Monday, September 25, 2017

Trading, corporate activities slow down

Though the government has no clear idea that trading and corporate activities have been slowed down or tax evasion has been increased – in the first 2 months of the current fiscal year – as a result the government failed to meet the revenue mobilisation target by over Rs 1 billion.
The Inland Revenue Department (IRD) has missed the revenue mobilisation target due to a slowdown in income tax collection and value added tax (VAT).
According to the department, it fell short by 4 per cent as the government was able to mobilise Rs 35.27 billion against the target of Rs 36.67 billion in income tax.
The department has been able to mobilise Rs 14.23 billion in income tax, which is 92 per cent of the target of Rs 15.46 billion. Corporate profit tax, remuneration tax and investment tax are the major sub-headings of income tax that the department collects as direct tax.
IRD spokesperson Yagya Prasad Dhungel said that the drop in income tax collection was a usual trend in the first quarter of the fiscal year, as a majority of taxpayers will not have filed their tax returns during this time.
Taxpayers need to declare and submit tentative tax returns in advance to the department.
Likewise, the department fell short of the VAT also. It has been able to mobilise Rs 12.90 billion achieving only 97 per cent of the target.
An increase in the number of cases of tax evasion recently had led to the drop in VAT collection, the department suspects. Proliferating use of counterfeit excise duty stickers and growing practice of not issuing VAT bills have led to slow revenue collection, though the department has however intensified market inspection from the past month.
The department has fined a total of 600 taxpayers for not paying their taxes on time. Likewise, it has started scrutinising 21 large taxpayers, who are suspected to have cheated the government by evading tax. The department has also instructed the concerned taxpayers to maintain updated transaction records and issue a VAT bill while making a sale.
However, excise duty collection exceeded the target. The department has been able to mobilise Rs 7.73 billion against the target of Rs 7.36 billion in the first two months of the current fiscal year.
Likewise, the department has also missed the education service tax and health service tax targets. The department has mobilised Rs 156.6 million in education service tax against the target of Rs 177.95 million and Rs 250.4 million in health service tax compared to the target of Rs 343.01 million.
The government has set a target of moblising Rs 299.91 billion through IRD in the current fiscal year.
Even as the tax authority was unable to meet the target for the first two months of the current fiscal year, the amount was an increase of 22 per cent against the same period of last fiscal year. Tax mobilisation under income tax increased by 17 per cent, VAT by 23 per cent, excise duty by 30 per cent, education service tax by 13 per cent and health service tax by 22 per cent in the first two months compared to the same period of the last fiscal year.

Two months’ revenue mobilisation
Title – Amount – Achievement
Income Tax – Rs 14.23bn – 92pc
VAT – Rs 12.90bn – 97pc
Excise Duty – Rs 7.73bn – 105pc
Health Service Tax – Rs 250m – 88pc
Education Service Tax – Rs 156.58m – 73pc

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