Om Prakash Khanal

BIRGUNJ: Following the amendment of the Value Added Regulation 2053, the government has made it mandatory to include the Harmonized System (HS) code on tax invoices for goods and services. This change has caused confusion among entrepreneurs and traders. Businessmen are uncertain about which goods and services require HS codes on sales invoices.

Even a week after the implementation of the new regulation, industrialists remain confused. Traders in Birgunj, the country’s largest land port and industrial and commercial center, are particularly confused.

Hari Gautam, the senior vice president of the Birgunj Chamber of Commerce, stated that the organization has raised the issue with the Director General of the Inland Revenue Department.

The Inland Revenue Office in Birgunj discussed the new tax invoice format with officials from the Birgunj Chamber of Commerce and Industry, according to Dhakaram Tiwari, the head of the office. Despite informing a few officials, the Inland Revenue Office has not effectively communicated the changes to the broader group of industrialists and traders, leaving many still confused.

In an interview with New Business Age, Tiwari clarified that the HS code is mandatory for the sale of imported goods. The old bill format is no longer acceptable, and importers must now include the HS code on their invoices. Although it is recommended for domestic products to have an HS code, no penalties will be imposed if the code is missing or incorrect for these products.

"The goal is to gradually make the HS code mandatory for all goods and services," Tiwari explained. However, this new requirement has caused significant confusion among businesses that produce goods from imported raw materials and among service providers.

Some businessmen have pointed out that not all items have corresponding HS codes and that the Inland Revenue Department has not provided clear guidance on which codes to use for these items. Tiwari suggested that HS codes can be obtained from the Department of Customs and reassured that no action will be taken if the code is unavailable or incorrect.

Businessmen have urged the Inland Revenue Department to clearly inform police and investigation agencies about this issue to avoid any miscommunication between government bodies. A businessman expressed concern that while the Inland Revenue Department may not enforce the HS code requirement, the police might, causing significant trouble for traders.