The private sector has started protests after the Inland Revenue Department canceled the extended deadline for small taxpayers to file their income details.
The department issued a notice on September 22 confirming that sole proprietors with annual transactions of up to Rs 10 million or those with no transactions are no longer eligible for an extension to submit their income details.
Section 98 of the Income Tax Act, 2002, allows the department to extend the deadline for submitting income details up to three months, either all at once or in phases.
Entities with annual turnovers of up to Rs 250 million and other taxpayers can still apply for an extension until mid-December, while those with higher turnovers can extend their deadline until January 5.
Organisations representing the private sector have started protesting the decision, arguing that removing the deadline extension for small taxpayers will have serious consequences for businesses.
“The current state of the economy is weak, and the morale of the private sector is low. This recent decision by the department, which contradicts the existing legal framework, will severely impact the business community,” said the Nepal Chamber of Commerce in a statement released on Thursday.
The Chamber also expressed dissatisfaction with the provision that allows an extension only until mid-December for entities with annual transactions of up to Rs 250 million and other taxpayers, and until January 5 for those with higher turnovers. The Chamber has urged the department to reconsider this decision.
Section 98(1) of the Income Tax Act, 2002, states that if a person required to file income details under Section 96 submits a written request for an extension to the department, the department may extend the deadline if reasonable grounds are provided.
“The department must inform the applicant in writing about the decision regarding the request for an extension. However, by cutting the previously provided extension facility without proper notice, the department has put businesses in a difficult position,” stated the Chamber.
According to NCC Director General Devendra Lamichhane, the department's recent decision contradicts the internal revenue policy, especially when the economy needs to be revitalized, and revenue sources need to be increased.
However, department officials have stated that taxpayers, including those with zero transactions, have been requesting deadline extensions, which overloads the department’s computer system. Therefore, the decision was made on September 20 to address this issue.
The department explained that the current system allows taxpayers to request an extension of up to three months, which is automatically granted. This has resulted in taxpayers, including those not required to prepare financial statements, requesting extensions, causing the system to become overwhelmed by the end of December. The department concluded after thorough consideration that the decision will not be revised.
