Mandatory PAN provision faces challenges

Kathmandu, August 14

“My boss told me to acquire Permanent Account Number card since the government has made PAN mandatory for payments. But I don’t know what to do next,” said Ram Kumar Poudel, a delivery man working at a retail store in Jorpati.

Workers like Poudel have been hit hard by the recently introduced provision of the government that has made PAN mandatory for every transaction over Rs 1,000 from the beginning of this fiscal. Though a law-abiding citizen, Poudel says he neither understands what PAN is nor does he know how to get a PAN card.

The government’s decision to implement the PAN provision is being met with numerous ‘practical challenges’, with the private sector — the major stakeholder for implementing this provision — expecting to face problems in doing business.

For instance, domestic industries based along the Indian border that have been employing a number of Indian workers, especially porters, have been facing problems in making payments as Indian workers do not have PAN. “Some Indian workers charge more than Rs 10,000 for loading and offloading goods from cargo vehicles. How is it possible to implement the PAN provision in such a context?” questioned Kishore Pradhan, vice-president of the Federation of Nepalese Chamber of Commerce and Industry.

While commending the government’s intention of bringing every transaction under the tax net with the PAN provision, Pradhan pointed to ‘practical’ difficulties in implementing the provision in every case and opined that the government should facilitate this concern of industrialists.

“Industrialists can neither make payments to workers not having PAN nor can they list payments made without PAN under expenditure,” added Pradhan. The PAN provision is also ‘problematic’ in the agriculture sector, as big agro-based firms have been deploying thousands of unregistered and uneducated workers in everyday farm work as per necessity.

“Particularly in vegetable farming, we deploy unregistered people to plant and pluck vegetables and we have been paying them up to Rs 1,500 per day. How relevant is it to seek PAN from normal farmers for payments?” asked Krishna Mani Baral, operator of Green Hill Agriculture Farm based in Sundarijal.

Contractors say it is impossible to implement the new PAN system in the construction sector as well, as the sector employs thousands of Indians and unskilled workers. “Workers in construction sector are not permanent job holders and contractors hire such workers depending on the need of the project for certain days or weeks or months. Majority of Indian and Nepali labourers lack PAN,” said Bishnu Bhai Shrestha, president of the Federation of Contractors’ Association of Nepal.

Claiming that the government made PAN mandatory without ample groundwork, stakeholders have suggested that the government should remain flexible for a certain period and raise the minimum threshold for PAN.

The government had also formed a committee to analyse private sector’s concerns regarding PAN under the coordination of Nirmal Hari Adhikari, joint secretary at the Ministry of Finance, along with members from the private sector and other related government agencies.

However, the committee has not been able to reach a concrete conclusion despite repeated meetings.

“The minimum threshold is a major sticking point,” a member of the committee told THT seeking anonymity. He added that the government was willing to raise the bar to Rs 2,000, while the private sector has been demanding that the minimum threshold be set at Rs 7,000.

Dirgha Raj Mainali, director general at the Department of Revenue Investigation, who is also a member of the committee, said the government would not step back from implementing the PAN provision.

Stating that all valid concerns of the private sector and other stakeholders regarding PAN will be addressed, he added that the next meeting of the committee, scheduled for Monday, would resolve the issues.