KATHMANDU, June 3: Vishal Group, a business conglomerate, stands to benefit big from the revision on the tax rate the government introduced in the budget for the upcoming fiscal year 2020/21.
Not only is the group going to make financial gains from the lowering of tax rates in some of the products that it has been importing and supplying in the market, it has also reaped immediate benefit from the government’s move to raise custom duty and excise on electric vehicles.
While many businesses say that they are frustrated with the budget failing to provide adequate relief to weather the current crisis, Vishal Group seems to be rejoicing at the revisions in some of the tax rates. Over 200 vehicles have been released from the Dryport Customs Office, Birgunj in two weeks prior to the budget speech. A majority of them are electric vehicles of MG (Morris Garages) Motors.
The release of over 120 electric vehicles of MG from the Dryport Customs Office on the eve of budget speech has raised suspicion over the leakage of planned hike on the customs duty and excise rate on the import of electric vehicles.
Vishal Group holds a stake in the company that supplies MG vehicles in Nepal.
Releasing the electric vehicles from the custom point before the budget not only resulted in savings of millions of rupees in taxes for the importer, it is going to profit by selling those vehicles after the adjustment of the tax hike.
Through the Financial Bill that forms the budget for the upcoming fiscal year 2020/21, the government raised excise tax to 40 to 60 percent on the import of electric vehicles from 10 percent. On top of that, the government has decided to slap 60 percent customs duty on the import of such vehicles.
“The rush of the importers to release so many vehicles before the budget was unusual. It might be either they received information about the plan to raise the taxes on the import of vehicles or they just got sense that there might be a tax hike given the pressure on revenue,” said a tax officer at the custom office. “Whatever is the case, those who have imported before the budget are big gainers,” he added.
Vishal Group is set to pocket the ‘windfall’ from the hike in the customs duty and excise rate in electric vehicles. The lowering of customs import duty on chocolates is also benefiting Vishal Group, which imports and supplies various chocolate brands in Nepali market. The Financial Bill has lowered the customs tariff on the import of chocolate to 30 percent from 40 percent. This means that importers of chocolates will now have to pay lower tariffs on the import of chocolates. Vishal Group imports and supplies various brands of chocolates in Nepali market including Mars, Snickers, Kinde, Bounty and Milkyway.