Kathmandu, September 21

The Inland Revenue Department (IRD) has intensified market monitoring after facing huge shortfall in value added tax (VAT) and excise duty.

IRD has mobilised three monitoring teams each from 36 branch offices across the country for market monitoring to ensure the issuance of VAT bills by the traders and service providers, as the government has been facing shortfall in VAT collection.

The government faced Rs 3.40 billion shortfall in VAT collection out of total collection target of Rs 18.8 billion in the first month of this fiscal, that is, from mid-July to mid-August. The government also missed the collection target under excise in the same period.

Worried about rising non-compliance, the IRD has started intensive market monitoring and taking action against those found guilty.

According to Kishor Jung Karki, director general of the IRD, the department has been carrying out regular market monitoring to ensure VAT bill issuance and more teams have been mobilised for the festive season as the transaction is higher during this time.

Though it has been two decades since the VAT was enforced in the country, ensuring issuance of VAT bills from vendors of goods and services is still a major problem for the tax administration.

“Firstly, we have to make the customers aware because if they do not take VAT bills while purchasing goods and services, the vendor will not be liable to submit the VAT paid by consumer to the tax office,” explained Karki. “Consumers should be aware that the money paid by them as VAT to the vendor will go to state coffers only if they take the VAT bills.”

VAT is the tax levied at the consumer end and the vendors are the only medium to collect tax from the consumers and submit to the tax office. However, due to lack of awareness among consumers, vendors are hurting government’s revenue.

As per IRD, the case of fake stickers, which are stamped on the bottles of liquor and packets of cigarettes, chewing tobacco/gutkha, among others, has posed serious challenge in excise collection. The market monitoring team of the IRD inspected a total of 3,186 taxpayers in the last one week and took action against 509.

IRD monitoring team had found traders were selling tobacco products without excise stickers and were operating liquor shops without obtaining permit from the tax offices. “Those not abiding the tax laws will face IRD’s action during market inspection,” said Karki.