• As a majority of retailers don’t have PAN yet, wholesalers and traders refuse to sell them goods, saying issuing goods without PAN will affect their accounting system

Kathmandu, August 8

The government’s ostentatious scheme to broaden the tax base by making permanent account number mandatory has badly affected micro-level businesses in the country, especially retail shops.

Retailers claim they feel cornered from all sides — struggling to understand the procedures for registering at PAN, being harassed by taxmen looking to extort money from them and traders and wholesalers refusing to supply goods to them for not having acquired PAN.

“Not all retailers are educated and aware of the tax system. But as the government has made PAN provision and value added tax registration compulsory, taxmen have been harassing small shop owners who are yet to comply with these laws,” said one owner of a retail shop at Swoyambhu, requesting anonymity.

The government has made it mandatory for all income earners, whether an individual or firm, to obtain PAN from the beginning of fiscal 2019-20. The mandatory PAN provision for earners aims at expanding the revenue base of the government, but abrupt implementation without enough groundwork has been affecting the retail market.

While the Inland Revenue Department has said that it will be lenient towards small businesses till mid-October, the ground reality seems different.

“As a majority of retailers do not have PAN yet, traders and wholesalers are refusing to sell goods to them, stating that issuing goods without PAN will affect their accounting system,” informed Pabitra Bajracharya, president of Nepal Retailers Association. “This has largely affected the business of retail shops.”

As per NRA, there are more than 60,000 retail shops in Kathmandu valley, of whom less than 20 per cent have acquired PAN and registered at VAT. In such a context, Bajracharya opined that the government should have conducted door-to-door campaign to make people aware about the PAN provision before making it mandatory for all.

Bishnu Shrestha, who owns a retail shop in Chabahil, explained the difficulty in complying with the PAN provision. “After I heard about the mandatory PAN provision, I went to the tax office at Chuchepati to know the details. However, the officials there simply told me to fill the online form. But, I do not have computer skills,” lamented Shrestha.

Even the Federation of Nepalese Chambers of Commerce and Industry — the private sector’s umbrella body — had expressed reservations against the government decision to make PAN mandatory, stating that it was untimely and that the decision came without enough groundwork.

Officials of IRD were not available for comment on the issue.

One retailer said those who had not acquired PAN yet had either been pulling their shutters down or ‘running away’ whenever they saw taxman’s vehicle approaching.

Earlier, IRD officials had said that taxmen had been deployed in the market to create awareness about tax and facilitate people in getting PAN.

Government statistics show that the retail and wholesale sectors contribute 14.37 per cent to the national economy. The Central Bureau of Statistics officials opined that unless the PAN issue is resolved at the earliest, there could be notable adverse impact on the country’s GDP and could make it difficult for the government to achieve its growth target of 8.5 per cent for fiscal 2019-20.