What is meant by Tax? (In Nepalese Context)

Literal Meaning:

Tax/ Taxation/ (देवनागरी: कर meaning in one sense a royal revenue, toll, tax, tribute, duty in saskritam)

History:

The first record of organized taxation comes from Egypt around 3000 B.C. Taxes have been collected in Nepal, India and the Indian Sub-Continent from thousands of years as a way of funding the state to maintain welfare state in the nation, maintain defense of the kingdom, recruit armies, and prepare forts, etc.

Direct Tax:

If tax is levied directly on the income or wealth of a person and the burden of the payment of tax cannot be shifted to other person, then it is Direct Tax. The payment of such tax ‘pinches’ the taxpayer. For example: Income Tax, Integrated Property Tax collected by Local Governments.

Indirect Tax:

If tax is levied on the price of a good or service, then it is called an indirect tax where the burden of payment of the tax is shifted from manufacturer to various level of sellers to the ultimate consumer. For example: Customs Duty, Excise Duty, Value Added Tax, Health Risk Tax, etc.

Tax Collection Power in Nepal

Article 115(1) of the Constitution of Nepal, 2072 provides that, No any taxes and duties shall be levied and collected except than as per the law. Now, a small glance over some taxes and duties collected in Nepal and their governing laws are:

• Income Tax is levied through the Income Tax Act, 2058.
• Value Added Tax is levied through the Value Added Tax Act, 2052.
• Excise Duty is levied through the Excise Duty Act, 2058.
• Customs Duty is levied through the Customs Act, 2064.
• Green Tax, Infrastructure Development Tax, Agricultural Improvement Duty, Health Risk Tax, Road Construction Duty, Road Repair and Improvement Duty, Cinema Development Duty, Pollution Control Duty, Telephone Ownership Duty, Telecommunication Service Charge, Casino Royalty and Forest Yields Fee are levied and collected through yearly Finance Act passed from the Federal Parliament.
• House Rental Tax is levied and collected through Local Level’s Finance Act. (There are 753 Local Level/ Local Governments in Nepal and the house rental tax may vary from one local level to another. House rental taxes rates of 8%, 10% and 12% have been found across various local levels. It is to be noted that the constitution has provided the political division of Nepal into Federal, Provincial and Local Levels and hence the name Local Level is used for reference. Usage of words local bodies, local agencies, etc. might be misleading)

The increment of Infrastructure Development Tax from Rs. 5 to Rs. 10 per liter on import of Aviation Fuel, Petrol and Diesel with effect from 2076/11/15 has been done by using the power provided by Section 9(1) of the Finance Act, 2076.

So any levying of taxes, duties, charges and fees are to be rooted to laws providing for levying and collection of such taxes, duties, charges and fees. So, if a new type of tax is to introduced in the country, then the same has to be presented in the parliament and then will be effective once it is approved by both the House of Representatives and National Assembly and authenticated by the President.

#EMBF

[Note: All the date used in this article are in Bikram Sambat (B.S.), the national calendar used in Nepal which is about 56.7 years ahead of the Gregorian calendar system]