May 29, 2020 | Investopaper
Taxes On Small Scale And Domestic Industries
The government has decided to give income tax exemption of up to 75 percent to small scale and domestic industries. Presenting the budget for the coming fiscal year on Thursday, Finance Minister Yubaraj Khatiwada announced 75 percent income tax exemption for taxpayers doing business up to Rs 2 million, 50 percent for those doing business between Rs 2 million and Rs 5 million and 25 percent for those doing business between Rs 5 million and Rs 10 million.
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The government has extended the period of income tax exemption for small-scale enterprises by two years to seven years. It has also extended the tax exemption period for women-run micro-enterprises by three years to 10 years. The government has removed the value added tax (VAT) on micro-insurance. The government has given tax exemption for five years to special industries set up in industrial areas or villages. Industries established in those areas will get 25 percent income tax exemption for five years from the date of commencement of business. The limit of personal income tax for the coming year remains unchanged.
Taxes On Cigarettes And Liquor
The government has removed excise duties on more than a dozen items for the coming year. But health risk tax has been increased on cigarettes, cigars, gutkha and betel spices. In the coming fiscal year, health risk tax will be levied at the rate of Rs. 50 per stuck on cigarettes and cigars and Rs. 40 per kg for Tobacco, khaini, gutkha and betel spice. However, the government has not increased the tax rate on bidi and liquor.
Taxes On Petrol And Diesel
The government has slightly reduced the tariff rate on industrial raw materials. However, it has increased the tariff rate on petrol and diesel by Rs 10 per liter. The customs duty on gold and gold jewelery has increased. The rates for aviation fuel and LP gas remain the same. The Income Tax Act states “Pollution control charges will be levied at the rate of 50 paisa per liter on petrol and diesel sold in Nepal,”. Likewise, the government has increased the tariff rate on the import of electric private vehicles. The tarriff rate of public transport has been kept stable.
The government has reduced customs duty on imports of machinery and raw materials, agricultural implements, seeds, etc. imported by small and cottage industries, agro-livestock, animal treatment and mask making industries. However, the government has increased the customs duty on the import of primary agricultural produce.
Taxes On Tourism Sector
The airline, transport service, hotel, travel and trekking entrepreneurs most affected by the Covid-19 infection have received 20 percent discount in the coming fiscal year. Likewise, the government has extended the period for filing value added tax (VAT) details for tourism transport and movie houses to four months.
Taxes On Pharmaceutical Industry
The government has exempted VAT on the import of raw materials required by the pharmaceutical industry. It has also announced to refund the VAT paid on such raw materials purchased from indigenous industries. The government has reduced customs duty on Ayurvedic raw materials. Likewise, it has waived the excise duty on ethanol and PPE of domestic products used as raw materials for sanitizers.
Taxes On Internet Service Providers
Internet service providers will receive discounts of up to 50 percent on fees of fixed broadband services. The government has reduced the service fee for self-produced radio and television broadcasting companies from two percent to one percent.
The government has revoked the 15 percent forest production fee levied by the community forest for selling Sal and Khayar species outside the consumer group. But all kinds of furniture items imported from abroad are subject to excise duty.
Taxes On Special Industries
Special industries to be established in the industrial sector will be exempted from income tax for five years from the date of commencement of business. An arrangement has been made to exempt drinking water and sanitation product groups from operating income tax from next year. The government has also stated that such groups have been given income tax exemption fixed till FY 075/76.
Taxes On Cooperatives
All types of cooperatives operating in the village municipality will receive income tax exemption. However, all types of cooperatives operating in the municipality, sub-metropolis and metropolis will have to pay the 5, 7 and 10 percent income tax respectively.
The government has made a provision for consumers not to deduct tax in advance in the amount received as incentive when paying for the purchase of goods and services through electronic devices. There will be charge of 2 percent education service fee on foreign currency exchange facility for students studying abroad.
Telephone/Mobile Ownership Tax
The government is going to charge Rs 500 per customer for telephone ownership fee. In the case of mobile telephones, it will charge the telephone ownership fee at the rate of two percent of each SIM card and recharge fee.
Similarly, if one transfers the amount of the sanctioned retirement fund in various bodies to the social security fund within Chaitra 2077, the government will waive the tax on retirement payment. The government has also stated that it will gradually phase out such funds.
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