The business community and experts have criticised the government's decision asking business firms to pay taxes while people are ordered off the streets due to the lockdown.

They have termed the government’s move as "insensitive".

Amid expectations that the government would relax the lockdown, a Cabinet meeting on Saturday decided to extend it until June 14. Nepal has been on lockdown since March 24.

Although the government had deferred the deadline of paying taxes twice in the past citing the impact of the Covid-19 pandemic on businesses, on Tuesday, it issued a notice asking taxpayers to clear their taxes within the extended deadline of June 7, or pay fines.

The cabinet on April 26 had extended the deadline for submitting tax details and making payment of taxes including income tax, value-added tax, excise duty, telephone service fee, telephone ownership fee, and education services fees till June 7.

The usual deadline for paying taxes is mid-April.

But businesspeople say that the time is still not right as businesses have been closed without any cash flow due to the lockdown.

Shekhar Golchha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry, the apex private sector body, said people have not been able to collect cash from the market as nearly all businesses are closed due to the lockdown and that they were unable to pay taxes at the moment.

“If the government is in urgent need of revenue to run the government agencies, it is wise to lift the lockdown and let businesses reopen,” he said.

“Our position is that the government should first lift the lockdown and give certain deadlines to businesses to pay their taxes.”

Although the government extended the lockdown till June 14, it has promised to change the modality allowing more economic activities to take place.

Finance and Communication Minister Yubaraj Khatiwada said on Saturday evening that the high-level coordination committee to prevent Covid-19 will come up with a new modality for the lockdown “in a few days”.

“The lockdown will be strict in areas where there is more risk,” Khatiwada, also the government spokesperson said at a press briefing after Saturday’s Cabinet meeting.

“We have to continue with our daily activities while managing the risks of the coronavirus.”

With no sign of the pandemic ending, the private sector has been demanding that the lockdown be imposed selectively if not completely lifted at the bare minimum.

In recent days, the number of Covid-19 cases has risen rapidly in the country. With the largest single-day spike of 288, total cases in Nepal on Tuesday reached 2099, according to the Ministry of Health and Population.

While some lives have been lost due to the pandemic in Nepal, the livelihood of tens of thousands of the people is at stake due to job losses caused by the pandemic.

Golchha said that even the Supreme Court has ordered that the lockdown period be called a zero period.

Although the Supreme Court’s order is for legal purposes where deadlines and court dates won’t be counted for that period, he referred to the court’s order to suggest the severity of the impact from the pandemic on businesses.

“How can we pay taxes during the zero period?” he asked.

Former Minister and former Finance Secretary Bidyadhar Mallik said it was necessary to extend the tax deadline as the government has been extending the lockdown continuously.

“Technically, it is necessary to extend the deadline as people cannot move during the lockdown and they also face a lack of cash flow at a time when businesses are not running”, he said.

According to him, the deadline can be extended until the end of the fiscal year or beyond because this is an unprecedented situation and the government should not charge any extra fees or penalties.

But, the government said that it does not intend to extend the deadline further as it has already extended the deadline twice in the past.

Yagya Dhungel, chief of revenue department at the Finance Ministry said that the government would ease the situation for businesses to pay taxes and submit tax details by ensuring banks and tax offices remain open while providing additional vehicle passes.

“In fact, many services including submitting tax details and tax payment can be done online too. So, the taxpayers should not be worried about the lockdown,” he said.

He said that the government had to collect taxes as it is facing a huge deficit in tax collection. As of mid-June, the government has only collected Rs 657 billion of their Rs 967 billion target, according to the Finance Ministry.

“The government is ready to ease the situation for business people to run their businesses as the government relaxed lockdown provisions for some businesses last month,” said Yagya Dhungel, chief of revenue department at the Finance Ministry.

“Businesspeople should help the government run the state mechanism by paying their taxes.”