Concerned officials attributed this rise to new changes in policies the government made in recent period, reforms done in tax administration and also new measures adopted to plug revenue leakages.
Through the policy changes, reforms have been instilled in the system for ensuring sustained output of the revenue administration, said Revenue Secretary Krishna Hari Baskota. And increased market vigilance and investigations by Inland Revenue Department (IRD) and Department of Revenue Investigation (DRI) have largely discouraged illicit traders and tax evaders in the market.
For instance, mainstreaming of excise administration initiated this year has helped plugging the leakage of excise duty, said a senior IRD official. Staffs were motivated to work at the factory level and they have been provided with additional incentives and authority as well.
“This policy change has started showing results,” said he, adding that some 78 percent growth in excise duty collections during the period was a testimony of it. During the period, the government also took steps to restructure DRI, equip it with much-needed human resources and security back up. It also strengthened DRI check posts in Thankot and Dhulikhel, the main gateways to the Kathmandu Valley.
These changes during the period mainly enabled DRI to better execute sudden raids, take control over smuggled goods and force tax compliance -- something that contributed in plugging revenue leakage, and hence the rise in collections.
According to a report of DRI, its check posts in Thankot and Dhulikhel took control over 39 containers on charges of tax evasion during the first quarter of 2009/10 -- a figure that far exceeded past investigation incidences of the past.
It also conducted big sweeping actions, such as seizing of 87.50 tons of DAP fertilizers while being smuggled into the Kathmandu Valley. This single case had helped the government recover revenue of over Rs 1.3 million.
The department also expanded its activities at the factory-level and services units. Its investigation helped government recover Rs 2.3 million in revenue from Alka Hospital in Kathmandu, and sent a strong message to other health institutions to comply with the tax laws.
It is also investigating into the cases of illegal movement of consignments by reputed companies such as Himalayan Snax.
DRI, during the period, also monitored market prices and supplies situation of essential commodities. To check possible incidences of food hoarding, the department has started collecting data and monitoring the prices and import volume of 10 essential commodities from various customs points.
Officials said this alertness and increased engagement of the department largely discouraged cross border smuggling and also forced traders and industries towards tax compliance.
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