October 2: The government has issued guidelines for the implementation of value added tax (VAT) on transport services. With the release of the guidelines, the turnover limit of cargo services that must be registered under VAT has also increased.

From now on, cargo service providers with an annual turnover of more than Rs 5 million will have to register their business under VAT.

With the release of Value Added Tax Implementation Guidelines, 2080, the guidelines previously implemented in 2076 have been cancelled.

Earlier, the cargo service providers with an annual turnover exceeding Rs 2 million were required to be registered under VAT.

According to the latest guidelines, the service provider must make a self declaration if its annual turnover will exceed Rs 5 million and fill an application form for registration and submit it to the relevant office.

It is mentioned in the guidelines that cargo service providers with a turnover less than Rs 5 million in the last 12 months can do business without registering for VAT unless they want to be registered voluntarily. In the case of renting the transport service, if the person who rents the means of transport earns more than the prescribed limit, should also be registered for VAT.

The government increased the limit for VAT registration for transport service providers in line with the announcement made in the budget for the current fiscal year.

The cargo service providers including the Federation of Nepal Truck Transport Entrepreneurs have welcomed the new guidelines.

According to Rajendra Bikram Baniya, secretary general of the Federation, the previous arrangement was not practical.

“It is practical now and the Federation itself took the initiative to issue the guidelines. The federation will support the implementation of the current guidelines and all businessmen have been requested to do so," he said.

Earlier, the directive issued in the year 2076 could not be implemented due to the opposition from businessmen and some legal complications.