No major changes in tax rates

Various tax incentives, waivers announced; VAT threshold raised to Rs 5 million

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KATHMANDU, July 14: The government did not make any changes in tax rates for the Fiscal Year 2015/16, while excise duty has slightly gone up.

The government, however, has said that it will expand the tax net.

The decision to raise Value Added Tax (VAT) threshold to Rs 5 million has come as boon for small and medium level companies and firms. This means companies or firms with transactions less than Rs 5 million will not be required to register in VAT.

An individual with annual income of more than Rs 4 million will have to submit income statement to tax offices from Fiscal Year 2015/16, according to the budget speech.

The government has also offered some tax incentives to some specialized businesses and companies. According to the budget speech, there will be no capital gains tax for any special industry or tourism enterprises that decided to capitalize its profit for capacity expansion.

Likewise, the government is waiving off income tax, excise duty and house rent tax for the 2014/15 of earth-quake hit small tax payers that have

submitted their estimated tax details. Such tax payers, however, should produce quake-hit identification cards distributed by the related authority.

Similarly, special industry and tourism industry employing more than 100 Nepalis will get 30 percent waiver on income tax. Likewise, manufacturing industries, except tobacco and liquor industries, will get 50 percent discount in registration fee land purchased in their name.

TAX waived ON LIFE INSURANCE PAYMENT

Meanwhile, the government has scrapped taxes on payment of insurance policies.

Likewise, the government has also removed taxes on payment of compensation paid to family of deceased person.

Finance Minister Mahat also said that the government will not charge VAT on insurance premium for crop and livestock/cattle insurance.

CUSTOMS DUTY ON SOME CONSTRUCTION MATERIALS REDUCED

The government has reduced customs duty on some construction materials to stabilize price of materials required for reconstruction. According to Revenue Secretary Navaraj Bhandari, custom duty on bricks, corrugated roofing sheets and raw materials of prefab houses has been reduced by 50 percent.

The government has been levying up to 30 percent customs duty on such construction materials.