Budget 2019/20 Hihlights

NEWSLETTER

LEXPERTEASE

INSIDE THIS ISSUE PG. 2 Objectives of Budget

PG. 3- 12 Highlights

BUDGET HIGHLIGHTS F/Y 2019/20

A BRIEF OVERVIEW Finance Minister Yuvraj Khatiwada on 29 May 2019 unveiled a total budget of NPR 1.53 trillion for the fiscal year of 2019/20 at the federal parliament of Nepal, which shall be endorsed by the parliament by mid July 2019 after discussions and amendments.

OBJECTIVES OF BUDGET 2019/20 





To qualitatively improve the standard of living by fulfilling the fundamental necessities and fundamental rights of general people.

To achieve rapid economic development accompanied by social justice through optimum utilization and equitable distribution of available means, resources, opportunities and potentials To transform into middle-income nation by 2030 A.D. by developing economic, physical and social infrastructure and lay down the foundation for prosperous and socialism-oriented economy.

HIGHLIGHTS A. INDUSTRY

 



 

Introduction of private-cooperative partnership module for promotion and prioritization of locally produced industrial goods and revival of closed and sick industries.

Standardization, prioritization, labeling and branding of major export items in international market system through trademark and channelizing goods produced by the small industry and cooperatives.

Establishment of economic zone and inter country economic zone to promote export-oriented industries. Budget allocated to establish economic zone in Nuwakot and Panchkhal through Public Private Partnership (PPP) module.

Subsidy in loan and skill development training will be provided to encourage Dalit community in industrial activities.

Textile industries that are registered under VAT shall receive 50% reduction in electricity bill and up to 5% interest rate in loan as subsidy.

B. ENERGY AND TRANSPORTATION  

Public Private Partnership (PPP) module is to be adopted in the production of hydroelectricity power.

Construction of monorail and metro in Kathmandu valley and other cities in public private partnership model, NPR 7 Billion has been allocated for that purpose.

C.

PRIVATE SECTOR PROMOTION 







D. START UP 



50% discount on electricity bill and 5% interest subsidy in bank loans for textile industries registered in VAT. Challenge fund is to be established as an initial capital fund for new and small industry.

INVESTMENT

Adoption of single portal service for the dissemination of all the information relating to investment.

Investment Board to start onewindow service to big projects from the fiscal year 2076/77.

Risk relating to foreign investment and foreign exchange will be managed through effective implementation of Hedging Regulation.

Amendment and implementation of company, intellectual property, banking and insurance law and laws relating to foreign exchange, insolvency and Industrial Enterprises Act. Similarly foreign investment and technology transfer and investment board regulation.

E. RECONSTRUCTION 





Rs. 1 Billion has been allocated for the reconstruction of Dharahara within 2 years.

NPR 58.73 Billion allocated for the completion of private housing of earthquake victims.

NPR 1.41 Billion allocated in order to complete reconstruction projects.

F. LOCAL INFRASTRUCTURE 

Partnership of federal province and local level for development of local infrastructure.

G. INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) 



Introduction of provision of co-use of technology to avoid tendency of double investment in ICT sector.

Establishment of National Knowledge Park in Khumaltar, Lalitpur.

H. AGRICULTURE  

   

Increment of budget to Prime Minister Agriculture Modernization Project from 4.77 billion to 8.10 billion.

1 billion allocated to provide subsidy on loan to small and medium farmers through Loan Program of Small Farmers Development Bank.

Coordinate with cooperatives, community and private entities to promote biogas plants to discourage use of L.P.G gas.

500 million allocated to encourage youth in cooperative, community based, contract farming.

Make provisions for leasing government lands to support farmers in their business.

Help farmers in gaining agricultural loans for farming and technology through cooperatives.

I.

TOURISM



Total budget allocated to tourism sector has decreased from 5.2 billion to 2.68 billion.

Focused on adventure sports.



J. LABOUR AND EMPLOYMENT Unlike previous budgets that focused on broadening the horizon of foreign employment, this budget has prioritized in creating employment opportunities domestically by collaborating with local government and providing incentives to start ups and implementation of Prime Minister Employment Program. 

Bilateral agreement to be concluded with foreign employment destination countries for the effective implementation of free visa free ticket policy (for the employers to bear the initial cost of human resourcing).

K. BANKING 

Government to provide 5% grant for interest and, and 75% grant for security of loan and insurancefor the implementation of subsidized loan programfor those candidates who fulfill the criteria of the program.  Facilitation in stock trading in secondary market for Non-resident of Nepal with modernization of NEPSE and SEBON.

L. TAXATION Government shall work to bring structural change in tax system for sustainability by gradually shifting the orientation of tax system from imports to domestic economic activities.

INDIRECT TAX 

   

  

No change in tax slab for application of VAT. Decrease in tax rate for exports of raw materials and primary agricultural products.

Facility of bonded warehouse to all exporters who export more than 20% of their productions for import of raw materials.

Release the start ups based on novelty, skills, entrepreneurship and technology, but are yet to be registered at tax office; from all taxes, fines, additional fees, fees and interest levied up to the F/Y 75/76 if they register themselves at tax offices within Poush 2076 for PAN or VAT purposes.

General increase in customs and excise duty in alcoholic beverages, cigarettes and tobacco products, which are injurious to health.

50% discount on imports of means of transportation for cooperative industries based on agriculture.

Customs duty fixed at 1% for Mill machineries, their spare parts and chemicals imported by textile industries for their own purposes.

 



Custom Duty on equipment for water transportation decreased from 15% to 5%.

Increase in custom duty for import of such agricultural and industrial products upon which Nepal is dependent such as tea, coffee, milk products, ghee, chicken, peas, peanuts, potato chips, biscuit, chewing gum, pasta, shoes, sandals, thread, tarpaulin, zinc sheets etc.

Time for adjustment of tax in VAT for refund has been decreased to 4 months from 6 months.

DIRECT TAX             



No change in income tax.

Tax slab increased to NPR 4 Lakhs for an individual and NPR 4.5 Lakhs for a married person.

Capital gain tax fixed at 5% for an individual on share transactions (to be calculated on weightage average cost method).

Advance capital gain tax on transactions of commercial land and building has been decreased.

Cooperatives involved in financial activities situated in municipalities shall be taxed at 5% and at 10% for those situated in sub-metropolitan and metropolitan cities.

No tax on income of Social Security Fund established pursuant to Contribution Based Social Security Fund Act, 2074.

Increase of term for tax exemption and facilities specified in Tax Act, 2058 regarding banking and financial and insurance business by an additional one year.

No VAT in accidental and health insurance.

Tax payer to submit the amendments to financial details (if any) within 30 days of date of submission of the financial details.

Custom Duty Bill in progress.

Online submission of documents at Customs in progress.

Fees to be paid at the Department of Tax for review of the tax assessment made by the tax office has been decreased to 1/3rd of the disputed tax amount from 1/4th of the disputed tax amount.

10% of the VAT amount on the goods and services bought and paid through value card or electronic medium shall be deposited automatically to the payer’s bank account and no advance TDS shall be applied on it.

Establish Revenue Board to advise government on policies and execution, carry out study and research on revenue along with the activities of former counseling committee.

CONTACT:

Kailash Panday, ACA Managing Director Leader, Corporate Law, Finance and Tax Practice (E): cakailash.llb@gmail.com kailash@lexpertease.com (1)+977-9851241139

LexpertEase Advisory Pvt. Ltd.

3rd Floor, House No. 150, Saras Marg, Anamnagar Kathmandu-44605 Nepal www.lexpertease.com

This document contains information, that is confidential and proprietary to Lexpertease Advisory.

The information may not be used, disclosed or reproduced without the prior written authorisation of Lexpertease Advisory Pvt .Ltd.