According to the Finance Ministry, revenue collection for the month stood at Rs21 billion against the target of Rs37 billion. Of the total shortfall, Rs2 billion is non-tax revenue while the rest is tax revenue.

Since the government had fallen behind its revenue target by Rs4.5 billion as of mid-April, the overall revenue deficit as of mid-May crossed Rs20 billion, according to the ministry.

Revenue collection has suffered with many shops remaining closed and export-import activities coming to a standstill in the aftermath of the recent earthquakes.

If the government had not extended the deadline for paying value added tax (VAT), excise duty and tax deduction at source (TDS) until May 21, revenue collection would have been higher but it would still have missed the target, said ministry officials.

The ministry believes that taxes amounting to Rs5-6 billion might have been collected during the extended period whose report will come out after mid-June.

“There will be a net shortfall of around Rs11 billion in the 10th month of the fiscal even if the tax collected in the extended period is accommodated,” said Laxman Aryal, chief of the revenue division at the Finance Ministry.  

Meanwhile, the outlook does not look good for the period mid-May to mid June either, the 11th month of the fiscal year. The daily revenue collection in this month was supposed to be in the range of Rs580 million, but the average daily collection has reached just Rs420 million, according to the ministry.

“Our tentative estimate is that revenue collection during this fiscal year will fall short of the target by Rs32 billion,” said Aryal. “If the situation does not improve from this point on, the deficit may rise further.”

The Department of Customs (DoC) and the Inland Revenue Department (IRD) are the key government offices with regard to collecting revenue. As imports have come down, the collection of revenue from customs offices has also dropped.

According to the DoC, it missed the revenue target by Rs5 billion in the 10th month of this fiscal. It collected Rs10 billion Against the target of Rs16 billion for the month.  

DoC Director General Sishir Dhungana said that the collection during the period mid-May to mid-June will not achieve the target under the present growth rate of 18.5 percent against the projected 21 percent.

According to Dhungana, the customs offices in Tatopani and Rasuwagadhi remain closed. A few days ago, the department had brought about 80 containers stuck at the yard of the Tatopani Customs to the Airport Customs in Kathmandu for clearance under police escort. “Imports through Birgunj Customs have also decreased,” he said.

Likewise, the IRD is also expected to have to scramble to meet the monthly revenue target for the period mid-April to mid-June. According to IRD Spokesperson Chandrakala Poudel, the tax collection deficit won’t be much if the collection of taxes during the extended deadline is also added to the total of the 10th month.

“Although the full collection report of the extended deadline is yet to arrive, we have seen that Rs10 billion has already been collected against the target of Rs11 billion for the period mid-April to mid-May,” said Poudel.  The IRD had a revenue deficit of Rs3.5 billion as of mid-April.

However, she said that as economic activities slowed down in the 10th month, the impact will be seen in the revenue collection of the 11th month. The IRD expects to see a revenue collection of deficit of Rs11-12 billion at the end of the current fiscal year.

Government officials said that besides a slowdown in economic activities, the damage caused to the tax offices and roads that are necessary for the shipment of cargo also contributed to a slump in revenue growth.

The Inland Revenue Office (IRO), Kathmandu 3 has been shifted to another place due to earthquake damage to its building at Lazimpat. Likewise, the buildings of the IRO, Kathmandu 2 and 3 have also been damaged forcing employees to work out of tents. Likewise, the Taxpayer Service Office at Maharajgunj was fully destroyed by the tremor.