Consumers yet to benefit from VAT rebate scheme

Kathmandu, February 23

The government’s scheme to provide consumers with a rebate of 10 per cent of value added tax (VAT) while making purchases through electronic devices, which came into effect from February 10, has not been effective as the scheme is yet to benefit consumers.

Though implementation of this scheme makes sellers mandatorily return 10 per cent of the VAT amount to bank accounts of respective consumers who purchase goods through electronic mechanisms using debit/ credit card, mobile money or other forms of digital payment systems, consumers have been deprived of the VAT rebate from sellers.

Niyesh Badal, a resident of Kapan, purchased goods worth almost Rs 4,000 at a nearby supermarket and made payment via debit card.

However, he informed that he was not rebated the VAT amount. “When I asked about the scheme, the seller said that they did not have this provision,” as per him.

The 10 per cent VAT rebate scheme is applicable for purchases made through electronic means from Rs 1,000 to Rs 100,000. Based on the scheme, Badal should have been rebated with 10 per cent of applicable VAT amount on Rs 4,000 or Rs 520, which is equivalent to Rs 52.

Like Badal, a majority of customers have been deprived of the VAT rebate scheme introduced by the government which primarily intends to discourage cash payments and promote payments through digital means.

Though the scheme was announced through the budget for fiscal year 2019-20, the Inland Revenue Department (IRD) had officially implemented the scheme from February 10.

Meanwhile, Binod Bahadur Kunwar, director general of IRD, acknowledged the 10 per cent VAT rebate scheme is yet to be fully implemented.

However, he stated that the scheme will be applicable only while making purchases in those outlets that have been linked with the integrated tax system of the government.

“So far, only a few outlets have been linked to this tax system while a number of banks and financial institutions, vendors and payment service providers are preparing to link themselves with new integrated tax system,” he said. “Consumers will certainly get the VAT rebate when they purchase goods from those outlets linked with the new tax system,” said Kunwar.

As per IRD, vendors should first link themselves with payment solution providers and the integrated tax system of the government. Though not mandatory, all those who accept electronic payments and are linked to the central billing monitoring system will make this service available to consumers, as per IRD.