The municipality geared up to mobilize the tax revenue after the government entrusted collection of the house rental tax to the local bodies. Previously, Inland Revenue Offices were responsible for collection of such taxes.[break]
“We have already started updating the data of the houses and lands that have been rented or leased out in the municipality and are also finalizing minimum standard of house rental tax soon,” said Revenue Officer of Butwal Municipality Bijaya Dev Bhurtel.
In the first phase, officials said, the municipality will launch a campaign to motivate people to comply with the law and pay due taxes. In case of defiance, the municipality is mulling slapping hefty penalty against the violators.
The municipality is presently studying the rents the landlords charge in different areas. Based on that, municipality is planning to set a reference rental rates for different prices. Once put into place, officials said landlords would need to pay rental tax not less than the municipality-set reference price.
Previously, Inland Revenue Department had also pushed the government to enforce reference prices for different areas in different municipalities, sub-metropolitan and metropolitan city, categorizing them as general, commercial and residential areas.
However, the government had dropped its proposal, citing that enforcement of reference price for taxation could result in an unwanted rise in the cost of rent.
“We will get the house rental tax related provisions endorsed by the Revenue Advisory Committee,” said Bhurtel, adding that enforcement of the new provisions will pave way for aggressive collections of house rental tax.
So far, Inland Revenue Offices were accepting whatever the house owners paid as rental tax. The officials admit that property owners were acting immorally and were evading taxes by producing contract agreement that does not reflect genuine rental charges.
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