Economy
The budget aims to achieve 5.5 percent economic growth and contain inflation within 7 percent, down from this year´s 12 percent, in the next fiscal year. The growth rate for agriculture sector has been targeted at 3.3 percent and non-agriculture sector at 6.6 percent. Despite the record low expenditure witnessed this year, the budget has allocated a huge Rs 106.28 billion for capital expenditure, which is double than the actual capital of 2007/08. In order to propel the yawning economic growth rate, the budget plans to invest Rs 45.03 billion for capital formation. Of the amount, which is more than double than the amount spent in 2007/08, a whopping Rs 32.18 billion has been earmarked for public construction. With Rs 18.4 billion, road construction, as usual, is the major absorber of the budget. The budget has also paid attention to creating employment with increased investments in river embankments in Tarai region. [break]
Businessmen
As a cheer for businessmen, the budget has annulled scrap tax, which the business community was terming as one of the major disincentives for doing business in Nepal. It has also annulled local development tax of 1.5 percent and lowered agricultural reform fee by 3 percent. The budget has reduced the prevailing high rate of 40 percent customs duty to 30 percent. It has made registration for VAT mandatory for persons importing taxable items exceeding Rs 10,000. Traders importing and dealing with excisable items, except for bricks and tobacco-related products, among others, need not get excise license from now on.
Consumers
The budget has vowed to guarantee people´s rights to receive quality goods at reasonable prices and announced tough actions against those involved in cartelling and creating artificial scarcity. It has also announced to launch a campaign called "Market monitoring for protecting consumers´ interest". The budget has also announced to set up an institutional entity under the Ministry of Commerce and Supplies to regulate the market and to ensure smooth and efficient supply system. Customs duty has been lowered for sugar and other edible items. However, changes in excise and customs duty have made two-wheelers, four wheelers, liquor, beer, cigarettes and tobacco products expensive.
Investors
The budget has reiterated its commitment toward liberal economic policy and letting the private sector play leading role in the economic activities and has formed an investment board led by the prime minister to lure domestic as well as foreign investments in the big and infrastructure projects. It has also pledged to work toward improving industrial relations and vowed to implement performance-based salary hike policy in the industrial sector. It has also laid a plan to issue special identity cards for non-resident Nepalis to encourage them to invest in Nepal and to protect their interests in Nepal. It has promised not to look into the income source of manufacturing industries using more than 50 percent indigenous raw materials, employing more than 300 Nepali workers and ´industries of national importance´, such as hydroelectric projects, international airports, tunnel ways, road ways or railways till mid-April 2019. The budget has also lowered capital gains tax to 10 percent and pledged income tax discount of 10 percent for special industries and information technology industry employing 300 or more Nepalis throughout the year. A similar 20 percent tax discount has been pledged to industries directly employing 1,200 or more Nepalis or providing direct employment to more than 100 Nepalis including 33 percent women, dalits and the handicapped.
Farmers
The budget has promised to extend irrigation facility in the different parts of the country and offered subsidy on chemical fertilizer. It has laid emphasis on commercialization of agriculture and announced incentives to promote organic farming. For instance, farmers switching to organic farming have been offered 50 percent subsidy on the purchase of machinery. The budget has also pledged incentives to farmers who export their produces. It has also announced programs to link production pockets with the markets. It has also announced programs of establishing wholesale markets in Kathmandu, Jumla, Dhalkebar, Harion, Butwal and Bharatpur under cooperative-private partnership. The government has also allocated budget for encouraging food production and storage in remote districts.
Professionals
Like all the other taxpayers, individual and married professionals will enjoy the rise in income tax exemption ceiling by Rs 45,000 and Rs 60,000 respectively. However, they will need to obtain permanent account number (PAN), as the government has made it compulsory for all income earners and advance tax payers (TDS payers) to get PAN number. The move will mainly tighten knots against the professionals providing services to multiple clients. It has also offered a scheme whereby income earners not registered for PAN so far can enjoy a tax and fine exemption for the previous year if they obtain PAN and submit tax returns of 2007/08 and 2008/09 by mid-February 2010. Those not taking benefit of the scheme, however, will be slapped with tax and fines.
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