New income tax slab introduced
The government has introduced a new income tax slab through the budget for next fiscal year. The existing 15 per cent and 25 per cent thresholds have been replaced with 10 per cent, 20 per cent and 30 per cent income tax slabs effective from the new fiscal year.
The minimum income tax threshold for individuals and married couples has been kept unchanged at Rs 350,000 per annum for individuals and Rs 400,000 for married couples wherein both individuals and couples will have to pay one per cent social security tax.
As per the new income tax slab, individuals with annual income of up to Rs 350,000 per annum will have to pay one per cent social security tax. Similarly, for those whose annual income crosses the set threshold, a 10 per cent tax will be levied for the amount of up to Rs 450,000. Likewise, a 20 per cent tax rate has been fixed for annual income from Rs 450,000 to Rs 650,000. Similarly, 30 per cent tax will be levied on income from Rs 650,000 up to Rs two million.
Meanwhile, individuals earning above Rs two million will be levied additional 20 per cent income tax totalling 50 per cent tax on the earning above the threshold.
Likewise, married couples will have to pay only one per cent social security tax for annual earnings of up to Rs 400,000. However, as per the new income tax slab, married couples will also have to pay 10 per cent income tax for their earnings in between Rs 400,000 to Rs 500,000, 20 per cent for their income between Rs 500,000 to Rs 700,000 and 30 per cent for annual earnings up to Rs two million.
Similarly, for couples earning above Rs two million an additional 20 per cent income tax will be levied totalling 50 per cent tax on the earning above the threshold.
The new fiscal policy has also raised excise duty by up to 40 per cent on automobiles depending on cubic centimetre (cc) capacity of vehicles. The government had been levying 60 per cent excise duty on vehicles so far.
The government has increased excise duty on two-wheelers above 150cc and four-wheelers above 1,000cc. Through the budget, the government has increased excise duty on two-wheelers above 150cc to 250cc by 10 per cent to 70 per cent. Similarly, excise duty for two-wheelers above 250cc has been increased by 20 per cent to 80 per cent.
Similarly, excise duty on four-wheelers above 1,000cc to 1,500cc has been increased by five per cent to 65 per cent while excise duty on vehicles above 1,500cc to 2,000cc has been increased by 10 per cent to 70 per cent.
Likewise, the excise duty on vehicles above 2,000cc to 2,500cc has been increased by 20 per cent to 80 per cent while such duty on vehicles above 2,500cc to 3,000cc has been increased by 30 per cent to 90 per cent. Excise duty on vehicles above 3,000cc has been increased by 40 per cent to 100 per cent.
Anjan Shrestha, former president of Nepal Automobile Dealers Association, said that the price of vehicles could increase by up to Rs one million, depending on the capacity following this revision in excise duty.
The government has also increased excise duty on tobacco and beverages. Besides existing taxes on tobacco products, the government has levied
25 paisa health hazard tax on every unit of cigarette, bidi and cigar from the upcoming fiscal year. Similarly, Rs 25 per kilogram health hazard tax
has been imposed on import or domestic production of chewing tobacco.
The government has also increased the income tax for telecommunication service providers and internet service providers by five percentage points to 30 per cent.
Meanwhile, the government has scrapped the VAT rebate facility on import of mobile phones, oil and ghee.
Published : May 30, 2018 11:00 am