KATHMANDU, April 26: The private sector has urged the government to revise the rate and threshold of income tax slabs in the FY 2021/22 budget in order to relieve the fixed income earners.
The Federation of Nepalis Chambers of Commerce and Industry (FNCCI), an umbrella organization of the private sector, in a pre-budget discussion program on Sunday, requested the government to revise the existing income tax structure.
The FNCCI has sought to reduce the minimum threshold of income tax to Rs 700,000 annually for an individual and Rs 800,000 for a married couple. Currently, the exemption limits for individuals and married couples are maintained at annual income of Rs 400,000 and Rs 450,000 respectively.
Similarly, the FNCCI has also urged the government to reduce the income tax rate from 5 percent to a maximum of 25 percent. Currently, married people with an annual income of Rs 450,000 to Rs 550,000 will have to pay 10 percent tax, while those with an annual income of Rs 550,000 to Rs 750,000 will have to pay 20 percent. Similarly, married people with an annual income of above Rs 750,000 and up to Rs 2 million will have to pay 30 percent tax. All those with an annual income of more than Rs 2 million will pay income tax of 36 percent.
Likewise, the FNCCI has also urged the government to revise the rate of value added tax (VAT) to 10 percent from existing 13 percent. “Provided the revision in the tax rates, it would help improve purchasing power of people to drive the economy gain pace through rise in demand,” reads a presentation forwarded by the FNCCI.
FNCCI President Shekhar Golchha said the measures would help the economy devastated by the COVID-19 disease which took down the economic growth rate to a negative value in the last fiscal year. “Huge employment opportunities can be created if the economy recovers in coming years,” Golchha said.
Golchha underlined the need for prioritizing promotion of the agriculture sector, construction of east-west railway and increase in electricity production and transmission lines to reduce dependency on India.
Suyesh Pyakurel of Morang Merchants Association said the government has to focus on implementing the bilateral trade and transit agreements done with Bangladesh and China. He also stressed on the need to extend the railway cargo track up to Biratnagar and enforcement of electronic cargo tracking system to this trading point.
Effective utilization of special economic zones, simplification of environmental impact assessment process for new industries, a five-year tax holiday for new startsup, provision of export credit insurance and simplification in provision of Exim code renewal process were among the concerns that the private sector sought to be addressed from the upcoming budget.