KATHMANDU, Jan 11: Consumers who make purchases through electronic means will now be able to get a 10 percent rebate on the 13 percent VAT they have paid to the government.

Releasing the working procedures of the scheme, which was announced in the budget speech of the current fiscal year, the Inland Revenue Department (IRD) on Friday said that sellers or suppliers will be returning 10 percent of the VAT to the respective bank accounts of the consumers who purchase goods or services through electronic means.

Officials say that the VAT rebate scheme is part the government’s effort to promote the electronic payment system and shift toward a cash-less society.

For example, when a consumer buys VAT-able goods worth Rs 100,000 from a mall, she/he has to pay Rs 13,000 in VAT. Now, under the new scheme, the consumer will get 10 percent of the VAT or Rs 1,300 back to his/her bank account immediately if the purchase was made electronically -- through a debit/credit card, mobile payment and e-money among other instruments.

However, the department has fixed the minimum and maximum limits for VAT rebate at Rs 1,000 and Rs 100,000 respectively.

Mukti Prasad Pandey, deputy director-general at the IRD, told Republica that the new scheme will come into implementation within a few days and consumers will start to benefit from it.

“The vendors have to complete a certain process like linking themselves with the payment service providers and operators while they apply with the department for VAT rebate through Integrated Tax System,” said Pandey. “Consumers will be getting 10 percent of VAT return immediately in their bank accounts after these processes are completed,” he added.

He said that the cap on the VAT return was fixed in line with Nepal Rastra Bank’s limit on electronic payments.

All those vendors or malls that make this scheme available for consumers must make this information display in their transaction area.

While not mandatory, officials believe that all those who accept electronic payment and are linked to the central billing monitoring system will make this service available to consumers.

Under this process, the merchant issues an electronic invoice upon the purchase of the VATable goods and services. It also shows 10 percent VAT once the buyer chooses the method of electronic payment. In the meantime, these details will be sent automatically to the payment service provider or operator which will deduct the amount from the seller’s account to deposit in the buyer’s account on real time basis.

According to the procedure, the 10 percent of the VAT amount will be automatically refunded to the buyer’s account after he/she makes the payment. The seller will have to settle the refunded VAT amount while filing taxes on a regular basis.

 
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