Very few shopkeepers in Nepal give their customers genuine VAT bills on the purchase of goods. Instead, most hand out bills with no identification of VAT registration. The tax amount ends up in the pockets of shopkeepers, not in government coffers. It has also been found that shopkeepers lure their customers with heavy discounts if the latter agree not to ask for VAT bills. But even when customers demand genuine bills, some shopkeepers fob them off with fake ones.

The Inland Revenue Department (IRD) which is supposed to monitor shops for counterfeit bills has been largely ineffective in its efforts. The common practice is for IRD to look into a handful of customer complaints instead of inspecting shops on a regular basis. Although IRD claims to have surpassed its expectations in tax collection, the government is still losing as much as 15-20% of VAT collections. Perhaps more initiatives like the Conscious Consumer Lottery Programme (CCLP) are the order of the day. More important is a massive awareness campaign enlightening average consumers about the harm they are doing to the country’s fledgling economy by not demanding VAT bills against their purchases and the hassles they

are likely to face in case the goods they buy turn out to be counterfeit.