“High inflation over the last three years has sharply shrunk the spending capacity of the fixed income earners. Hence, we have concluded it is high time we raised income tax exemption ceiling,” said Finance Secretary Krishna Hari Baskota.[break]
The tax exemption limit, which presently stands at Rs 160,000 for individuals and Rs 200,000 for couples, was last adjusted in 2009. However, Baskota did not disclose the extent by which the ceiling will be raised.
Also, to get the actual raise in the ceiling, the people will need to wait for the announcement of full-fledged budget. And the fate of the full-fledged budget, despite bring pushed strongly by the government and the private sector, still remains uncertain as the government has not yet managed to hammer out political understanding with the opposition parties to announce it.
Apart from eyeing to relieve the fixed-income groups, the government is also preparing to increase the ceiling that defines any industry and firm as a large tax payer, enabling them to acquire special services.
Presently, any firm that records an annual turnover of more than Rs 250 million is defined as large tax payer. “We are raising that threshold,” said Finance Minister Barsha Man Pun. He, however, did not disclose the new threshold.
Officials said the Ministry of Finance (MoF) has agreed at raising this turnover threshold mainly after the business community pushed it either to revise the ceiling or open branches of large taxpayers´ office (LTO) in major cities outside the Kathmandu Valley.
“With businesses and inflation growing at rapid rate, the number of large tax payers is rising rapidly outside the Valley as well. However, for filing assessment, paying taxes and every other activity they need to come to Kathmandu. This has created inconveniences for them,” said Suraj Vaidya, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
Speaking at a national workshop on tax related problems, Vaidya along with presidents of different district chambers had urged the government to double the ceiling of turnover for any firm to be a large taxpayer.
Pun said raising the ceiling was a good decision for now because LTO, which is based in the Valley alone, has capacity to best serve 400 taxpayers only.
Data shows, the number of large taxpayers has presently touched 722. At the present rate of business expansion, MoF has estimated it to rise to 1,000 soon.
Pun even indicated that the government could provide amnesty to traders that did not maintain their VAT accounts properly.
Even though such cases are linked to either lack of issue of VAT receipts to customers or issue of fake VAT receipts to hide transactions, FM Pun said the MoF was ready to consider mismatch in their VAT accounts as an outcome of their unawareness to VAT rules.
“However, businessmen must understand ´unawareness´ cannot be an excuse to win amnesty and they must assure us such wrongdoing will not happen in future again,” he stated.
Director General of Inland Revenue Department (IRD) Tanka Mani Sharma said that the government was marking the current fiscal year 2012/13 as Tax System Reforms Year.
“We have already worked out numerous programs, laying a strong emphasis on making taxpayers aware about the prevailing tax law and system,” he stated. Under the programs, he said the IRD will launch education, information exchange, communication and services related campaigns targeting the taxpayers.
All Inland Revenue Offices will together organize a total of 1,000 such awareness campaigns, he said. Sharma further informed that the IRD has set a target to open tax office or taxpayers´ service center in all 75 districts of the country, so that taxpayers need not travel out of the district to file taxes and settle tax liability.
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