The business community of Nepal in particular, had some great expectations from this years’ budget. General mood of the market was to obtain relief packages to fight the impact of the ongoing COVID crisis. However, since its announcement in May, the much anticipated Fiscal Budget 2077-78 has been under public scrutiny.
Although the Government was unable to provide significant relief packages to businesses, leaving many business owners and investors disgruntled. They have prioritized the health sector, and have promised to rescue industries that have taken a major hit from COVID crisis.
So, here are some insights on how your business can take advantage of 2077-78 annual budget:
Tax amnesty scheme
Via this scheme the government has given a limited time opportunity given to specific groups of people who have defaulted on paying tax on time, in exchange for interest and penalty. Any form of administrative sanctions and legal prosecutions that would otherwise be implemented, has been terminated for users who have applied for this scheme.
Direct Tax and Direct Tax Waive – offs
If you are an unregistered person, or run an unregistered entity, meaning if you have failed to obtain permanent account number, VAT number, or to submit appropriate tax return documents then you are eligible to obtain relief in forms of waive offs in interest, application fees, and penalties by submitting your application to Inland Registration Office by the end of Falgun 2077.
Terms and conditions of waive off will vary as per the legal identity and turnover of your business.
For detailed information refer to our podcast episode : Decoding Fiscal Budget 2077-78 with Nitesh Todi .
Some Relief for businesses
If your business has turnover of less than 10 million NRS. and has been affected by COVID-19 then for this fiscal year, your business is entitled to get 25% rebate in the existing tax rate.
Similarly, if your business has annual turnover of over 10 million NRS, but your business falls in the category of : hotel, tourism, travel, trekking transportation, and airlines then you are entitled to a tax rebate of 20% in the existing tax rate.
Some solutions for small businesses owners
The lock-down has loosened up but the market is yet to recover. The government has taken some steps to provide relief to small business owners by waiving the demand charge which is applicable on commercial consumption of electricity.
Apart from this, The government has also announced a refinancing facility of 100 Billion NRS at a concession rate of 5% for agriculture, hotel and tourism based business. To provide concessional loans to SMEs and cottage industries fund of 50 billion NRS. has been established with the NRB.The aim of these provisions is to support businesses to meet their liquidity and working capital needs. Businesses can access these loans by getting in touch with their respective commercial banks.
Moreover, the government has allocated a budget of 0.5 billion NRS. for disbursement of loan at 2% interest rate to support start-ups with innovative ideas.
To an extent, the fiscal budget seeks to solve liquidity issues faced by businesses due to the ongoing COVID-19 pandemic and it aims to do so by extending the deadline for payments, by providing waive offs, and by introducing provisions that would encourage businesses that have identified opportunity in this crisis. It is also encouraging digital economy by bringing reforms in ICT and digital payment gateways sectors. However, the question remains how will these benefits trickle down to businesses operating in Nepal?
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