Highlights of the Budget fiscal year 2018/19

Reporters Nepal

Publish date : 30 May, 2018

Of the total announced budget, the government has allocated 483.14 billion for the economic affairs sector, 396.74 billion for general public services, 134.2 billion for education, 66.57 billion for housing and community amenities, 65.34 billion for health, 47.50 billion for law and order, 46.91 billion for social protection, 44.93 billion for defense, 22.72 billion for environment protection, 7.10 billion for recreation, culture and religion sector.

KATHMANDU, May 30: The federal government unveiled the first full-fledged federal budget of Rs 1.315 trillion for the fiscal year 2018/19 at the federal parliament on Tuesday.

Unveiling the budget Finance Minister Dr Yuba Raj Khatiwada informed that of the total budget, Rs 845 billion would be spent under the current expenditure, while Rs 313 billion under the capital expenditure.

In order to manage the annual expense, the revenue sources would account for 831 billion, while the foreign aid to account Rs 58.81 billion.

The ambitious federal budget has targeted 33.69 percent revenue growth and 8 percent economic growth; and has emphasized job creation. A third of the total has been allotted for the local and provincial units.

The government has adopted a system of progress taxation for the upcoming fiscal year. According to the budget announced by Khatiwada, there will be three rates of income tax, viz. 10 percent, 20 percent and 30 percent on taxable incomes. An individual earning Rs 450000 annually will have to pay 10 percent pm the amount higher than the income tax slab of Rs 350000. It means persons having annual earning of up to Rs 450000 will have to pay only 1 percent social security tax for 350000 and 10 percent of the remaining 100000. Under this taxation, the total income tax on annual income of Rs 450000 will be Rs 13500.

Earlier, an individual was required to pay 15 percent, income tax for this earning.

Similarly, individuals earning above Rs 450,000 will have to pay 20 percent income tax on the amount higher than the threshold, down from earlier rate of 25 percent. But, those within the annual income bracket of Rs 650,000-Rs 2 million will have to cough up 30 percent of income tax on the amount higher than the lower slab.

Individuals earning higher than Rs 2 million per year will have to pay 20 percent surcharge on top of one percent social security tax, 10 percent, 20 percent and 30 percent tax rates. The three different rates will be applied for the salaried couple in their slab of taxable income. The taxable income slab for a couple has been fixed at Rs 400,000.

The government has decided to scrap education service fee and health service fee. The education service fee used to be charged from schools, colleges and other educational institutions, while health service fee was non-tax source of the government from hospitals, healthcare service providers and medical clinics.

The land and house transaction is going to be costlier since the limit for waiver of the Capital Gains Tax on land and housing transactions has gone down to Rs 1 million to Rs 3 million. Earlier, there was no need to pay CGT transactions below 3 million.

Four-wheelers with engines bigger than 1,000 cc and two-wheeler with engine displacement larger than 150 cc are also going to be more expensive now with the government’s decision to increase their excise duties.

Similarly, with the rise in excise duty in chocolate, cigarette, tobacco, perfumes, dolls and refrigerators, their price is to be soared.The government has announced to impose 25 paisa in each cigarette under the health risk tax in the production and import from today itself.

Similarly, Nepalis coming home from foreign countries can import 100 gram of raw gold by paying tax.

Furthermore, the customs tariffs, excise duty and VAT amounts have been waived off in the vehicles of 30 seats and bigger than size imported for the purpose of the community schools.

The government has brought the provision that all companies of production sector with the capital of over Rs 1 billion will have to be listed in the share market by being transformed into the public limited company.

The budget has mentioned that the private equity, venture fund and hedge fund would be introduced to the capital market.

The foreign investment and loan floating would be made easier with credit rating from the budget. A regulatory body would set up for the effective regulation of Citizen Investment Fund, Employees’ Provident Fund and Deposit and Credit Guarantee Fund.

In order to capacitate the regulatory bodies, the related laws as Nepal Rastra Bank Act, Beema Act and Securities Act would be amended.

The government has announced to develop the much-hyped West Seti Hydropower Project from the national investment.

The budget announced by Finance Minister Khatiwada has aimed at advancing the Karnali Chisapani Multipurpose Project of 10,800 megawatt.

Similarly, the budget has pledged to begin the construction after distributing the compensation to those affected from the Budhigandaki Hydropower Project.

Rs 10 billion has been allocated for this task, according to the Finance Minister.

Furthermore, the government would develop at least a multipurpose project in each province and feasibility study of Tamor, Kankai, Uttarganga, Naumure, Sunkoshi II, Sunkoshi III, Kaligandaki and Nalgadh projects.

Likewise, the government has allocated budget to construct the national grid in order to link the power generated from the hydropower projects after their completion.

Similarly, the government has allocated Rs 10.99 billion for the construction of Bheri Babai Diversion Project, Rani Jamara Kulariya, Sikta and Babai Irrigation Project and Rs 350 million has been allocated for solar irrigation project.

The government has set a target to develop tourism-friendly infrastructures with an objective of attracting two million tourists within 2020.

The budget has also made necessary arrangement to run tourism business round the year, attracting the tourists from neighboring countries India and China.

Nepal Academy of Tourists and Hotel Management would be developed as Tourism University and necessary process in this regard forwarded for the same.

The budget also set a target to make mountaineering safer and systematic and the government has allocated Rs 5.20 billion for the development and promotion of tourism sector.

Similarly, the government has allocated Rs 19.35 billion for the development of aviation sector. Initiating construction of Nijgadh Airport, starting the service after concluding the construction works of under construction Gautam Buddha Airport and Pokhara Regional Airport are other priorities.

Likewise, the budget has aimed at upgrading Tribhuvan International Airport and domestic airports.

The government has earmarked budget for the development of infrastructure to connect all seven provinces with an international trade transit point, laying emphasis on completing the construction of fast track, mid-hill highway and postal highway.

Rs 500 million has been appropriated for the construction of roads through Chure and interior Madesh. Likewise, Kimathanka-Rani road section and Rasuwagadhi-Galchhi-Thori road section are to be completed.

The under construction Kaligandaki corridor is to be expanded to southern border at Triveni from northern border Korala.

Similarly, budget has been allocated for the construction and up-gradation of Seti Highway, Gamgadi Nagma, Simikot Hilsa and and Dunai Marimlapas road section, expansion of Karnali Highway linking northern border via Dolpa, Mugu and Humla.

The government has earmarked a budget of Rs 3.53 billion for Terai-Madhes Infrastructure Special Programme in the southern area laggard from the infrastructure development perspective.

The construction of a tunnel expressway will begin this year on the Thankot-Naubise road section along Prithvi Highway. The government has also announced the construction of Tokha-Khahare-Ghurjubhanjyang tunnel way. Budget has been allocated for importing necessary technology for the tunnel construction.

Through the budget, the government has envisaged the construction of Infrastructure Development and Consultancy Company.

Likewise, the government has allotted a budget of Rs 5.24 billion for the beautification of highway in tourism sites. The budget for the Road Board has increased to Rs 5.5 billion.

Over Rs 109 billion has been set for the development and expansion of transport infrastructure. The under construction bridges would be completed and handed to the province governments.

The budget speech has noted that feasibility study for waterways would be undertaken in the Koshi, Gandaki and Karnali rivers. The government has also pledged to carry out feasibility study for the operation of cable car, metro rail and mono rail in the Kathmandu Valley.

A comprehensive project proposal would be prepared by undertaking feasibility study of Mechi-Mahakali railway and Mechi-Mahakali Kathmandu link road, stated a budget speech.

The budget has stated that cyber bureau and human trafficking bureau are to be established under Nepal Police in view of changing form of cyber crime and human trafficking.

National identity card distribution program would be extended in additional 15 districts in coming fiscal year 2018/19 as per the policy to distribute national ID cards to all people within five years.

Likewise, an environment conducive for development and prosperity would be created by making people realize the safety and security, maintaining effective peace and security as well as law and order in the country.

Nepal Army, Nepal Police and Armed Police Force would be made modernized and professional by building capacity, while NA’s program ‘Bunker to barrack’ would be continued.

Similarly, daily subsistence allowance given to prisoners has been increased to Rs 60 from Rs 45. The milk allowance provided to children of prisoners has also been increased to Rs 35 from Rs 10.

The government has also stated that it would adopt a zero tolerance policy against corruption.

According to Khatiwada, the fiscal discipline would be strictly maintained and international cooperation would be increased to check money laundering and organized crimes.

The coordination and monitoring of the international and national Non-Government Organizations (NGOs) activities would be made effective.