Income Tax Bill '58 tabled

By Satyendra Timilsina

KATHMANDU, Aug 8 - The Income Tax Bill 2058 (2001 AD) that was registered at the Parliamentary Secretariat during the nineteenth session of the Parliament, which could not proceed due to disruption by the opposition, has been tabled in the Parliament for debate.

The proposed income Tax Act 2058 will replace the existing Income Tax Act 1974 after the Parliament’s approval. The new Act is intended to govern all income tax matters, which will prevail in case of conflict with any other Acts and regulations. The Act will also be accompanied by rules providing administrative details and harmonized interpretation.

The bill aims at broadening the tax base, implementing full fledged self-assessment system, ensuring simplicity, and bringing uniformity and transparency in tax administration. The proposed Act has attempted to tax all those activities that contribute toward the creation of wealth, the sources of which has been divided into three categories: employment, business and investment. Likewise, tax business income and the agricultural income above the limit as provided in the Acts related to land administration would be taxable considering such agricultural activities as business.

The Income Tax Bill has proposed to charge tax on the net gains that are derived by subtracting total losses from total gains. The unrelieved losses for the actual income year and those from a previous income year can be carried forward forever.

The proposed Income Tax Act has also revised the existing appeal system on tax issues. With the new provision, it has been made mandatory for taxpayers to file objection at the Inland Revenue Department before appealing to the Revenue Tribunal.

Other important features of the Income Tax Bill is the provision of tax credit facility to the individual tax payers. The tax payers who have to undergo medical treatment is entitled to receive 15 per cent of the total medical expenditure in tax credit. If the tax credit exceeds the total tax payable then it is carried on as the tax credit for the next year.

The tabled bill proposes to tax capital gains, which are received from the disposal of business assets or liabilities. It also aims to tax those gains that come from the disposal of non-business assets of an investment, which are regarded as chargeable. An entity is liable to pay tax separately from its beneficiary, it is also a provision of the bill.

Furthermore, with the amendment, the proposed Act will allow banks to carry back losses for 5 years before the carry forward rule applies. Similarly, the proposed Income Tax Act has differentiated retirement savings as approved and unapproved, of which the unapproved retirement savings will be taxed.

In case of misfiling of the income tax returns, penalty from 50 per cent to 100 per cent has been proposed in the bill.

MPI growth rate dips Sectoral performance wanes

By Prem Khanal

KATHMANDU, Aug 8 - As an early indication to the slowing industrial activities of the country, the overall Manufacturing Production Index (MPI) in the last fiscal year registered a sluggish growth of 4.02 per cent as compared to 6.57 per cent growth recorded in the previous year.

According to the annual production statistics complied by the Central Bureau of Statistics (CBS), manufacture of food products, which holds the largest weightage in the index, registered a slump of 5 per cent where as the growth of the group in the fiscal year 1999/2000 was 7.77 per cent. The growing imports of foreign foodstuffs, particularly the flood of cheap Indian rice witnessed recently, are the chief reasons behind such a decline.

Despite the surging export growth of vegetable ghee, its production in the last year, showed a decelerating growth of just 2 per cent against the growth of 6.67 per cent registered in the previous year. Piling stocks of vegetable ghee along with slowing domestic consumption might explain the cause of decline.

Similarly, propelled by a favorable weather condition, the production of rice, which commands the largest weightage in the food group, recorded a robust growth of 15 per cent as opposed to 4.35 per cent in the previous year. One of the shocking pictures, in the group, has been seen in the animal feed production, whose overall production last year dived by more than 5 per cent against nominal increment of 1.43 per cent in the previous year.

Shrinking poultry farming, the largest consumer of animal feed, as a result of slowing tourism industry combined with growing distraction over animal husbandry, especially in the rural sector, and also due to growing violence played crucial role in the dive in the food sector.

Similarly, the index of manufacture of other food products soared by 4.56 per cent against 6.58 per cent recorded in the previous year. Despite the sluggish growth in the production of sugar, the double-digit bump in the production of noodles largely helped to keep the index positive.

After a surge of 6.76 per cent in the previous year, the manufacturing index of beverages during the last year tumbled by 5 per cent mainly due to the burgeoning anti-liquor campaigns, especially in the rural sectors. After many years, a marginal decline was also observed in the production of cigarettes, which dived by 2.06 per cent against a growth of 9.37 per cent in the previous year.

The 13 per cent double-digit plunge in production of woolen carpet, a major weight holder in the index of manufacture of textile, reflects that the major foreign currency earning industry is in doldrums and the days ahead are tough.

Similar decline was also observed in production of ready-made garments, which during the last fiscal year, sank by 5 per cent against the growth of over 19 per cent in the previous year. The decline in the production of carpet and garment, which comprise 80 per cent of total overseas export, clearly reflects the deepening gloom over the major exportable industries.

As a sign of improving performance of the construction sector, the production of cement during the period surged by around 10 per cent. However, the production index for iron rods declined by over 7 per cent mainly due to the huge stocks of the previous year. During the previous year, the production of iron rods had recorded a robust soar of around 17 per cent.

Outgoing Polish envoy meets FNCCI chief

KATHMANDU, Aug 8 (PR) - The outgoing ambassador of Poland to Nepal Jan Krysztof Mroziewicz met with Ravi Bhakta Shrestha, President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) at the Federation’s secretariat today.

According to an FNCCI press release, talks on expanding bilateral trade and economic relations, exchange of business delegations and participation of each country in trade fairs organized in Nepal and Poland were held on the occasion. President Shrestha expressed the views that Poland could import high quality tea, gems and jewelry from Nepal and added that the diplomatic missions abroad could help in enhancing bilateral trade.

On the same occasion Ambassador Krysztof opined that Nepal could import small aircraft from Poland and Poland could invest in hydropower sector in Nepal. He also said that the diplomatic missions could play an active role in promoting mutual trade and stated that Polish embassy is committed to it. Honorary Consular General to Poland Hulas Chand Golchha also spoke on the occasion saying that he has been contributing to promote bilateral trade relations between Nepal and Poland, and would continue his efforts in the days ahead.