The government has amended its policy on the advance income tax (AIT) levied on the import of pulses. Following a Cabinet decision on November 21, the Ministry of Finance has reduced the AIT on pulse imports from 10 percent to 2.5 percent.

The Cabinet had granted the Ministry of Finance the authority to decide on matters related to tariffs and tax exemptions. Both the Inland Revenue and Customs departments have been directed to implement the decision.

The change affects goods under tariff heading 7.13, which includes dry leguminous vegetables such as peas, chickpeas, beans, lentils, and others, as outlined in the Finance Act, 2081.

During the budget announcement for the current fiscal year, the government had hiked the advance income tax during import of various goods from 1.5 percent to 10 percent, with the highest rate applied to goods like potatoes, onions, and fish. 

Importers had demanded the removal of the 10 percent advance tax, deeming it excessive and impractical. 

While the government argued the hike was for protecting domestic production, entrepreneurs had claimed it would only foster illegal imports.

The then Finance Minister Barshaman Pun had stated in parliament and various forums that the tax was imposed on goods which are produced in abundance in the country. However, domestic traders had countered, arguing that the production in the country was insufficient to meet the demand.