VAT levied on air tickets re-applied from 2nd September 2023
Legal avenues for implementation of Value Added Tax (VAT) levied on air tickets have been opened. As the interim interim order issued by the single bench of the Supreme Court on July 14 was not continued, the way to implement the decision to impose VAT on the government has been opened.
The interim order issued by Justice Anil Kumar Sinha in a single bench was quashed by a bench of Justices Ishwar Prasad Khatiwada and Sushmalata Mathema on Friday.
Spokesperson of the Supreme Court, Bimal Paudel, said that although the writ was dismissed, the other written text was not ready.
According to the earlier order of the Supreme Court, the discussion was held on Friday in the presence of both sides. The Internal Revenue Department also filed a petition in the Supreme Court on July 28, demanding the cancellation of the unilateral interim order.
The Director General of the Internal Revenue Department, Gilgraj Mainali, said that the VAT will be implemented from August 16.
The government imposed 13 percent VAT through the provisions of the Economic Act. A writ was registered in the Supreme Court on behalf of the Nepal Association of Tour and Travel Agents saying that the ticket seller company and the general public were in trouble with that decision.
According to the provisions of the Economic Act, VAT will be charged on both domestic and international air services. In the case of international flights, VAT will be charged on the ticket for passengers departing from Nepal to the destination.
Now a person running a travel agency business has to issue a bill for tax on the price paid for the purchase of tickets from the air service provider, which would be his profit or commission. The travel agency should issue a bill in the name of the air service provider for the service fee or commission amount received from the air service provider.