The Inland Revenue Department (IRD) is expecting to more than make up for people’s initial lukewarm response to special scheme, with Inland Revenue Offices (IROs) witnessing bigger crowds over this week, especially on Tuesday—the final day of the deadline.

“Based on the crowd of people seeking to pay tax at the IROs, people’s participation in the scheme is very good,” said Rajan Khanal, chief of revenue division at the Finance Ministry.

However, officials at the Ministry and IRD said that they have not yet received data of the exact number of taxpayers under the scheme as collection was going on until Tuesday night.

As per the special scheme offered through the Financial Ordinance 2013, private institutions, small traders, cooperatives, professionals and other individuals have been asked to pay their income tax for the last two years within mid-January and get exempted from the tax liability of earlier years even if they had not paid tax for several years.

The targeted taxpayers are private institutions, small traders, cooperatives, professionals and other individuals. The scheme has been designed for both income taxpayers and VAT payers. “There had been a disappointing response to the scheme until recently. But the number of taxpayers benefitting under the scheme has grown over the last few days,” said Ram Mani Duwadi, deputy director general of IRD.

According to Duwadi, even those who would normally pay the installment of tax at the end of sixth month paid the tax on Tuesday. “The tax offices across the country have been instructed to collect tax until mid-night Tuesday,” he said.

He explained that response to the scheme has been very good in Terai, particularly in eastern Terai, including in Biratnagar and Birgunj, where the IROs remained crowded throughout the day. “The response in Kathmandu and other hill areas was not as good as that of Terai and eastern Nepal,” Duwadi noted.  

The government has turned down the private sector’s request to extend the deadline, announcing that it would initiate actions against defaulters once it expires on Tuesday.

Response from the professionals such as doctors, engineers, lawyers, chartered accountants among others have been poor, the IRD said. “Although exact details on how many of them have registered with tax office is currently unavailable. the response is not what we had expected,” said Duwadi.

“Surprisingly, those unaware about the tax regime turned up to register themselves with the tax office, while those well aware of it have been reluctant,” he added.

Until last week, only around 600 professionals had taken benefit of the scheme. The Financial Ordinance has asked all professionals, who are liable to pay taxes but have not acquired Personal Account Number (PAN) or have failed to pay income tax until fiscal year 2011-12, to pay their taxes for fiscal year 2010-11 and fiscal year 2011-12 within mid-January 2014. The IRD had offered income tax exemption for the previous years, fee and interest accrued thereof.

As far as the problem of discrepancy is concerned, only around 1,000 small traders, with an annual transaction of less than Rs 2 million, paid their taxes until last week. The IRD had expected to collect taxes from around 4,400 and settle discrepancies.

Meanwhile, the government is expected to meet its revenue target for the first half of this fiscal year following the increase in collection from customs offices and IROs. But the collection in the first five months had been poor. “We may slightly the miss the overall target of first half despite good collection in the sixth month,” said Surya Prasad Acharya, director general at the Department of Customs. According to him, more than Rs 14 billion has been collected in the sixth month against the target of Rs 12.89 billion.