Contribution of Income Tax on National Revenue of Nepal

Abstract

The study was aimed at finding out the contribution of income tax on national revenue of Nepal and impact of taxation on revenue generation in Nepal. Main objectives of this study are to study the structure of tax revenue in Nepal, to analyze the contribution of income tax on national revenue in different fiscal years and to evaluate the effectiveness of tax system of Nepal mean that its contribution in GDP . Nepal has been presenting deficit budget, there is incensement. So the country is heavily dependent on the foreign aids and grants to undertake developmental activities. To know that secondary data of Inland Revenue Department, Economic survey of five years and budget speech of five years has been used. Descriptive research design has been used to conduct the study. The major sources of data are economic survey of five years, budget speech of five years, data of MOF, GOV/Nepal, report of IRD, previous thesis and other related published journals etc. Data processing procedures are Simple percentage, average of percentages and Charts & Diagrams. Data analysis tools and techniques are percentage, average of percentage grapes, tables. Finding of the study revealed that trend of revenue structure is in increasing trend, composition of income tax with total revenue is in increasing trend, contribution of public enterprises, private corporate bodies, remuneration and tax on interest also in increasing trend, contribution of income tax on GDP is also increasing trend, trend line of tax is in increasing trend but trend of non-tax revenue is in decreasing trend. Developing country Nepal has lack of sufficient finances resources. It is the main constraints for national economic development sufficient und are needed to meet the additional financial requirements for the development activities of the country.Tax is the compulsory payment to the government from a person according to law. The government needs lots of revenue to maintain fiscal policy, to carry out function of the government such as national defenses and to redistribute resources among the individuals or classes. So that government and IRD should pay proper attention towards the unhealthy condition of decreasing trend of non-tax revenue.