Kathmandu. The fiscal year 2083/84 starts from {{} ( Friday) {{} on July 1. With the beginning of the new fiscal year, the policies and programs, budget and policies and programs that the bank has made public will be implemented. The government has removed some old taxes and given concessions and added some new tax policies. 

The government has made changes in various tax policies with the objective of simplifying the tax system, expanding private sector investment, encouraging and and making the banking system more effective.  Significant changes have been made in the tax system relating to personal income tax, customs, customs, excise duty, green tax and electric {{}(EV) in the financial year as compared to the financial year 2082/83. 

The biggest change has been made to personal income tax. Earlier, the limit of tax on annual income up to Rs 5 lakh has been increased to 1 percent to Rs 10 lakh. Similarly, the maximum personal income tax rate has been reduced from 39 percent to 29 percent. Income between Rs 10 lakh and Rs 15 lakh will be taxed at 10 per cent, income between Rs 15 lakh and Rs 25 lakh will be taxed at 20 per cent, Rs 25 lakh to Rs 40 lakh will be taxed at 27 per cent and income above Rs 4 million will be taxed at 29 per cent. This is expected to provide relief to the middle and high income taxpayers. Similarly, the government has increased the salary of employees by 21 percent. The salary of employees is also going to be implemented from July. 

The government is also going to implement a new system for customs tax. Earlier, the customs rate was reduced from 11 levels to 7levels. Likewise, customs duty has been reduced on 273 types of industrial raw materials. The government hopes that this will reduce the cost of production of the industry. There has also been a major change in the excise duty system. Excise duty will no longer be levied on 360 items. However, excise duty has been increased on alcohol, cigarettes, tobacco,junk food, juice and some luxury items. The increased tax has already been implemented.

Integrated Green Tax (Green Taxes) from the new fiscal year, and other various including Infrastructure Development Tax, Road Maintenance } and {{} are going to be implemented. Similarly, a provision of providing up to 40 percent incentive subsidy to farmers investing up to Rs 20 million to encourage agricultural production and commercialization will also be implemented.

The government has adopted a policy of introducing intraday trading, short selling and derivatives trading in a phased manner with the objective of making the capital market modern and competitive from the new fiscal year. The final tax on capital gains tax from the sale of shares of a listed company will also be applicable to (final tax). 

What new fees have been added?

According to the Finance Act, 2083, various new fees are also coming into effect from July 17. Some of the new tax policies introduced by the government have a direct impact on and on the general public. Similarly, 3 percent education parity fee will be implemented in the private educational institutions and 3 percent health parity fee will be implemented in the services of private health institutions. Although the government claims to have imposed tax on the fees charged by private institutions to improve government schools and hospitals, it seems to have a direct impact on the general public.

Similarly, the decision to implement five percent Value Added Tax (VAT) on household electricity consumption is also coming into effect.Now, households consuming more than 50 units of electricity will have to pay 5 percent VAT. Although the government has said that it will make alternative arrangements so that the burden does not fall on the final consumer, it has not yet made a clear provision in this regard. However, 13 percent VAT will be levied on commercial electricity consumption.

Similarly, 2 percent luxury fee will be levied on five-star or above hotels, luxury resorts and imported liquor, while the annual royalty paid by mini casinos has increased from Rs 15 million to Rs 30 million.Those buying gold and silver jewelry from July 1 will also have to pay additional tax. Likewise, those buying gold, silver and jewelry will have to pay 0.5 percent skill promotion fee. Similarly, 5 percent service charge has been added on ride-sharing services.

Expected to have a positive impact on the economy

The Monetary Policy for the fiscal year 2083/84 is coming into effect from Friday. The implementation of the new policies and provisions of the government and the Nepal Rastra Bank is expected to increase the credit flow. The monetary policy is expected to keep the interest rate corridor stable, allow commercial banks to invest in foreign government bonds, and facilitate the blacklisting due to cheque bounce. The monetary policy aims to limit inflationto 5.5 percent, credit to the private sector to 11 percent and the broader money supply to 14 percent. 

The new policies and provisions to be implemented by the government and the Nepal Rastra Bank are expected to provide relief to taxpayers, reduce the cost of industry and business, increase private sector investment, encourage the agriculture sector, modernize the capital market and make the banking system more dynamic . However, due to the increased fees in education, health, luxury consumption, ride-sharing and some service sectors, the direct impact of this will be felt by the consumers.