Government exploring contingency plan
Kathmandu, December 16
The government is preparing a contingency plan to make up for the shortfall in revenue collection so that expenditure for this fiscal year is not hampered.
The government is exploring various alternatives in a bid to recover the loss in revenue collection — the major source of budget financing — which has dropped significantly when compared with the target set for this fiscal due to the border blockade.
The government has an aim to collect revenue worth Rs 475 billion this fiscal. With the country’s imports continually surging every passing year, the country has been collecting around 44 per cent of the total revenue from customs points. Hence, the border blockade by the Madhes-based agitating parties has dented the collection significantly.
Revenue collection from customs points has already been missed by around Rs 30 billion of the set target of Rs 76.84 billion in the first five months of this fiscal.
According to the Revenue Division of the Ministry of Finance (MoF), the total revenue collection in the first five months is projected to drop by Rs 50 billion. This means the total revenue collection is expected to hover at around Rs 112 billion, against the set target of Rs 162 billion in first five months.
Rajan Khanal, revenue secretary at MoF, informed that the Inland Revenue Department and Department of Revenue Investigation will start inspection of the stock position in trading houses starting second week of January. MoF is going to take this initiative to compel traders to submit their value added tax (VAT) to the respective tax offices.
MoF, considering the unfavourable economic situation, has been extending an additional one month period to traders to submit value added tax. However, reportedly traders who have not been affected by the blockade have also not filed VAT on time by capitalising on the facility extended by the government.
“The facility was targeted to provide relief to those who have really suffered due to the blockade, but a significant number of traders have not been submitting VAT collected from consumers by taking advantage of this provision,” said Khanal. “The government will not extend any additional default period after this provision expires on January 9, 2016.”
MoF expects revenue collection to increase in the sixth month as the first instalment, or 40 per cent, of income tax will be collected. Likewise, revenue determined by the Tax Settlement Commission (TSC) will be collected within this fiscal. This will provide some support as TSC has extended the deadline by a maximum of 120 days to the taxpayers, except for a few sick industries and businesses. For a few sick industries and businesses, the commission has granted extension of 270 days for submission of the tax amount. TSC, which was terminated in mid-October this year, has settled 1,069 disputed cases amounting to Rs 9.55 billion.
Similarly, MoF has also been pushing the Financial Comptroller General Office (FCGO) for reimbursement of the donor-funded projects. The government in this fiscal is expected to get reimbursement worth Rs 32 billion, but only Rs eight billion has been reimbursed from the donor funded projects during the first five months of this fiscal.
The government releases funds for various donor-funded projects based on the pledges made by donor agencies. The donors then reimburse the spent amount to the government based on the accounting reports.
“We have been pushing the FCGO for early completion of accounting and reporting of the donor-funded projects for the reimbursement,” said Khanal. “The reimbursement amount will support us in increasing the fiscal space at a time when revenue collection has been disappointing.”