Finance Secretary Suman Prasad Sharma said that the government has formed the Tax Review Commission to address the recent structural changes on revenue front.

Source: THT