Customers will now get 10 percent of the Value-Added Tax (VAT) amount if they pay online at hotels, restaurants, and bars. The Inland Revenue Department (IRD) made the tax rebate policy to encourage customers into electronic payments.
Making the sensational decision on Bhadra 21, the IRD said that customers will get back 10% of the VAT amount. Customers pay three types of taxes at places such as restaurants, bars, etc.
According to the IRD, such a provision is stated in sub-section 1 of section 25 in the VAT ACT 2052.
“If a consumer purchases goods and services determined by the department by publishing a notification and pays the price of such purchase electronically in accordance with the prevailing law, 10 percent of the tax paid as a cash incentive will be returned to his bank account after completing the process prescribed by the department,” the act states.
Check out: Mobile Banking vs Internet Banking, Which One is Better?
Where will customers get the 10$ VAT amount back into their account?
According to IRD, customers will be returned their 10% VAT amount at restaurants, bars, hotels, motels, and guest houses.
There are conditions
However, there are some criteria to be met for this. The taxpayers shall be registered in the VAT system and have approval by IRD to issue electronic invoices.
Likewise, electronic equipment and software suppliers registered in the department need to make arrangements in their software to give back a 10% VAT amount to the customers. This means QR codes, credit/debit card issuers, banks, and financial institutions (BFIs) all need to prepare an online system to facilitate this procedure.
IRD may officially provide process for the entire transaction later.
Merchants or service owners should also publish information regarding the VAT return to their customers upon electronic payments.
Check out: Mobile Banking, QR Payment Transaction Limit All Updated List
Even the budget for FY 2081/82 stated that 10% of the total VAT paid will be returned back to the customers. The government earlier said that the initiation will be started from Shrawan 2081 onwards.
Now, the IRD is making an effort to implement this all over Nepal.