Nepal | October 23, 2020

Heavy discount on income tax for small businesses

HIMALAYAN NEWS SERVICE
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KATHMANDU, MAY 28

Announcing the federal budget for fiscal year 2020-21, Finance Minister Yubaraj Khatiwada has offered heavy income tax exemption to small and cottage industrialists.

The government has exempted income tax of up to 75 per cent for businesses with annual transactions of up to Rs two million. Likewise, for businesses whose annual transaction is between Rs two million and Rs five million, the government has exempted 50 per cent on income tax, while 25 per cent exemption has been granted for businesses with annual transaction amounting to Rs five million to Rs 10 million.

Meanwhile, industries established in industrial areas will receive 25 per cent discount on income tax for five years, while all the cooperatives being operated in remote areas do not have to pay any income tax to the government.

Likewise, income tax exemption period for small businesses has been extended by two years to seven years, while the exemption period for women-run enterprises has been extended by three years to 10 years. The government has slashed customs tax on import of machinery and raw materials required for small and cottage industries, agriculture, livestock, veterinary and mask production. Similarly, customs tax on seeds of paddy, maize, wheat and vegetables has also been reduced.

“The government has decided to provide 20 per cent exemption on income tax of the current fiscal year for airline companies, transportation companies, hotels, travel and trekking agencies,” the minister said, “Infrastructure development tax on aviation turbine fuel has also been removed, while the government has also removed all airport service charges for aircraft during the lockdown period and flight restrictions.”

The government has also exempted value added tax on import of raw materials required for producing medicines as well as for raw materials of ayurvedic medicines.

However, the government has increased customs tax on petrol, diesel, gold, alcohol and cigarettes. The government has increased customs tax on imported alcohol by Rs 300 per litre, while Rs 2,000 has been increased on 10 grams of gold import.

Meanwhile, the government has decided to enforce road maintenance charge on electric vehicles worth Rs 12,000.

The government has also increased customs tax on spare parts of automobiles by five per cent.

A version of this article appears in e-paper on May 29, 2020, of The Himalayan Times.

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