Revenue collection tops target by Rs7bRevenue collection overshot the target by Rs7 billion in the last fiscal year despite a four-and-a-half-month-long Indian blockade that brought Nepal’s economy to a near standstill.
Revenue collection overshot the target by Rs7 billion in the last fiscal year despite a four-and-a-half-month-long Indian blockade that brought Nepal’s economy to a near standstill.
The government raked in Rs482 billion against its goal of Rs475 billion, a pleasant surprise even for the Finance Ministry. The amount is equivalent to 21.4 percent of the Gross Domestic Product (GDP) which is the highest ever, the Finance Ministry said.
The ministry had projected a revenue collection deficit of Rs45 billion while unveiling the mid-term review of the budget for the last fiscal year.
Finance Ministry officials cited administrative efforts, higher customs valuation of imports and harder work to recover dues for the surge in revenue despite an adverse situation.
The payment of Rs10 billion in capital gains tax on the sale of Ncell, the largest corporate sector deal in Nepal, besides the receipt of Rs6.5 billion from the Telecommunications Fund collected by the Nepal Telecommunications Authority (NTA) also swelled revenue collection.
“This incident of revenue collection exceeding the target serves as a lesson that things considered as impossible can be possible if there is conviction and dedication to achieve things,” said Finance Minister Bishnu Poudel while speaking at a press meet on Tuesday.
According to him, measures such as recovery of tax dues, monitoring of the non-tax sector, improvement in valuation of goods at customs points, control of smuggling and risk mitigation initiatives to tackle tax evasion, among others, helped collection to surpass the goal. “During the first half of the fiscal year, revenues fell short of the target by Rs52 billion, and the deficit still stood at Rs50 billion in the third quarter of the fiscal,” said the minister. “But after border obstructions were removed in February, economic activities began to recover and revenue collection began to rise.”
When the government was preparing the budget for the current fiscal year, Finance Ministry officials were still expecting a revenue deficit of Rs10 billion, but eventually it even surpassed the target.
Responding to charges that the government depended on non-tax revenues like recovery of resources from the Telecommunication Fund and unplanned revenue collection such as capital gains tax from Ncell, Revenue Secretary Rajan Khanal said that collecting revenue from various inactive funds was part of the strategy pursued to meet the revenue target after the blockade.
He added that allowing various funds to remain inactive was against the law. “We have asked the Financial Comptroller General’s Office (FCGO) to determine the status of various inactive funds so that we can collect such funds in our revenue account,” he said.
Although the loan repayment of Rs12 billion by Nepal Oil Corporation is said to have been added to revenue, such monies are put under the ‘Financing’ heading and not revenue, said Joint Secretary Laxman Aryal of the Finance Ministry.
“In fact, consistent efforts by the revenue administration are mainly responsible for the higher revenue collection,” he said.
A surge in imports towards the end of the fiscal year also contributed to the jump in revenue despite prolonged obstruction at the border points during the blockade. Imports had plunged sharply during the blockade, but they swelled after the blockade was lifted and reached close to the figure of the previous fiscal year, according to the ministry.
Meanwhile, the contribution of income tax to total revenue increased by 3 percentage points to 27.52 percent from 24.85 percent in the previous fiscal year. However, the share of customs duty and value added tax (VAT) decreased by 1 percentage point.