Permanent account number rule to come into force despite calls for deferralThe private sector said implementation should be postponed because of practical difficulties.
The government is likely to make it mandatory for all individual wage earners to obtain a permanent account number (PAN) immediately despite calls from the private sector to postpone its implementation.
Permanent account numbers became required for salaried workers from July 17, the beginning of the fiscal year 2019-20. The government also made it mandatory for cargo transporters to use the vehicle and consignment tracking system from that date.
As per the Finance Act, firms cannot put distributed salaries without PAN under the expenditure heading. Any firm making payment to its workers who do not have a PAN is not validated by the tax authority.
The private sector has urged the government to defer the date of implementation complaining that the rule was impractical. It has also demanded that the government enforce PAN only on payments of more than Rs5,000 per day. Currently, PAN is mandatory for all transactions exceeding Rs1,000 daily.
Following complaints from the private sector, the Ministry of Finance formed a task force under Joint Secretary Nirmal Hari Adhikari consisting of representatives from the Nepal Chamber of Commerce, Federation of Nepalese Chambers of Commerce and Industry and Confederation of Nepalese Industries.
The ministry has held several meetings with business persons, but it has not fixed the minimum value of transactions for the implementation of PAN.
“The ministry is holding discussions with the private sector to revise the limit, but it will not stop from implementing the system for all salary earners even at the grass roots level,” said Uttar Kumar Khatri, spokesperson for the ministry.
Khatri said the ministry had scheduled the next meeting for Monday. “Government officials and the private sector are expected to reach a consensus at that meeting,” said Khatri.
According to the private sector, the ministry is adamant on implementing PAN for all despite the fact that there are a number of practical difficulties. Parsuram Dahal, chairman of the Tax Revenue Committee of the Nepal Chamber of Commerce and also a member of the task force, said the ministry was holding discussions with the private sector on how to implement PAN for wage earners in businesses like tea estates, small shops and eateries.
Dahal said the ministry planned to require non-Nepali workers engaged in small businesses obtain PAN. “The government will distribute PAN cards to these workers based on the recommendation letter issued by their employers and their identity cards,” he said.
Small business owners are sceptical about the ministry’s move. “People who work in small shops change their jobs frequently. Shopkeepers cannot issue recommendation letters frequently to workers who are always switching jobs,” said Pawan Jajodiya, proprietor of Jajodiya Khadda Store, Gyaneshwor.
The private sector has also asked the government to reschedule the date of implementing the vehicle and consignment tracking system. As a result, the launch date has been postponed to mid-October.
Kamlesh Kumar Agrawal, vice-president of the Nepal Chamber of Commerce, said they were requesting the ministry to pilot the tracking system for a year. “As many transport operators are not familiar with the online system, we have asked the government to give more time for preparation,” he said.
According to Agrawal, the government should also define the type and quantity of traded goods and the related distance to effectively implement the tracking system.