By CK Khanal

Kathmandu, Feb. 29 Employees of government, public and private enterprises have shared that they are facing hard times to manage their household expenses, thanks to low income tax exemption ceiling of the government.
After the government introduced compulsory provision of personal permanent account number (PPAN) for every piece of work from current fiscal year, workers managing their budget from off-hour extra works have been mostly affected by the low tax ceiling of the government.
A non-gazetted civil servant working in Kathmandu said that he needed at least Rs. 600,000 budget to sustain his family in Kathmandu in a year which he had to manage alone.
“As my salary is not sufficient to meet my family expenses, I had managed it by teaching in private colleges in the morning hours,” he said under the condition of anonymity. “It was not difficult for me to manage income required for the living expenses as I had to pay only 1 per cent tax on salary of my college,” he said.
After the integration of my income through the compulsory use of PPAN in payment in both income sources, now I have to pay a large portion of my income as tax posing serious threat to sustenance of my family.
Now, I have realised that the minimum income tax ceiling and tax rate both are not appropriate in view of the minimum expenses required for a family to meet the basic living standard.
Currently, married individuals have to pay 1 per cent tax for an annual income of up to Rs. 450,000 and the tax rate increases progressively in higher levels of taxable income.
A banker from private commercial bank said that he had also faced difficulty to manage his household expenses and pay the loans of his house in recent days due to high income tax.
“I have been unable to make any savings in the last few months due to the high burden of tax,” he said.
A registered auditor and a staff of government-owned insurance company shared that they had decided not to work in the morning after the government made PPAN compulsory for every payment of works.
Economist Dr. Chandra Mani Adhikari said that the ceiling of income tax in Nepal was low as per the principle of minimum expenses required to maintain a basic living standard.
The practice of exemption on income tax up to a certain level of income is based on the minimum income required for a household to meet its basic necessities, including health and education expenses, he said.
But the minimum taxable income ceiling in Nepal is not sufficient to meet the basic needs of a family having four to six members, he said.
He said that the ceiling of taxable income in India is IRS 500,000 and an Indian national had to pay only 15 per cent income tax on the income of up to IRS 1,500,000.“From the practice of India as well as other countries and on the basis of purchasing power of our currency in relation to other currencies, the ceiling of Rs. 450,000 for income tax is low,” he said.
Dr. Adhikari said that it was high time for the government to review income tax ceiling on the basis of size of the family and number of dependents.
He also suggested making more slabs of income tax and introducing the provision of determining the income tax of couples jointly.