Govt faces challenge as tax arrears soar to Rs 113 billion

Kathmandu: The government is grappling with a formidable task as it confronts the daunting challenge of collecting a staggering Rs 113 billion in taxes. According to the annual report of the Inland Revenue Department, this substantial amount remains outstanding, owed by 270,383 taxpayers under the categories of tax arrears, interest, and additional collection late fees.

In a concerning trend, the total tax arrears for the fiscal year 2078/79, which stood at over Rs 65 billion 35 crores 67 lakh, has surged dramatically to over Rs 47 billion 71 crore 91 lakhs 40 in just one year. Simultaneously, the number of taxpayers resorting to administrative review due to dissatisfaction with tax assessments by various tax offices has reached approximately 5,500. As of the end of last June, as many as 5,443 taxpayers have initiated court cases, contesting the disputed amount.

The report highlights that, concerning tax arrears and legal disputes, a majority of cases pertain to income tax. Furthermore, the report reveals that revenue equivalent to a total of 1,500 taxpayers remains outstanding in terms of final tax.

Conversely, taxes totaling Rs 92 crore 57 lakh 10 thousand have not been collected from two thousand five hundred and seventy-one taxpayers. The government faces the critical task of addressing these mounting challenges to ensure the effective collection of outstanding taxes and resolution of legal disputes in a timely manner.

Furthermore, about 164 taxpayers, disputing a substantial Rs. 3 billion 137,75,68,000 in taxes, have opted for judicial appeal. Moreover, up until the previous fiscal year, the Internal Revenue Department and its affiliated offices faced a deficit of Rs. 76 billion 142 million.

This growing trend of taxpayers resorting to litigation over tax arrears and contested tax amounts has evidently impacted annual revenue collection. The government’s ability to meet these targets and address the rising challenges posed by taxpayers in dispute resolution will be crucial in maintaining fiscal stability.