Sources at Inland Revenue Department (IRD), which recently finalized the PAN (permanent account number) enforcement plan, said they would initiate the program by registering PM and other cabinet members at PAN and issuing them with the electronic tax ID card.
The PAN ID card will bear ID code of the cardholder and one can easily get income details and tax clearance statements from the Inland Revenue Offices (IROs) by producing it. The card is being issued as a part of the government´s program, which made registration at PAN mandatory for all income groups from 2009/10, irrespective of whether they pay tax or not.
Under the program, IRD will maintain electronic details of all income earning groups at the tax offices -- a move that will not only widen tax base, but also plug leakage of tax from multiple jobholders and service providers.
The government believes enforcement of the program will bring in additional 200,000 taxpayers under PAN net by the end of this fiscal year. It also believes that the program will raise the incidence of tax compliance.
“We have already sent a team to IROs across the country and District Treasury Offices to demonstrate procedures for maintaining taxpayers´ records and issuing ID cards,” said the source. He elaborated that the department has, for now, dropped the idea of issuing electronically readable card because of time and money required to harmonize the system.
“The card will be of a standard format and look like Visa or MasterCard, but won´t be readable,” he added.
Going by its implementation plan, IRD will also bring in all the Constituent Assembly members in the tax net in the second lot. Wider dissemination of the card among general people, however, could start only in September.
The introduction of the card will initiate a new revenue regime, wherein all the taxpayers of the country will be known by their tax ID numbers and not their names. All the firms and individuals will need to cite ID number of persons or firms from whom they procure service and goods.
When revenue offices enter income details in the spreadsheet, it will record all incomes and transactions of a PAN ID cardholder in a single window. This will enable the tax office to consolidate everyone´s income and establish tax liability accordingly at the end of every fiscal year, which will help to control revenue leakage from professionals and service providers engaged in multiple firms.
The government believes that the effective enforcement of the new system will generate additional revenue of Rs 1.50 billion. The new system will also enable taxpayers to get tax clearance report instantly.
IRD slaps Rs 5.1m penalty to CoMEN
Inland Revenue Department has slapped a penalty of Rs 5.1 million to Commodity and Mercantile Exchange of Nepal (CoMEN), a company trading on future markets, for not complying with tax laws.
“The company, going by its transactions, should have registered with value added tax (VAT), but it had not,” said an IRD source, elaborating that the department´s team, after investigating the case, assessed the liability on Sunday. The amount includes VAT assessment amount and fine slapped for non-compliance.
IRD had initiated investigation against CoMEN on the ground that there is no specific regulatory authority to govern the future markets operations. Citing similar statement, the government in the budget speech for current fiscal year has announced to make arrangements to regulate the future markets trading.
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