The government struggled to meet its revenue collection target in the first six months of the current fiscal year, with collections falling short under most headings.

The government had set a target of collecting Rs 1,284 billion in tax revenue this fiscal year. However, data from the Ministry of Finance shows that by mid-January 2025, it had collected only Rs 489 billion—81.2 percent of the Rs 602 billion target for the first six months.

Customs duty collection stood at Rs 107 billion, falling short of the Rs 145 billion target. Similarly, value-added tax (VAT) collections reached only Rs 154 billion against the target of Rs 183 billion. Excise duty revenue also lagged, with collections amounting to Rs 83.39 billion instead of the target of Rs 91.43 billion. Income tax collection reached Rs 141 billion, missing the Rs 180 billion target. However, revenue from education service fees exceeded expectations.

Industrialists and traders blamed high customs duties on essential imports for the revenue shortfall. They argued that excessive tariffs had discouraged legal imports and fueled smuggling, leading to revenue losses. During a recent discussion with the members of the Finance Committee of the House of Representatives at the Biratnagar Customs Office, business representatives claimed that steep duties on sugar, cotton, and edible oil had driven up smuggling, preventing customs offices from meeting their revenue targets. They urged the committee to lower customs duties to encourage legal imports through official checkpoints.

Stakeholders pointed out that despite a drop in imports through customs, these goods remained widely available in the market. They alleged that weak government policies had allowed illegal imports to flourish, resulting in billions of rupees in lost revenue.

Finance Ministry officials, however, cited multiple factors for the shortfall, including floods, landslides, and reduced imports of petroleum products and fuel-powered vehicles. At a mid-January press conference, Finance Ministry spokesperson Mahesh Bhattarai claimed that despite these challenges, revenue collection had shown significant progress in the first half of the fiscal year. He noted that shifting consumer demand toward electric vehicles, disruptions in the telecommunications sector, and a general decline in imports had also affected revenue generation.