VAT imposed on Potato, Onion annuled

KATHMANDU, MAY 29: The government has changed the tax rates of different goods and commodities through the upcoming fiscal year’s budget, which was announced on Tuesday.

Unveiling the budget, Minister for Finance Barshaman Pun announced the reduction of import fees and excise duty on raw materials for drugs, induction stoves, yarn, helmets, incense sticks, sanitary pads, and some raw materials for other goods to prioritize domestic industries.

Likewise, Finance Minister Pun has scrapped the provision of VAT exemptions for certain goods. This move, he said, is aimed at expanding the tax base and developing a clean tax system.

“I have annulled the VAT imposed on potatoes, onions, apples, and other vegetables and fruits. This will help promote domestic production,” Finance Minister Pun said.

Similarly, the excise duty rate on liquor, beer, tobacco, and cigarettes has been increased.

Furthermore, the existing threshold for VAT registration on mixed transactions of goods and services has been raised to Rs 3 million.

A green tax has been imposed on the import of petroleum products and coal.

Likewise, the government has adopted a policy to increase import tax and excise duty on some ready-made goods to protect domestic industries.

The income tax on interest payments by banks and financial institutions has been decreased to attract foreign capital.

Minister Pun also announced plans to develop a model agreement to end the dual tax system to promote foreign investment from different source countries.

Information technology-based industries will be given an exemption on the dividend tax if their profits are capitalized.

The customs duty of 15 percent on the import of steel milk cans for animal farms and industries producing more than 1,000 liters of milk daily has been reduced to just one percent.