Prior administration failed to meet its revenue collecting goals.
In the most recent fiscal year, the government aimed to collect 3.7 billion in customs taxes. Nonetheless, $2 trillion and one billion were raised in all. That is, the customs duty raised only amounted to 65.59 percent of the target. The Education Service Fee Tax has unexpectedly gone up.
Against the objective of raising 2.81 billion 2 lakh rupees, an education service charge tax of 3.26 billion 3.8 lakh rupees was raised. 116.14 percent, to be exact. This indicates the rising trend in the number of students choosing to study overseas each year. However, the nation's revenue in recent years has fallen far short of the government's goal. Additionally, experts have charged that the government sets "unreliable revenue targets."
Every day, more and more students are choosing to pursue studies overseas. Every day, a throng of students departing for overseas studies fill Tribhuvan International Airport. When international students take out foreign currency from banks and other financial organizations, the government collects education fee taxes from them. There is a fee of 2% of the total amount that the student is required to pay.
Although the number of students studying abroad has increased annually, according to Dhaniram Sharma, Joint Secretary of the Finance Ministry's Revenue Management Division, the education service fee has above the target. According to Joint Secretary Sharma, "the government collects 2 percent revenue from students for exchanging foreign currency." Joint Secretary Sharma claims that because of the unexpected rise in the number of students choosing to study abroad, more money has been received than anticipated.
112,000 students used No Objection Certificates (NOCs) to study abroad only last year. Every year, more students are choosing to study overseas. Data from Nepal Rastra Bank shows that in just 11 months of previous year, 1 trillion 17 billion 1 crore rupees were taken out through schooling. In contrast, those who traveled overseas to study had 89 billion 18 million rupees taken from them the year before.
Reduced exports and lower revenue
The primary revenue stream is the customs tax. But last year's decline in imports also resulted in a large drop in customs duties. The government wanted to collect almost $3 trillion and seven billion in customs duties last year. But just about $2 trillion and one billion were collected. It only accounts for 65.59 percent of the goal. A total of 457 million dollars came from the green tax and 1 trillion 59 billion from goods imports.
Exports brought in 29 billion 17 million, infrastructure tax brought in 20 billion 63 million 81 million, agricultural reform fees brought in 6 billion 53 million 61 million, road repair and improvement fees brought in 8 billion 84 million 21 million, and road construction and maintenance fees brought in 4 billion 31 million 12 million. An equal amount of money was brought in. In addition, 66.19 million rupees were raised for additional revenue.
Exports accounted for the least amount of the target's revenue last year. The goal for export revenue collection was Rs 69 crore 91 lakh last year. But just 291.7 million were collected. It only accounts for 41.73% of the goal. This indicates that virtually little was exported the previous year. The customs department's statistics indicates that a decline in the nation's manufacturing and industrial capacity has resulted in a decline in exports.
Last year's exports fell by 3.03 percent from the prior year. The nation exported 1 trillion 57 billion rupees, or 146 million and ninety-five thousand, last year. Exports, meanwhile, fell to 1 trillion 52 billion 38 billion 12 lakh 44 thousand rupees last year. Sharma, joint secretary of the Ministry of Finance's revenue management division, claims that the decline in both domestic production and export volume is the reason why tax collection is below target.
According to him, the administration has not set many goals to increase export revenue.
"The government aims to collect more tax from imports," states Sharma, "not from exports." Last year's import volume also declined. The overall revenue appears to have reduced as the import of raw materials, mechanical equipment, and construction materials declined. The government has been promoting exports and boosting local production by offering a variety of incentives, including loans at discounted interest rates. For this reason, the government does not insist on obtaining additional export customs duties.
The biggest portion of the money raised last year came from Value Added Tax (VAT), which brought in $3 billion, $1 billion from import VAT, and other sources. This generated income of 3 trillion 10 billion 455 million rupees. The government intended to raise the equivalent of Rs. But only 72.89 percent of the goal was reached. The goal was to collect 1 trillion 57 billion in VAT through sales, production, and services. Under this title, the government was able to collect about $1 trillion, thirty billion. The VAT on imports alone brought in 1 trillion, 80 billion, 34 billion, and 92 million rupees.
Excise duty alone brought in 1 trillion 46 billion 35 billion 22 lakh rupees in income. 1 trillion 9 billion 20 crore 88 million rupees were received, falling short of the goal of raising more than 1 trillion 55 billion 58 crore from domestic manufacturing alone. In addition, 37 billion 143 million rupees were gathered in order to deduct the excise charge on imported items, which totaled around 51 billion 63 million rupees. VAT revenue is rising generally. Joint Secretary Sharma did note, however, that since the government put a VAT on airline tickets during the previous fiscal year, the title's revenue has increased.
There is just 78.28 percent income tax.
The analysts claim that since the income of the majority of industries has dropped by half and the morale of industrialists and businesses as a whole has declined, the revenue is below target. The government aimed to collect 3.62 billion 11.89 million rupees in income tax during the previous fiscal year. Nevertheless, income tax revenue of 2 trillion 83 billion 46 crore 46 lakh rupees, or 78.28 percent of the target, was collected. Interest on the aforementioned income tax was collected to the tune of 36 billion 83 crore 85 lakh rupees.
The financial staff believes that even though the economy's external sector appears robust, the nation's present revenue of about $10 trillion, or $30 billion, should be viewed as a success. This level of income collection has been considered an accomplishment even given the difficult circumstances facing the domestic economy. Since customs duties were the primary source of income for the previous fiscal year, they were also less than anticipated.
The Customs Department's foreign trade statistics shows that imports were 16 trillion 11 billion 73 crore 17 lakh 70 thousand rupees in 2079–2080, while in the most recent year, they were only 15 trillion 92 billion 98 crore 55 lakh 28 thousand rupees. Year over year, imports fell by 1.16 percent. Following the worldwide pandemic, the government placed particular limits on a number of goods as the amount of imports rose manually and foreign exchange started to leave the country in excess. The customs service claims that since then, though, imports have dropped relative to the prior year because of the weak market demand.
The Ministry of Finance's information officer, Yuvraj Basnet, reports that talks are underway over how to fulfill the objective for revenue collection in the upcoming year because the aim was not met during the previous year's budget review. The Ministry has also examined the program and budget from the previous year, as well as the income collected, the mobilization of foreign aid, and the lump sum expenditure statement that was created by the Ministry overall and modified by each of its nine divisions.
In addition, the specifics of the allocated works for the years 2080 and 2081 were assessed in terms of their development. The ministry ascribed the drop in tax collection to the commerce, manufacturing, and industrial sectors' downturn as well as the drop in imports.
Is the sales aim unattainable?
Revenue is the primary source of all government spending, including capital, current, and financial spending. But throughout the previous two years, it hasn't been able to increase in line with the goal that was established. Experts claim that this predicament resulted from the government's audacious goal of generating more cash than it could possibly handle.
However, the government's revenue collection fell short of the objective in the most recent fiscal year, and the target's lowest export was recorded. Despite establishing a target of 14 trillion 22 billion rupees, the government only managed to collect 10 trillion 58 billion 89 billion rupees in income in the most recent fiscal year. Merely 74.44 percent of the objective was accomplished.
On the other hand, because revenue could not cover the entire budget, the government has been proposing deficit budgets for the last four to five years. Approximately 9 trillion 27 billion in tax income were received, compared to the objective of 13 trillion 5 billion. In a similar vein, it raised almost 1 trillion 3 billion from non-tax revenue despite planning to raise 1 trillion 17 billion.
Formalize the software; business is not formal.
Dr. Rameshchandra Paudel, a former member of the National Planning Commission, claims. He claims that there is a rising trend among certain individuals to host formal gatherings yet conduct business informally.
"There is a tendency to do business but not pay bills," states Dr. Paudel. It is normal to bring costly items and sell them, only having to pay customs duty on inferior or low-value items. When they sell a branded towzer for 7-8 thousand, customs only pays 2-3 hundred, similar to what they would for local items. It appears that a control mechanism ought to be developed.
It is time to put an end to those who formalize business yet keep informal documents. Says Poudel. "Leakage by using the 'loophole' of the law is also more visible," according to him. The abuse of this kind of right has outweighed its use. When their personnel make mistakes, the likelihood of rights violations spreading increases and fines and jail terms are decreased. Other nations do not grant such rights. He advocated for the government to concentrate on limiting leaks. He claims that because the government has not made more investments in technology, the administration of revenue, taxes, and customs has not become more effective. "Investment should be increased accordingly in order to make the revenue administration based on information and technology," Dr. Paudel stated. "The process of accounting, reporting, reporting, and monitoring should be started."
He claimed that a large amount of the money collected by Value Added Tax (VAT) is actually "hairs" that are not placed in government coffers. "There is evidence of this in the number of business owners who participate in the VAT system and the amount of money they have deducted from their monthly and quarterly accounts," he stated. "It is believed that there is a greater propensity in retail to collect revenue but not file it." When this is not feasible, traders have profited from the regulatory body's weakness, incapacity, or lack of resources. He maintained that the income collection aim cannot be reached if this sector is neglected.
In order to put everyone under the tax framework, the government plans to bring 6.3 lakh registrants into the tax system and 4.2 lakh additional people obtaining individual PANs. Nevertheless, just 63 lakh 40 thousand 369 permanent account numbers (PAN) have been obtained by individuals, companies, and tax agencies. This data pertains to the fiscal year 2080–1981. There were 55 lakh 54 thousand 26 of these taxpayers earlier in 2079–2080. In a single year, 786 thousand 343 new individuals have been added.
Taxpayers who obtained personal PANs (permanent account numbers) numbered 42 lakh 67 thousand 395 in just the previous year. which represents a 16.93% increase over the prior year. 3,649,614 individuals were registered under individual PANs last year. Taxpayers who obtained commercial PANs totaled 19 lakh 92 thousand 544 in just the previous year. This is an increase of 1.6% (1 lakh 16 thousand 239) over the prior year. 18 lakh 76 thousand 305 commercial individuals were registered with PAN last year. In addition, tax authorities have collected 80 thousand 430 pans in the past year alone. This represents a 52 thousand 323 increase, or 186.16 percent, over the prior year. There were 28,107 registrations in the previous year.
Value Added Tax registrations of 3 lakh 34 thousand 983 have been made thus far (VAT). This represents an 8.59 percent increase over the prior year. It was 3 lakh 8 thousand 477 the year before. In a similar vein, 1,25,000-81 people have registered to pay excise taxes. This represents a 7.20 percent increase over the prior year. Excise duty of Rs. 1 lakh, sixteen thousand 675 was paid in the preceding year.
