October 2, 2022, Sunday
Nepal 1:37:26 pm

Finance Minister announces Rs. 1793.83 billion budget

The Nepal Weekly
May 31, 2022

Finance Minister Janardan Sharma has announced a budget amounting to Rs. 1,793.83 billion for the new fiscal year 2079-80. Out of this, 42 per cent or Rs. 753.40 billion has been allocated for current expenditure and 21.2 per cent or Rs. 380.38 billion has been allocated for capital expenditure. Similarly, 12.8 per cent or Rs. 230.22 billion has been allocated for financial management, said Finance Minister Sharma.

429.83 billion or 24 per cent has been allocated for the transfer of finance to the states and localities. Out of the estimated sources of expenditure for the coming fiscal year, Rs 1240.11 billion will be borne from revenue and Rs 256 billion from foreign grants, the government said.

 The government says that the remaining Rs. 246 billion will be borne from the external debt as the expenditure allocated for current, capital and financial transfers will be less than the revenue and foreign grants of Rs. 55.46 billion.

The government has projected economic growth of eight per cent in the coming fiscal year. The government has set a growth target of 7 per cent for the current fiscal year, but only 5.84 per cent, according to the Public Economic Survey.

The government has set a target to bring the inflation within 7 per cent limit. For that, Nepal Rastra Bank will formulate monetary policy. The implementation of the budget will achieve high economic growth, lay the groundwork for transformation of the agricultural sector, orient towards food self-reliance, promote exports, reduce trade deficit, build basic infrastructure, and increase access to quality and vital education and basic health services through investment in social sectors.

Similarly, the government expects to reduce multidimensional poverty and strengthen the foundation of social justice through social security programs, lay the foundation for a socialist-oriented economy, and contribute to building a just society.

Development of agriculture and industry sector, expansion of transmission lines, development of airport and tourism infrastructure, construction of roads, electricity, irrigation projects, and implementation of information technology projects will lay the foundation of economic development.

The Finance Minister says that the government is confident that the implementation of the budget will create significant employment in agriculture and forest, tourism, industry, electricity, and services.

Meanwhile The government has introduced various tax concession schemes for the businessmen for the promotion of local industries.

While presenting the budget for the fiscal year 2022/23 on Sunday, Finance Minister Janardan Sharma said that the government has proposed to provide 40 per cent income tax exemption for five years from the date of commencement of business if the industry establishes a new industry to manufacture or assemble four-wheel electric vehicles.

“I have made an arrangement to levy only 1 per cent tax on the person who earns foreign exchange by providing services based on software, electronic services, business process outsourcing or similar information technology outside Nepal,” he said.

In order to provide relief to the small entrepreneurs affected by COVID-19 pandemic, 75 per cent income tax exemption has been provided to the taxpayers with an annual turnover of up to Rs. 3 million and 50 per cent income tax exemption with an annual turnover from Rs. 3 million to Rs. 10 million.

The budget has made an arrangement to provide 50 per cent tax exemption on business taxable income of the tourism industries such as hotels, travel, trekking and movie business which were most affected by COVID-19 as per the objective of fiscal year 2021/22, he said.

“I have made an arrangement to give full exemption from income tax for five years from the date of commencement of business if such an industry is established to encourage the opening of agricultural tools factory in Nepal which produces machinery, equipment or spare parts required for agricultural activities,” said FM Sharma.

In the hilly districts of Karnali and Sudurpashchim Provinces, if special industries are established to provide direct employment to more than 100 people, the industry will be fully exempted from income tax for 15 years from the date of starting the business.

The government has made some modifications in the customs duty on raw materials imported by manufacturing industries in line with the policy of reducing the customs duty on manufactured goods by at least one level. In addition, to discourage the import of luxury goods, customs duty, excise duty and other import tax rates have been increased.