After encountering strong criticism from the business community and the general public against the proposed tax deadline of June 7, the government has deferred the deadline to pay taxes and submit tax details by 15 days.

The Inland Revenue Department has extended the deadline to pay value added tax, excise duty, tax deducted at source (TDS) under income tax, education service tax, telephone ownership fee, and telecommunication service fee to June 21 from the previous deadline of June 7, according to a notice issued on Wednesday.

The tax authority also extended the deadline for the payment of income tax from June 14 to June 28.

This is the third time that the government has extended the deadline to pay taxes as the country continues to remain in lockdown to prevent the spread of Covid-19, which has claimed nine lives and infected 2,300 people across the country so far, according to the Ministry of Health and Population.

The deadline extension follows a request from the private sector during a meeting with Finance Ministry officials on Wednesday morning. During the meeting, private sector representatives had called the government's decision to collect tax in the middle of a lockdown “insensitive”.

The country has been under lockdown since March 24, with the latest extension lasting until June 14. The government’s earlier deadline of June 7 fell smack in the middle of a lockdown where public movement has been prohibited.

“The government’s decision to extend the deadline is a move towards a positive direction,” said Shekhar Golchha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry, the apex private business sector body. “Provided the lockdown is no longer extended, it will give some respite to the private sector.”

Golchha said that the private sector had asked that the deadline be extended till the end of current fiscal year, until mid-July.

Most businesses are not in a position to pay taxes immediately as there is still a lack of cash flow due to the fact that the markets are closed, according to Golchha.

“The VAT and excise duty are taxes that we have collected in the market but they have already been spent. So, we need to raise cash from the market in order to pay the tax authority,” he said.

The government aims to collect more taxes as it is facing a huge deficit in revenue. According to the Finance Ministry, the government has only collected Rs 657 billion so far, against a target of Rs 967 billion by mid-June.

“The government is ready to ease the environment for people to run their businesses. The government also relaxed lockdown provisions for some businesses last month,” said Yagya Dhungel, chief of the Finance Ministry’s revenue department, told the Post on Tuesday. “Business people too should help the government operate state mechanisms by paying their taxes.”