Customs tariff exceeds income tax in first month

Kathmandu, August 31

The dynamics of major contributors in tax revenue have slightly changed in terms of collection amount in the first month of this fiscal. Income tax, which used to be the second largest contributor to the government coffers, slightly missed the collection target in the review period and lost its position to come third after being overtaken by customs tariff.

Revenue collected from customs points as customs tariff surpassed income tax collection in the first month, according to the Revenue Division under the Ministry of Finance. As per the Revenue Division, collection from customs tariff in the first month stood at Rs 7.85 billion whereas income tax contributed Rs 7.5 billion.

At a glance







Customs tarriff



Income Tax






Registration fees



Vehicle tax



Education tax



Health Tax






Non-tax sources



Amount in Rs billion, Source: MoF

Customs tariff became the second largest contributor for tax revenue as there was a shortfall in the collection target under the income tax heading. The government had expected to collect Rs 7.79 billion through income tax and Rs 7.33 billion under customs tariff. But the collection target under income tax heading has been missed while customs tariff collection has exceeded the target.

There was a slight shortfall in the income tax collection target in the first month of this fiscal after the government took a decision to revise the income tax slab. The government has revised the annual slab of income tax for both single individuals and married persons from Rs 250,000 to Rs 300,000 and Rs 350,000 to Rs 400,000, respectively, along with the increment in salary of government staffers from this fiscal.

As per the Revenue Division, overall revenue collection in the first month of this fiscal exceeded the monthly target by Rs 1.25 billion as the collection of customs tariff, excise and non-tax was more than the set target. Revenue collection stood at Rs 41.07 billion against the target of Rs 39.82 billion in the review period, according to Revenue Division.

However, major tax headings like value added tax (VAT) and income tax failed to meet the set target in the first month. Collection of VAT — the largest contributor in the tax revenue — stood at Rs 13.6 billion against the target of Rs 14.5 billion.

The government had aimed to collect Rs 7.79 billion from income tax but was able to collect only Rs 7.46 billion. All the three sub-headings under income tax, namely, individual and corporate income tax, land and building rental tax, and interest income tax have missed the target.

Revenue collection under excise, on the other hand, exceeded the target. The government was able to collect Rs 6.3 billion under excise against the target of Rs 5.2 billion. Collection under education service tax stood at Rs 99.9 million, which was also higher than the set target of Rs 98 million. Health service tax collection stood at Rs 165.6 million, which was below the set target. The government had set an aim to collect Rs 232.5 million from health service tax.

Revenue collection target under registration tax and vehicle tax also failed to meet its given target of Rs 842.5 million and Rs 754.08 million, respectively. Collection under registration tax stood at Rs 633.7 million and Rs 716.6 million was collected under vehicle tax, according to the Ministry of Finance.

The government collected Rs 1.8 billion from others tax heading and Rs 2.46 billion from non-tax revenue sources in the review period.

The government has set a target to collect Rs 565.9 billion in fiscal 2016-17.

At a glance

Heading               Target   Collection

VAT        14.5        13.6

Customs tarriff 7.33        7.85

Income Tax         7.79        7.46

Excise   5.22        6.31

Registration fees             0.84        0.63

Vehicle tax         0.75        0.72

Education tax    0.098     0.099

Health Tax          0.23        0.17

Other    0.84        1.8

Non-tax sources               2.21        2.46

Amount in Rs billion, Source: MoF