Government Can Change Tax Rates According to Economic Act 2083

Kathmandu. Generally, the government cannot change laws passed by parliament by its own will. Therefore, there is a question of how the education equity fee and health equity fee, which have become law, can be abolished by the Prime Minister's announcement.

However, the passed Economic Act itself has made provisions for the government to abolish the tax rates mentioned in the act if it wishes. Section 18 of the Economic Act 2083 gives the government the authority to change taxes as needed. Subsection (1) of that section states: Notwithstanding anything written in the prevailing law, the Government of Nepal may, as per its need, reduce, increase, or grant partial or full exemption from the fees, charges, duties, or taxes imposed under this Act or any other prevailing law.

Subsection (6) of the same section also mentions that the information about such changes must be published in the Nepal Gazette. The Act also includes a provision to present the details of the tax changes to the Federal Parliament every year.

Amrit Lamsal, spokesperson for the Ministry of Finance, stated that since the Ministry of Finance has no official information on this matter, he cannot say what the process will be. Officials from the Ministry of Finance, however, say that this matter can be implemented through a cabinet decision in accordance with the provisions of the Act.

"Since the Act gives the government the authority to reduce, increase, and grant exemptions on revenue, a decision from the Council of Ministers is necessary for this," says the official, "Once announced by the Prime Minister, in our parliamentary system, there is no reason why this decision cannot be implemented by the government. Once that decision is published in the Gazette, officials must grant the tax exemption."

However, there is no rush for this. The Economic Bill has made a provision to submit such education and health equity fees to the tax office within 25 days of the end of the quarter. That is, the tax that came into effect from Shrawan 1st had to be paid by schools or health institutions only on Bhadra 25th. Now, such fees do not have to be paid.

However, since schools have to add this tax to the fees collected from parents, it was necessary for schools and parents to be informed before collecting the fees.