Generally, Revenue is the total amount of wealth collected from various sources for funding public services and projects. These sources consist of taxes (income, sales, and property taxes), fees (motor vehicle registration and building permit fees), fines, grants, and transfers from other levels of government. The constitution of Nepal outlines a framework for distributing revenue sources among the federal, provincial, and local levels of government. Each level is granted the authority to impose taxes within its respective jurisdiction and to collect revenue from these sources.

Article 57 of the Constitution of Nepal, along with Schedules 5 to 9, set forth the tax rights of the three levels of government. According to this framework, the federal government exclusively holds the authority to levy customs duties, VAT, excise duties, corporate income tax, and personal income tax. Concurrently, entertainment tax, advertisement tax, vehicle tax, and house and land registration fees are shared rights between the provincial and local governments. The local governments have exclusive rights to impose property and land taxes, business taxes, house rental taxes (excluding rental income of entities), and local natural resource taxes. Additionally, the provincial government is solely responsible for collecting agriculture income tax. 

The process of financial planning and budgeting in the province begins with estimated fund flows through grants and revenue sharing from the National Natural Resources and Fiscal Commission (NNRFC), guided by their annual recommendations. Following this, the Revenue Estimation Committee, coordinated by the Provincial Planning Commission (PPC), prepares a report on the province’s own source revenue estimation for the next three fiscal years, based on projected investment and financing needs as outlined in periodic plans. This estimation considers key indicators such as the aggregate economic index of the previous fiscal year, the first six months of the current fiscal year, anticipated revenue sources, development support, internal loans, and funds to be collected by the Province Consolidated Fund. Next, the aggregate budget ceiling is fixed, and sectoral allocations are determined, along with guidelines for budget and program prioritization, ensuring obligations and commitments do not adversely affect economic stability. Finally, the revenue source estimation and expenditure limit report are submitted to the Finance Minister for approval, ensuring alignment with the province’s fiscal capabilities and strategic goals.

Let’s review the revenue collection of Gandaki Province over some major headings and its performance over last three fiscal year.

Fiscal Year 2077/78
Revenue HeadingsYearly TargetTarget AchievedIn Percentage
Agricultural Income Tax15,00,00000
House/Land Registration Fees40,00,00,00069,59,11,000173.97
Revenue Sharing Received from Entertainment Tax75,00,00000
Revenue Sharing Received from Advertisement Tax30,00,00015,0000.5
Motor Vehicle Tax1,00,05,20,00082,72,14,00082.67
Fiscal Year 2078/79
Revenue HeadingsYearly TargetTarget AchievedIn Percentage
Agricultural Income Tax2,00,00000
House/Land Registration Fees60,00,00,0001,03,66,47,000172.77
Revenue Sharing Received from Entertainment Tax30,00,00000
Revenue Sharing Received from Advertisement Tax40,00,0004,79,00011.975
Motor Vehicle Tax1,50,00,00,00088,93,01,00059.28
Fiscal Year 2079/80
Revenue HeadingsYearly TargetTarget AchievedIn Percentage
Agricultural Income Tax5,00,00000
House/Land Registration Fees1,00,00,00,00070,45,32,04070.45
Revenue Sharing Received from Entertainment Tax50,00,00014,18,38028.37
Revenue Sharing Received from Advertisement Tax1,00,00,0002,70,1802.7
Motor Vehicle Tax1,08,00,00,0001,80,22,11,660100.12

Reflecting on the above table, over the past three fiscal years, Gandaki Province’s revenue collection performance varied significantly across different tax headings. Agricultural Income Tax consistently failed to meet its targets. House and Land Registration Fees consistently exceeded targets, though performance peaked in 2077/78. Revenue Sharing from Entertainment and Advertisement Taxes often fell short, with minor improvements in 2079/80. Motor Vehicle Tax showed considerable fluctuations, with the highest achievement in 2079/80, surpassing its target. These trends highlight the need for targeted strategies to enhance revenue collection, particularly in underperforming areas, while maintaining the gains in more successful categories.