Private sector seeks hike in income tax threshold

THE Federation of Nepalese Chambers of Commerce and Industry (FNCCI) on Sunday asked the government to hike the income tax threshold to Rs 300,000 for an individual and Rs 350,000 for a couple. Currently, a person earning up to Rs 160,000 annually should pay 1 percent income tax. The rate increases to 15 percent for income between Rs 160,000 and Rs 260,000. In case of couple, income tax rate stands at 1 percent for income up to Rs 200,000 and increases to 15 for income between Rs 200,000 and Rs 300,000. The rate further increases as the income increases. In its 17-point suggestion, the apex private sector body has also demanded the government maintain the income tax rate at just 5 percent on every increase in income by Rs 300,000 . In a bid to attract investment, the FNCCI said the government must provide 5-10 percent waiver on income tax in the national priority sector and productive industries based on their nature. The FNCCI has put forth its suggestions concerning sectors including energy, agriculture, physical infrastructure, export promotion, tourism, employment generation, industrial promotion, income tax, value added tax, customs duty, excise duty, and money laundering. The apex private sector body has urged the government to give national recognition to industries that use 60-70 percent local raw materials. “Industries producing goods that are consumed more than 70 percent in Nepal and agro-based industries should be given special privileges in customs duty on the import of raw materials, suggested the FNCCI. In the energy sector, the FNCCI demanded tax exemption on raw materials for thermal plants that generate electricity from coal. “There should be zero duty on coal imports meant for producing energy,” states its demand letter. The private sector body has also sought introduction of an Act to promote commercial contract farming, VAT exemption on all agriculture production and provision of agro-insurance to boost the agriculture sector. With physical infrastructure being the backbone for development, the private sector’s apex body asked the government to complete the ongoing study on the East West Electric Railway and start construction from the next fiscal year. The business community has also sought the government’s priority to establishing industrial zones in Kakkadbhitta, Biratnagar, Birgunj, Bhairahawa, Nepalgunj, and Dhangadhi. To identify new export markets, the FNCCI has demanded the government allocate necessary budget for holding study on export feasibility to 10 new countries for exporting 10 Nepali goods. In its suggestions, the FNCCI has said the government has to simplify process of giving cash incentive to exporters. “Exporters should be provided with a flat cash incentive of 2 percent and it should be increased to 3, 4 and 5 percent based on value addition ,” the FNCCI demanded. FNCCI President Suraj Vaidya welcomes Finance Minister Shankar Prasad Koirala as FNCCI Vice-president Bhaskar Raj Rajkarnikar looks on at an interaction programme in Kathmandu on Sunday. The private sector body has also suggested allocating 10 percent of resources allocated to the education sector to vocational training. It demanded employment-friendly labour law, single trade union in an enterprise and compensation law to compensate loss of bandas and strikes. It has urged the government to prioritise privatisation of public enterprises, provision to allow the private sector to import petroleum products, and income tax waiver for up to 5 years for IT-based industries.