Biratnagar VAT office unlikely to raise targeted revenue

Post Report

BIRATNAGAR, March 16 - Going by the revenue collected by the Biratnagar Value Added Tax (VAT) Office in the first eight months of the current fiscal year, the office is unlikely to meet its target of revenue collection.

The office has collected a revenue of Rs 111.4 million in VAT and Rs 255 million in excise duty, within the first eight months of the current fiscal year, while it had targeted to collect a revenue of Rs 555 million including VAT and excise duty in the current fiscal year.

One of the factors responsible for the poor collection of revenue is the growing practice of not issuing bill to customers among most of the local business firms.

It is mandatory that all business firms dealing in value added taxable goods should issue bills with clear mention of the respective firm’s name and serial number to their customers upon purchase of goods or services. But the reluctance of business firms to issue bills to customers has become a major problem in the implementation of VAT.

And some business firms ask for ten per cent extra amount if buyers insisted to have bill. "If you need bills, you have to pay VAT", say the local businessmen. However, officials at the local VAT office say that they have taken on the spot action against those businessmen who ask for additional ten per cent to issue VAT bills.

Not only that. First, they discourage the customers by asking additional amount for issuing bill. And even if they issue bills they provide the fake ones.

Madhu Kumar Marasini, Chief of VAT office Biratnagar, says that they have taken action against those businessmen who either do not issue bills or issue spurious bills on the spot. He said that the office fined Rs 2,000 each to 20 firms for not issuing VAT bills.

However, an official at the customs point in Biratnagar says that VAT office Biratnagar has not been able to take action against any business firm evading VAT through under-invoicing.

Since VAT is already included in the goods and services, the customers do not have to pay extra amount for receiving VAT bills.

Apart from the non-cooperation from the business community, the indifference of the customers has also affected the efficacy of VAT implementation. Most of the local customers say "what’s the use of asking for VAT bills?"

"Businessmen should include VAT in the sales price to make their transactions transparent. But whether the customers ask for bill or not there should be only one price", says Marasini.

If any business firm with transaction exceeding 2 million rupees are found not registered with the VAT office and if the transactions of any firm differ from customs declarance letter and the record of Revenue Investigation Department (RID), we take action against them, he said.

If any business firm imports goods worth over Rs 10,000 at a time or imports goods worth over Rs 200,000 in a year, such firms should be registered with the VAT office.

Marasini said that for the effective implementation of VAT, consumers should be made aware in a massive scale and as VAT collection is directly related with the retailers, its success largely depends on their cooperation. However, he also admitted that enough awareness programs have not been conducted to make the consumers aware about VAT.

The tendency among the traders of ever exaggerating stocks and under invoicing are other problems in VAT implementation, says Marasini. As customs valuation of imported goods is made on the basis of invoicing, it has resulted in under-invoicing, which affects even the retail level, he says.

Altogether, 1,488 firms have been registered with the Biratnagar VAT office so far.

VAT banners disappear

BIRATNAGAR, March 16 (PR)- Biratnagar VAT Office, a couple days ago, hung banners reading "Did you get your VAT bills?" at the most crowded areas, with a view to reminding customers to ask for VAT bills upon purchasing goods, but they have been removed by the local businessmen, it is apprehended.

Madhu Kumar Marasini, Chief of the office suspects that those banners must have been removed by those businessmen who are reluctant to issue VAT bill.

"Though I have not seen anyone removing the banners, it must be those traders who don’t want to issue VAT bills", he said.

Promising IT firm closed, likely to face liquidation

By Bhaskar Sharma

KATHMANDU, March 16 - ‘Placing Nepal on the Global Information Technology (IT) Map’, within the next five years, is the vision of the IT Policy - 2000. Unfortunately, hardly four months after it was announced, one of the largest IT firms in the capital is on the verge of collapse.

The future of Himalayan Infotech Services Pvt. Ltd. (HIS) now hangs in limbo. Closed down from March 1, the employees have not been paid for the past month, and with management claiming bankruptcy, the company is likely to go into liquidation.

More than four hundred young boys and girls, most of them medical transcriptionists, for over four months, had braved the chilly nights of Kathmandu’s winter and tapped at their keyboards, sending transcripted messages to doctors in the United States, taking turns round the clock.

With average qualifications of ten-plus-two, the employees were earning around Rs 9000 per month, an amount not much heard of in other sectors for the plus-two pass outs. And the total turnover for the company, had it survived one more year, would have shot over a hundred million rupees, a respectable amount for a Nepali firm.

"It was not in our intention to close down a firm in which we have invested heavily and worked hard to set up. The abrupt withdrawal by Heartland Information Services from going into a joint venture with HIS has forced our closure," says Judda Gurung, chief executive officer of HIS.

Established nearly three years ago, HIS had entered into a contract with Heartland Information Services, an American company, for providing transcription services. According to Gurung, when HIS, a few months after its agreement with the American company, sought local partners to inject additional funds, the American company assured to invest in HIS. However, Heartland Information Services abruptly withdrew from investing into HIS last February-end without any explanation, says Gurung.

However, irritated young employees say Gurung’s claim that American last-minute investment withdrawal is the cause of the firm’s closure is unfounded since no written agreement was ever reached on the matter. "Americans are highly professional. No American firm would reach a verbal agreement in business. The story is concocted by Gurung," says a frustrated employee. Gurung admits that no written agreement had been reached on the issue.

Whatsoever, despite all allegations of misconduct and fraud, Gurung claims that HIS can still be revived if additional funds are injected into it. "We have tried every possible source of financing, both private and public, but in vain," says Gurung. HIS management even contemplated to issue equity shares to its employees, but the proposal is not feasible, he says.

According to Gurung, HIS’s operating cost stands at US $ 75,000 per month, while the cash inflow is a meager US $ 35,000. "With almost forty thousand dollars in monthly deficit, how can we sustain," he says.

Meanwhile, reconciliatory talks between the management and the employees failed to make much headway. Employees now are pressing the management either to compensate them or to reopen the company, while the management has steadfastly remained silent on the issue.

Apart from the salary for February, each of the 400 employees is yet to receive their accumulated allowance, payable for the training that they undertook, of Rs 9000 each. The management even issued a notice Wednesday that the salary due for February would be paid in three equal installments, payable each month. The notice makes no mention of Rs 9000 that the company owes to each of its employees.

Lawyers say that since HIS is a private limited company, the company can be liquidated if it fails to reimburse its employees on time. "The employees and the management are holding talks for reaching an amicable solution. If they fail, the only alternative would be liquidation," says an advocate requesting anonymity, who represents the employees.

The failure of an IT firm just when Nepalese techno-preneurs and youths were beginning to cash in on the global IT boom, and after the government announced the IT Policy, is a matter of concern to IT experts.

"The collapse of an IT firm providing employment to 400 people is a big loss - not only for the investors and the employees, but to the IT industry as a whole," says Rajib Subba, General Secretary of Computer Association of Nepal.

NRB to conduct WPI regularly

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KATHMNDU, March 16- In an effort to make economic data more realistic, Nepal Rastra Bank is preparing to conduct Wholesale Price Index (WPI) , an additional economic parameter for the first time in Nepal.

Speaking at a seminar organized by NRB, Ram Babu Panta, Deputy-Governor of the Bank expressed his hope that the WPI would be conducted regularly and it would assist to formulate correct economic policies.

NRB is conducting Consumer Price Index for quite some time, said Panta "This new Micro economic parameter would assist to pin point the price differences in the various intermediaries and correct the reason for price hike.

The whole sale Price index is an indicator designed to measure the changes in the price levels of commodities that flow into wholesale trade intermediaries. The index is vital guide for economic analysis and policy formulation and as basis for price adjustment in business contracts and projects. It is also intended to serve as an additional source of information for comparison in international front.

Highlighting the need of new parameter Dr YubRaj Khatiwada, Executive Director of Research Department at NRB, said that CPI alone can not cover the whole price range and WPI is instrumental to find out the price at the production level.

Rabindrta Prasad Pandey ,Project chief at WPI Development Project Office, said that the WPI will be conducted at various parts of the country and various commodities have been selected for this purpose.

The Index is to be carried out every month to cover agricultural commodities, domestic products and imported items.

Fan sales to mark 10,000

KATHMANDU (PR) - Khaitan Electricals (India) Ltd. has said that fan sales in Nepal is likely to touch the ten thousand mark this fiscal year ending March.

At a dealers meet organised here by the company Thursday, Sunil K Khaitan, vice chairman of Khaitan Electricals Ltd., India said that the aim is to push up the sales to 25,000 the next year.

He also said the company’s ISO-2001 certified products is the second largest selling brand in India, in terms of volume of sales.

Three top dealers in Nepal were also felicitated on the occasion.