Lack of coordination between KMC, IRD makes Kathmandu house owners pay double tax

File image: A view of Kathmandu city

Kathmandu, July 30

The Kathmandu Metropolitan City recently decided to receive the entire sum of rental tax according to the new constitution from this fiscal year. Accordingly, the local unit has already instructed all ward offices to collect 12 per cent tax applicable to house rents from the house owners.

The house owners had been paying 12 per cent tax earlier also, two per cent to the KMC and 10 per cent to tax offices under the the Inland Revenue Department.

It was expected that after the KMC’s decision to collect the whole of rental tax, the IRD would stop collecting such tax. But, the IRD says checking what the KMC decided is not its responsibility and it continues collecting the rental tax as well as assigned by the Income Tax Act.

“The law has authorised us to collect rental tax and we will continue it,” the IRD spokesperson Dhaniram Paudel says.

But, the KMC argues the legal provisions contradictory to the constitution automatically gets null and void.

“Nearly two years have passed since the promulgation of constitution,” KMC Information Officer Basanta Acharya says, “Now, the central government should stop collecting rental tax.”

“The Inland Revenue Department should not forget that laws contradicting with the constitution are scrapped.”

Meanwhile, the Ministry of Federal Affairs and Local Development spokesperson Rudra Singh Tamang says the Ministry of Finance should take initiatives to amend the Income Tax Act to resolve the issue.


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