Karnali works to boost internal revenue

By Rajani Yogi,Surkhet, Apr.30: The Karnali Province Government has devised a plan to broaden the tax base. Discussions are under way to incorporate this into the Finance Act for the next fiscal year. 

The Ministry of Economic Affairs and Planning stated that intensive deliberations are ongoing to identify additional sectors that could be brought under taxation. The Revenue Advisory Committee is currently preparing a report on the matter. Due to the limited tax base in the province, internal revenue has remained low. 

Senior Revenue Officer Ganesh Bahadur Chand informed that the plan is to expand the tax base with implementation targeted for the fiscal year 2026/27. In several areas falling under the concurrent jurisdiction of local and provincial governments, the federal government has been collecting taxes. 

As the government adopts a policy of collecting taxes within respective jurisdictions, the provincial government has also taken a more assertive stance. 

Despite nearly a decade since the implementation of federalism, land registration fees are still being collected by the federal government, even though this falls within the jurisdiction of local and provincial levels.

Efforts are also underway to further systematise and strengthen the taxation of agricultural income, which was introduced in the current fiscal year. 

Similarly, vehicle taxation is being streamlined, and discussions are ongoing regarding other areas within provincial jurisdiction.

In recent years, the provincial government has prioritised expanding the tax base. It has established a dedicated revenue division and a Revenue Advisory Committee to strengthen revenue mobilisation.  The committee comprises four sub-committees and is working not only on revenue reforms but also on identifying new revenue sources, according to Chand. The government has adopted a policy prohibiting cultivable land from being left fallow. Landowners who leave arable land uncultivated will be subject to penalties. 

An annual fine of Rs. 500 has been set for up to 10 ropanis of fallow land. For 10 to 20 ropanis, the annual fine is Rs. 1,000, and for more than 20 ropanis, the penalty is Rs. 1,500.

Chand added that the tax base was expanded across multiple headings this year. The Provincial Assembly’s Public Accounts Committee has also been working to recover arrears. In the first nine months of the current fiscal year, nearly Rs. 80 million in revenue has been collected under forest-related income and royalties. 

The provincial government expects this revenue stream to continue improving in the coming years. Although the Karnali Province Government has been seen as weak in budget implementation, it has shown improvement in internal revenue generation.

In the first nine months of the current fiscal year 2025/26, the province generated Rs. 480.395 million in internal revenue. During the same period in the previous fiscal year 2024/25, the figure was around Rs. 410 million, an increase of nearly Rs. 70 million this year, according to Accounts Officer Lalit Thapa at the Office of the Provincial Comptroller.’

The provincial government has set a target of generating Rs. 967.411 million in internal revenue for the current fiscal year.