🎬 Video explanationकर प्रणाली र राजस्व प्रशासन
⏱ 4 min read
📗 Nayab Subba syllabus: Paper II, Section C, Units 3.2.3 and 3.2.4 · Open the full Public Management course
Revenue administration (राजस्व प्रशासन) means assessing, collecting, accounting and controlling the income of the government according to law. Article 115 of the Constitution says no tax can be imposed or collected except in accordance with law.
1. Sources of government revenue
| Type | Examples |
|---|---|
| — | — |
| Tax revenue | Income tax, Value Added Tax (VAT), customs duty, excise duty |
| Non-tax revenue | Fees, fines, royalties, dividends from public enterprises, sale of goods and services, rent |
| Grants | Foreign grants (not loans) received by the government |
Direct tax: the burden falls on the person who pays it (income tax). Indirect tax: the burden can be passed to consumers (VAT, customs, excise).
2. Main bodies of revenue administration
- Ministry of Finance: makes revenue policy; the yearly Finance Act sets tax rates.
- Inland Revenue Department (IRD, आन्तरिक राजस्व विभाग): administers income tax, VAT and excise duty through Inland Revenue Offices and Taxpayer Service Offices.
- Department of Customs (भन्सार विभाग): collects customs duty at customs offices, along with VAT and excise on imported goods; uses the ASYCUDA system and the Nepal National Single Window.
- Department of Revenue Investigation: investigates revenue leakage and evasion.
- Financial Comptroller General Office (FCGO): keeps the central account of revenue.
3. Main laws
- Income Tax Act, 2058 – tax on income of persons and entities.
- Value Added Tax Act, 2052 – VAT at a standard rate of 13%.
- Excise Duty Act, 2058 – excise on goods like alcohol, tobacco and some industrial goods.
- Customs law – duty on goods imported and exported.
- Finance Act – passed every year with the budget; fixes rates.
- Intergovernmental Fiscal Arrangement Act, 2074 – revenue sharing between the three levels.
4. Principles (canons) of a good tax system
- Equity: people pay according to ability.
- Certainty: amount, time and method of payment are clear.
- Convenience: easy time and way to pay.
- Economy: low cost of collection.
- Modern additions: productivity, simplicity and flexibility.
5. Revenue accounting and the Consolidated Fund
- All revenue goes into the Consolidated Fund (संचित कोष) of the federation (Article 116); provinces and local levels have their own funds.
- Revenue is deposited in the government revenue account in banks and recorded by revenue heads (राजस्व शीर्षक).
- Offices keep revenue records and send revenue statements; the central revenue account (राजस्वको केन्द्रीय हिसाब) is kept by FCGO, using RMIS (Revenue Management Information System).
- Revenue is reconciled with the bank (bank reconciliation) and audited by the Auditor General.
6. Revenue sharing (Intergovernmental Fiscal Arrangement Act, 2074)
| Revenue | Federal | Province | Local |
|---|---|---|---|
| — | — | — | — |
| VAT and excise on domestic goods | 70% | 15% | 15% |
| Royalty from natural resources | 50% | 25% | 25% |
7. Deposit (धरौटी) system
- A deposit is money held by an office for a time, not as income: for example bid security, performance security, bail and security deposits.
- It is kept in a separate deposit account and recorded in a deposit ledger, both personal (per depositor) and summary.
- It is returned when the condition is met, or forfeited (सदरस्याहा) to revenue if the depositor breaches the condition or does not claim it within the legal time.
- Deposit accounts are also audited.
8. Problems in revenue administration
- Tax evasion, under-invoicing and smuggling across the open border.
- Large informal economy and narrow tax base.
- Weak taxpayer awareness; complex procedures.
- Leakage and corruption in collection points.
Reforms: online filing and PAN, electronic billing, risk-based audit, single window, taxpayer education and stronger investigation.
📌 Key points to remember
- No tax without law (Article 115); all revenue goes to the Consolidated Fund (Article 116).
- IRD = income tax, VAT, excise. Department of Customs = customs duty (plus VAT and excise on imports).
- VAT standard rate is 13%; the Finance Act sets rates every year.
- VAT and domestic excise sharing: 70% federal, 15% province, 15% local. Royalty: 50/25/25.
- Deposit (dharauti) is held money; it is returned or forfeited (सदरस्याहा).
📝 Quiz
Test yourself: Revenue Administration in Nepal
50 questions on Sources of government revenue, Principles (canons) of a good tax system and Problems in revenue administration. Each attempt picks 25 at random.
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