Inland Revenue Department (IRD) of the Government of Nepal is currently responsible for the administration of Value Added Tax, Income Tax, and Excise Duty. Likewise, the IRD is also responsible for monitoring non-tax revenue of the government.[break]
Rishi Pokharel, Tax Officer of Inland Revenue Department (IRD) in Baber Mahal, informs: “There are no separate tax laws for the youth and the clause and conditions for paying income tax are the same for all working people. It, however, differs for married and unmarried people.” He further explains that it is compulsory for all working youth to pay 1 percent tax from their monthly salary.
“For unmarried working people, including the youth, if the yearly income is Rs 160,000, which is the first ceiling, they just have to pay 1 percent tax a month but if the annual salary is more than that and increases by 100,000, then the tax increases by 15 percent and if the person earns more than that then by 25percent,” explains Pokharel, adding, “For married people, however, the first ceiling is Rs 200,000, so if a person earns that much in a year then he/she has to pay just 1percent tax a month and as the salary of the person gets higher, the tax increases by 15percent and 25percent eventually.”
He further explained that it is compulsory for working people to get the Personal Pan ID which is provided by the Inland Revenue Department (IRD) so that they can keep track of the total tax they pay.
Bishal Tamang, 20, a student who also works as an office assistant, shares, “I earn Rs 4,000 a month and the government cuts 1percent tax, which is equivalent to Rs 40 a month from my salary but I don´t hesitate to pay it.”
“The government is collecting taxes for all the public services we use so we should definitely pay but in a way it is unfair because I earn very less,” he says, adding, “I hope the government is more responsible for utilizing the tax we pay in a proper way and think about the benefits of the working youth like me.”
Arun Thapa, 20, who works as an assistant chef at an eatery, however, is unaware of tax policies in the country. “I get my salary from my manager and I have no idea as to how much tax I have to pay to the government,” he says. “But I think it should be utilized for developmental needs of the country.”
The most effective way to boost a country´s resource mobilization effort is to improve its tax system. Income tax can be taken as a major resource which can be mobilized to meet the developmental needs of the country.
Associate Professor Ananta Mainali at the Department of Economics, Tribhuvan University (TU), commenting on the tax working youth pay, says, “The government taking a certain percentage of tax is acceptable but there should be a proper policy regarding it. Collecting tax from working youth whose salary is more than 160,000 a year is rational because the government also needs revenue to run the system but accumulating tax from those who earn less than 160,000 in a year is not justifiable”.
He further expresses that from the revenue generated the government should also invest in education sector focusing more on vocational education and training because we are in dire need of skilled manpower in the country.
“There are youth who are educated but are unemployed so in order to have skilled and productive manpower, the government needs to invest on those things from which the youth can benefit from,” he added.
“As responsible citizen, we are ready to pay tax to the government but the government should improve the services that we receive from the state,” says 26 year old Sanjana Karki who is working at a commercial bank. She asks: “Why should I pay tax when I am deprived of basic needs like electricity, water and security and feel that the money I am paying is not going to the right places?”
She further says that she doesn´t understand why and how she´s deprived of the basic needs even after paying tax on time. “When a citizen fulfills his/her duties and responsibilities, the government should also fulfill theirs.”
Mainali argues that the tax system should be made accountable so that the working youth feel good about paying tax. “The best way the government can win their trust is by utilizing the revenue resources for developmental needs like health, education, infrastructure development and employment so that the youth will feel that the tax they pay is put to good use.”
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