KATHMANDU, June 5: While Finance Minister Barsha Man Pun has been reiterating that he has not made much changes in the tax rates in the budget for FY 2024/25, stakeholders have slammed the government for imposing unfair taxes on a number of items through the budget.
Through the budget, the government has imposed 10 percent advance income tax on import of pulses and legumes. At a time when these food items are already subjected to 10 percent customs duty, the added tax will inflate the prices of these products to hit the consumers, said traders.
Kumud Kumar Dugad, president of the Association of Nepalese Rice, Oil and Pulses Industry, said the extra taxes imposed on these raw materials will shoot up the prices of related food in the market. “This will adversely affect around 35 firms which have invested Rs 35 billion on top of making dearer the kitchen of the countrymen,” he said.
The budget also talks about taking advance income tax of 2.5 percent on imported paddy, while the government has already been charging five percent of agriculture reform fee on it. “While the Indian government has been taking 20 percent tax on export of its paddy, the added tax will make the basic food much more expensive in the domestic market,” Dugad added.
The government has also been facing heavy criticism for raising taxes on electric vehicles. The annual budget has increased the customs duty on the eco-friendly cars by as much as 20 percent.
Speaking at the parliament on Tuesday, Rastriya Prajatantra Party Chairman Rajendra Lingden termed the increased taxes on electric vehicles unfair. “The Finance Minister is advised to take back the decision, if it is possible,” Lingden said.
Likewise, the government has doubled the customs duty on imported sponge iron, the raw material for manufacturing steel, to two percent. The imported scrap iron will now have to pay one percent customs duty, which was zero percent earlier.
Similarly, the government has scrapped excise duty of Rs 2,500 per ton being imposed on imported iron billet. In the new provision, importers of iron billet have to pay only five percent in customs duty.
Anjan Shrestha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industries, said the new policy will be a big setback for extraction-based iron manufacturing industries. “It will be in favor of only those manufacturing groups which yield very small value addition for the country,” said Shrestha.
Finance Minister Pun however said that the budget will help promote production sectors. “The new provisions will help make economic activities more vibrant. The budget is not distributive, but it is more production-oriented,” said Pun, speaking at a National Assembly meeting on Tuesday.