Finance Minister Announces Tax Reforms in Budget

Kathmandu. Finance Minister Dr. Swarnim Wagle has made a comprehensive review of tax rates in the budget for the upcoming fiscal year 2083/84 to provide relief to enterprises and businesses, expand the middle class, and make the overall economy dynamic. He announced some notable reforms related to the established order and the foundation of overall development while presenting the budget in the joint meeting of the Federal Parliament on Friday.

According to the budget statement, to reduce the tax burden, the income tax exemption limit has been doubled to 1 million rupees for individuals. The maximum rate of personal income tax has also been reduced by 10 percentage points.

With the objective of promoting the industrial sector, customs duty on raw materials has been reduced for 273 types of raw materials to be at least one level lower than that on finished goods. In addition, the existing 11 levels of customs duty have been reduced to 7 levels.

The budget has completely abolished the excise duty currently levied on 360 items. Scattered taxes such as infrastructure development tax, road maintenance and improvement fee collected at customs points have been integrated and included in green tax.

The government has made a provision that income tax under section 57 of the Income Tax Act, 2058, will not be attracted in case of involuntary retirement of a natural person after death and change of ownership in a controlled entity due to change of ownership in the entity.

The budget has made arrangements for the capital gains tax levied on the sale of securities of listed companies to be final for stock market investors. A provision will be implemented whereby consumers will receive a 10 percent discount on value-added tax at the time of invoice issuance for purchases made through digital payment channels.

The system of refunding value-added tax will be automated, and attractive programs like lotteries will be launched to encourage the culture of taking and giving invoices in the purchase and sale of goods or services, as mentioned in the budget. Similarly, a high-level suggestion committee will be formed to study the relevance of multiple rates in value-added tax and submit suggestions.

The government has adopted a policy of making tax compliance a partner in development, not a punishment. A special plan related to tax exemptions and concessions has been introduced to resolve tax disputes that have arisen for a long time due to legal ambiguity and taxpayer ignorance, and to create a business environment.

Finance Minister Wagle announced that tax disputes pending in courts or judicial bodies by the government or taxpayers will be resolved by withdrawing the case and waiving fees, fines, additional duties, late fees, or interest if the determined tax amount is paid along with an additional 1 percent within the stipulated deadline.