August 6: The government has not been able to effectively implement its policy to refund value added tax (VAT) for payments made through electronic medium.
The Ministry of Finance had issued the work procedure for refunding VAT on electronic transaction about seven months ago. The refunding process was launched on February 10.
As per the government policy, any customer making a minimum payment of Rs 1000 to a maximum of Rs 100,000 through electronic transaction would be entitled to get a 10 percent refund on VAT.
However, the government has failed to implement this policy as the Inland Revenue Department has not been able to adjust the payment system with the payment service providers.
The government needs to create a National Payment Gateway for effective implementation of payment and VAT rebate. However, the proposed payment gateway is not yet ready and therefore the policy has not been implemented, according to officials of the Inland Revenue Department.
Deputy Director General of IRD Mukti Acharya informed New Business Age that the department has already corresponded with the Nepal Rastra Bank to prepare the required system. However, the central bank is yet to prepare a one-door payment and discount system, said Acharya.
He further said that unless the inter-banking transactions are brought under one-door system, the problem of VAT rebate will persist.