The Inland Revenue Department (IRD) has just executed a new system whereby purchases made via any electronic mediums will result in a 10% rebate on the VAT amount.
Meaning that you’ll get a 10% refund off the 13% VAT amount that is to be paid to the government. The system was introduced around a month ago and now starting 11th February, the policy is being carried out. (You can read the complete notice here.)
However, there is a catch to the system. The system will come into play if and only if the purchase is within the boundary limit. The boundary limit, as per the IRD starts at Rs 1,000 and goes all the way up to Rs 1,00,000.
For instance, let’s say you purchase a product worth Rs 1,00,000 through any electronic medium. Now, under the new rule, you’re applicable to pay 13% of the total amount for VAT. Now, what happens is that 10% of the total VAT amount you pay, is refunded back into your account.
That means initially, you’d have to pay 13,000 for the VAT amount. From today onwards, if you pay through an electronic medium, 10% of the VAT amount i.e. Rs 1,300 is rebated into your account. Payments through credit/debit cards, mobile payments and e-money are taken into consideration under this scheme.
The call was made by Finance Minister Yubaraj Khatiwada amidst a program. As per the IRD, the new system has come into implementation in line with the fiscal year budget (2019-20). To add further on the matter, IRD director general said that the VAT rebate scheme is part the government’s rigorous efforts to promote the digital payment system and cash-less society.
Not every vendor or mall will be implementing this scheme available but those who choose to should display this information in their transaction area.