Overall, the budget has taken the right direction. The Federation of Nepalese Chambers of Commerce & Industry (FNCCI) had submitted a list of recommendations. Birgunj Chamber of Commerce and Industries had also provided feedback. Some of the recommendations are included in the budget speech.
The government has announced subsidy schemes to the tax being levied on industrial raw materials and readymade goods. This is a good move but we will still look at the details of the provisions.
Similarly, the government has been imposing Value Added Tax (VAT) on the import of agricultural products such as potato, onion, apples etc. As a result, these products were being imported using illicit routes. The budget has annulled the VAT on the import of these products. This provision will help end the import through illicit routes and formal business groups can import the goods.
The budget, however, has introduced the provision of 10 percent income tax in advance for the import of foodstuffs. This provision is not supportive to the business community. This provision also contradicts other laws of the country. On the one hand, the law prohibits traders from collecting profits above 20 percent. On the other hand, 10 percent income provision demands a profit margin of 50 percent. This is a complex situation. I personally feel that the government should reconsider this provision.
Similarly, Indian vehicles are allowed 72 hours to unload the goods to the destination and no temporary import duty is being charged at present. The budget speech has changed this provision. The government has introduced Rs 1500 tax for a vehicle. As Nepal is importing goods including raw materials from India, this charge will result in the increased cost to the industrial products.
The Finance Minister has tried to address the majority of the concerns of the private sector. Customs evaluation part is not also clearly mentioned.
While talking about the manufacturing sector, the budget has not included any provision that can lure new investments. Manufacturing industries that are facing critical situations, their concerns are largely overlooked.
Overall, the budget will not expand economic activities. No provision can attract new investment in the industrial sector.
Anil Kumar Agrawal is president at Birgunj Chamber of Commerce and Industries.
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