Revenue collection under major tax headings in H1 below target
Kathmandu, January 24
The government has managed to meet the overall revenue collection target in the first half of the fiscal from non-tax sources like royalties from public corporations and government entities. More worryingly, however, the revenue collection under the major tax headings missed the set target in the review period.
Finance Minister Gyanendra Bahadur Karki expressed deep concerns regarding the ‘weak’ collection performance under the major tax headings.
The government has missed the collection target under value added tax (VAT), income tax and customs tariff, which are the three major taxes that contribute over two-third to the total revenue.
Performance of VAT collection has remained weak since beginning of this fiscal. However, collection from income tax and customs tariff were also below target in first half.
During the half-yearly review of revenue collection at the Ministry of Finance today, Finance Minister Karki instructed the tax administration to strengthen tax enforcement by plugging the loopholes and controlling leakages.
In the first half of the fiscal, the government collected 45.9 per cent of the total annual target worth Rs 730.05 billion and revenue growth stood at 20.73 per cent compared to the corresponding period of the previous fiscal. The government had targeted to collect Rs 334.14 billion within the first six months of this fiscal, whereas the collection stood at Rs 335.1 billion, according to the Revenue Division under MoF.
Collections under three major taxes — VAT, income tax and customs tariff — stood at Rs 92.4 billion, Rs 72 billion and Rs 61.95 billion, respectively. The collected amount under VAT, income tax and customs tariff were 91.6 per cent, 97 per cent and 98 per cent of the target, respectively.
The government has also missed revenue collection target under registration fees, vehicle tax, health and education service tax. However, collection under other tax heading was nearly 51 per cent above the target to stand at Rs 9.63 billion. Similarly, the collection of Rs 46.98 billion in excise was nearly one per cent above target, as per Revenue Division.
Collection under non-tax exceeded the target by 45.68 per cent to stand at Rs 38.14 billion. This helped the government to bridge the shortfall witnessed in major tax headings and meet the overall revenue collection target.
Half-yearly revenue collection
Value added tax
Health service tax
Source: Revenue Division, MoF