New Tax Slab: 39% Tax Rate for Individuals and Proprietorship Firms with Income Over Rs. 50 Lakh

 

Finance Minister Dr. Prakash Sharan Mahat delivered the much-anticipated budget for Nepal’s upcoming fiscal year 2080/81 on Monday during an important parliamentary session. Members of the National Assembly and the House of Representatives attended a joint session where the budget was unveiled in the prestigious chambers of the federal parliament.

All eyes and ears were on Finance Minister Mahat as he began his address to the joint session of the federal parliament as the session got underway in the evening. He revealed the income tax rates, a crucial component of the budget that has an immediate impact on people and sole proprietorship businesses. It was revealed that a 39 percent income tax would now apply to those with annual incomes over Rs. 50 lakhs. The government’s efforts to ensure a just distribution of wealth and to strengthen the country’s revenue sources were demonstrated by this increase in the tax rate.

As the Finance Minister spoke about the updated income tax rates, an interesting point of comparison came up. Previously, people who made more than Rs. 20 lakhs annually had to pay a tax rate of 36%. Surprisingly, no specific threshold was set for incomes below 20 lakhs, suggesting some tax relief for those in lower income tiers. However, the government sought to simplify the taxation system with the release of the new budget, encouraging a more equitable approach.

This budget was not unrelated to other government initiatives to increase revenue collection and review existing tax laws; rather, it was the result of those initiatives. The government has pledged to increase revenue generation because it is aware of the crucial role that taxes play in fostering economic growth and development. The government sought to strengthen its financial capabilities by expanding the range of revenue collection in order to implement crucial policies and programs for the benefit of the nation and its people.

Additionally, the government was required by the constitutional provisions governing the budgetary process to release the budget on Jestha 15 of every year. This statutory requirement ensured fiscal planning was transparent and accountable, allowing citizens to fully comprehend the budgetary outlook for the upcoming year. By upholding this constitutional clause, the government demonstrated its dedication to good governance and the welfare of its citizens.

It’s important to note that President Ram Chandra Paudel’s presentation of policies and programs on June 5 was followed by the budget’s release. The ruling coalition government used this earlier occasion as a platform to lay out its vision, objectives, and plans for the ensuing fiscal year. The policies and programs presented during this presentation typically have a significant impact on how the budget is developed because they act as a roadmap for the government’s intended course of action.

With the release of the fiscal year 2080–2081 budget, the government is prepared to start a journey of resource management and financial allocation. The distribution of funds to various industries, including social welfare, infrastructure development, healthcare, and education, will determine the country’s course in the coming year. It is anticipated that the government will prioritize equitable growth across all regions, job creation, poverty alleviation, and sustainable development.

In conclusion, the parliamentary session on Monday saw the presentation of the fiscal plan for the upcoming fiscal year 2080/81 by Finance Minister Dr. Prakash Sharan Mahat, which was a significant turning point in Nepal’s governance. This significant announcement was made during the joint session of the federal parliament, which was attended by the National Assembly and the House of Representatives. The government’s dedication to responsible governance and socioeconomic development was demonstrated by the revised income tax rates, the government’s commitment to expanding revenue collection, and the observance of constitutional requirements with regard to budget disclosure. Now that the budget has been made public, Nepal is prepared to start down a path of financial planning and implementation that will influence the future of the country.