House rent tax drive to hit tenants hard

The government’s drive to widen the house rent tax net that is starting from Wednesday is expected to hit the millions of tenants in the valley in absence of weak regulatory mechanism and lack of protection of their rights.

“A natural person will have to pay 10 per cent of the rent as tax,” said Inland Revenue Department’s director general Tank Mani Sharma here today.

Most of the commercial buildings have already come into the tax net — though reducing the rent to escape tax compliance is high among them — but residential houses are yet to come into the net, he said, adding that the department is planning to bring some 25,500 more houses across Nepal into the house rent tax net within this fiscal year. “For commercial buildings, it is planning to bring floor price.”

“The department is planning to bring some 20,500 more houses into the net in the Kathmandu Valley and the remaining from across the country.”

However neither the department nor the Kathmandu metropolis has fixed any rent for the residential purpose that might push the rent up by 10 per cent as soon as the drive starts as the house owner will be responsible to pay the tax now onwards.

“In Kathmandu district, the department will start the House Rent Tax card distribution to the house owners from Wednesday,” Sharma added. “The 35 ward offices in Kathmandu metropolis and 13 tax payers service offices will help distribute the cards in Kathmandu district and two places each in Bhaktapur and Lalitpur will help distribute the cards in the valley whereas there will be around 100 places to distribute the cards across the country.”

“The metropolis will start collecting all the data of the houses and maintain the database within the current fiscal year,” said chief executive of Kathmandu metropolis Kedar Bahadur Adhikari. “The database will be shared with Inland Revenue Department making revenue mobilisation of both the department and metropolis easier,” he said, adding that the drive will also boost the local tax mobilisation.

The department has already mobilised Rs 1.90 billion tax under house rent by the end of the ninth month of the current fiscal year that has set a target of Rs 1.35 billion. “Kathmandu Metropolis alone houses over one million population,” according to Population Census 2011 that has revealed that some 119 families live in some 100 houses across the country. But the ratio is higher in Kathmandu as it has seen a huge influx from outside the Valley not only for higher education but also for employment and security.

However, finance minister Barshaman Pun opined that the government needs to mobilise more resources to serve the rising expectation of the people. “The current resources are not enough to meet the recurrent expenses,” he said.

“A country can become sovereign only if it can mobilise local resources,” finance secretary Krishnahari Baskota said, adding that widening of tax net is a must.

Source:The Himalayan Times

1Ropani