Traders Object to 10 Percent Advance Income Tax on Potatoes and Onions

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Traders Object to 10 Percent Advance Income Tax on Potatoes and Onions

BIRGUNJ: Importers have raised objections to the government's decision to increase the rate of tax levied in advance at the customs. The government had decided to increase such taxes through the budget announced for the next fiscal year (FY 2081/82). They accuse the government of bringing a large budget instead of adopting austerity measures and arbitrarily raising taxes for resource management.

Importer Om Prakash More demanded the immediate revocation of the system of collecting a 10 percent advance tax at customs, calling it impractical. The government has increased the advance income tax rate from 1.5 percent to 10 percent.

Importers argue that most of the items subject to the 10 percent advance tax are daily essentials for general consumption. The government plans to collect this tax on potatoes and onions as well. Businessmen claim that such high tax rates on items like vegetables, potatoes, onions, and fish will increase prices and adversely affect consumers.

Finance Minister Barshman Pun removed the VAT on potatoes and onions in the next year's budget. However, businessmen accuse the minister of seeking credit for removing VAT while intending to collect it through other means. Previously, the advance tax on potatoes and onions was 1.5 percent.

According to Madhav Rajpal, vice president of the Birgunj Chamber of Commerce and Industry, earlier, the combined customs duty, VAT, and advance income tax amounted to 23.5 percent. Now, with the removal of VAT and the addition of a 10 percent advance tax, the total tax has been adjusted to 19 percent. Rajpal criticized this change, stating that while the VAT removal seems beneficial, the additional 10 percent tax is an added burden.

Officials from the Department of Customs say that it will take a few days to get a clear picture of the impact of the new budget. Information officer Punya Bikram Khadka remarked, "The budget has just been announced. It is too soon to assess its impacts."

The government also plans to charge a 2.5 percent advance tax on the import of flour and similar items.

"The government itself states that more than 20 percent profit constitutes black market activity. However, to pay a 10 percent advance tax, a 40 percent profit would be necessary," More said. "Is it possible to make such a profit by selling potatoes, onions, and vegetables?"

Businessman More insists that even if advance income tax must be collected, the rate should not exceed 2.5 percent, as the maximum profit in such businesses is around 10 percent.

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