Indirect Tax and Its Effect on Revenue Generation in Nepal

Abstract

This study examined the assessment of value added tax and its effect on revenue generation in Nepal for ten years. This study is based on both Primary and Secondary data. The Primary data were collected by using questionnaire from consumer, tax collector and officer, tax experts and teacher, and Business firm respondents. The Secondary Source of data was sought from Economic Survey of Nepal 2017/18 and Annual report of IRD. Data analysis was performed with the use of statistical and financial tools. The findings showed that Value Added Tax has statistically significant effect on revenue generation in Nepal. However, having significant contribution on total revenue of Nepal, there are low government initiation, lack of trained manpower, Low responsible taxpayers, delay in registration process, long tax refund process, tax evasion, unauthorized trade due to open boarder, under billing system, ineffective VAT administration system, unconcious customer about VAT, and ineffective VAT collection. The revenue contributed by VAT and others revenue that combined in total revenue decreased in year 2072/73 due to earthquake, blockage and strike made by India for almost 3 months. It is only a year which has less contribution than previous years. The study recommends that there should be dedication and apparent honest on the parts of all agents of VAT with respect to the collection and payment and government should try as much as possible to improve on the way of collecting value added tax.

Keywords: Indirect Tax, Value Added Tax, Total Revenue, Tax Revenue, Revenue Generation, Taxation and Contribution, Nepalese Economy.