PUBLIC AWARENESS OF TAX PAYING SYSTEM IN BANKE DISTRICT

By: Dilli Raj Pandey

CHAPTER ONE: INTRODUCTION

1.1 Background of the study

All the countries of the world need different types of resources for their economic development,
and for welfare activities. For this country’s taxation policy, tax administration and its
mechanism seem to be most effective source for mobilizing the internal resources of the country.
The objective of the tax system is to make funds available for development activities.
Developing countries had several challenges in collecting of tax. The government fiscal policy
plays a vital role in increasing the rate of capital formation, resource mobilization, price stability,
and reduction in economic inequities and promotes the employment opportunity. This in turn
helps to achieve high rate of economic growth, tax policy being one of the major instruments of
fiscal policy. The main objectives are to collect the revenue and other objectives to mobilize
funds for economic development, establish of welfare state, and promote the equal distribution
system of income, production and consumption, creation of favorable environment for
employment, investment and control of illegal production and consumption. These are the main
determinants of economy. So, it is justifiable to conclude that taxation is the backbone of
countries economy.

Taxation is the most effective and popular tools reserved in the hand of government of a country.
The major objective of taxation is to make fund available for economic stability. It also helps to
equal distribution national income of the country.

Generally tax is classified into two types on the basis of tax payer's burden direct and indirect
tax. The impact or the money burden and the incidence are on the one and the same person id
direct tax like income tax, property tax, vehicle tax etc. it play a vital role as compared to indirect
tax. An indirect tax is a form of tax imposed on one person but partially or wholly paid by
another like VAT, excise duty, import Export duty etc.
In general, tax can be defined as a levy or other type of financial charge or fee imposed by state
or central government on legal entities or individuals. It is a compulsory levy from individuals,
households and firms to central or local government. It is a kind of money of which it is the legal
duty of every citizen of the country to pay honestly. It may be levied on income, property and
even at the time of purchasing a commodity. Tax is computed and paid as prescribed in the law.
If a person defies the tax payment, he may be punished in the court of law. A taxpayer is not
entitled to compel the government, while paying taxes, to give something to him in return of the
amount he has paid.

1.2 Statement of the problem

Tax is a major source of government revenue and it contributes for the overall development and
prosperity of a country. Government has prepare tax plan to collect revenue as per his plan of
development with his functional body tax administration. It is necessary to know whether
taxpayers awareness are not with tax administration, tax officers personal behavior, tax
mechanism, tax penalty, etc. Because to tax preparing an efficient or not it should be find out for
their purpose this study has been designed.

The study focused on the following problems:

 What is the level of awareness among the taxpayers?

 Whether the public are fully know the income tax with the existing tax paying rules and
regulation?
 Whether the public are aware service provided by IRD?
 Whether public satisfied with tax calculation procedure and administration of IRD?
 Whether the income tax taxpayer’s aware with availability of customer and the quality of
tax documentation?

1.3 Objective of the study

The general objective of the study is to examine the various issues relating to Tax and to provide
useful views as well as suggestion. However the main objective of the study to identify the
weakness and awareness of tax payers.

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 1. To know the income tax taxpayers level awareness of with exiting taxpaying rules and
regulation.
2. To know the level of income tax taxpayer’s knowledge with the quality of service
provided by the Inland Revenue Department (IRD).
3. To know the level of income tax taxpayer’s awareness on the tax calculation procedure
and administration.
4. To know and find income tax taxpayer’s satisfaction level on the availability of tax
information.
5. To suggest remedies and recommendation for successful implementation of tax
awareness in Nepal

1.4 Statement of hypothesis

1. There is significant positive relationship between accessibility of tax information and

public awareness.
2. There is significant positive relationship between Quality of services of IRO and public
awareness.
3. There is significant positive relationship between administrative mechanism and
taxpayer’s awareness.

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 CHAPTER TWO: REVIEW OF LITERATURE.

2.1 Theoretical reviews:-

Researcher has gone through different literatures including books, expert articles, some study
reports, web publications of source in Nepal or some other countries to frame study criteria.
Methodologies used and principles, findings and recommendations provided by these studies will
be presented to the extent researcher gets information in this regard. While reviewing the books
it is found that most of books are syllabus oriented. Some of these are extremely based on
campus syllabus and some are based on organizational need. These are now categorically
presented.

2.2 Review of Reports, Articles and journals

Shidaei (2012) research titled "identify factors affecting the acceptance of the electronic system
to receive tax returns using planned behavior theory". The study Using Path analysis statistical
model methodology results show that the factors affecting the acceptance of the electronic
system to receive tax re-turns include: perceived usefulness, perceived ease of use, the impact of
environment and facilitative conditions.

Maleki (2011) published a journal entitled "Investigating the impact of effective factors on
acceptance one application of information technology in electronic tax service by its taxpayers,
according to the Davis' model" results of this study shows that acceptance of e- tax service by
the tax with variables including ease of use of the internet services , usefulness of using the
internet system, access to the technological facilities and - demographic features of taxpayers
having a positive and direct relationship and having an inverse relationship with risk of using
Internet system .

Skandari (2011) research article titled "design and providing a model to accept the tax e-
statements." In this study we found out that the more easier to use the Internet sys-tem, the more
taxpayers are willing to accept more electronic services, that is there is a positive and direct
relation-ship between these two factors, these results are also gained for other independent
variables: whatever the use of the system for its taxpayers will be more beneficial there should be
more technological facilities, so that taxpayers know them more. Also by taking into account the

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general manner of demographic characteristics of acceptance the e-tax Service is more
electronic, that is there is a direct and positive relationship between the variables .Another point
says that the less risk of using e-tax services for the tax-payers, the more they are eager to use it,
namely, there is an inverse relation-ship between dependent and independent variables.

CheAzmi (2010) research article titled " The Acceptance of the e-Filing System by Malaysian
Taxpayers: A Simplified Model" This study is a model consisting of three constructs including
perceived usefulness, perceived ease of use and perceived risk. The proposed model used by the
researchers is a simpler model in comparison with other studies in forming e-filing. Exploratory-
factorial analysis indicates that the model is good enough. Based on the data collected from 166
respondents, the results showed that the proposed model explained up to 61% of the variance in
behavioral intention. All of the variables significantly influence behavioral intention. The
perceived risk construct has a negative association with the perceived usefulness construct.

Ching (2010) The research study "Impact of quality antecedents on taxpayer satisfaction with
online tax-filing systems" Records of taxpayer's satisfaction quality of tax system on Online tax-
filing system quality encompasses information, system, and service qualities, which are the
antecedents of user satisfaction with any system. To measure online tax-filing system quality, a
second-order measurement model was tested using higher-order confirmatory factor analysis. In
addition, the Information and quality factors of service quality system in the measurement of
taxpayer’s satisfaction were more important than the system outputs and processing capability.

Ramayah (2012), The research article titled "Continued Usage Intention of E-Filing System in
Malaysia: The Role of Optimism Bias" in this study is about an estimate of risk by the taxpayer
through determining the extent of optimistic bias when doing e-filing system, in Malaysia
taxpayers, which pays attention to create awareness among taxpayers about the levels of concern
that they have regarding violation of privacy and security.

Kayastha (1993) The article in "Rajsawa" entitled "Problems and Prospect of Resources
Mobilization through Direct Taxation in Nepal" In this article he has shown that Nepalese tax
structure has heavily relied upon indirect taxes and non-tax revenues with the growth in
comparison to other taxes but the trend in Nepal is still not encouraging. He has started that there

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is almost of need for certain tax measure and widening of the taxpayers. He has pointed out the
following factors responsible for week revenue administration in Nepal.

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 CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design

This research has been designed under description, correlation research design and tries to find
out awareness and problem of taxpaying system in banke district of Nepal.

3.2 Population and Sampling.

The population of the study is total population of Banke District. This research is broad on
opinion survey taken from one hundred respondents through convenience and judgment
sampling method.

The population for this study was comprised of the entire person belonging to or associated with
income tax payers in banke district. They were business organizations and professional tax
payers. In order to fulfill the objectives of the study, 120 samples were distributed to business
houses and professionals tax payers. They are selected on a judgmental sampling basis. Among
100 distributed samples only 90 responded were respond. Among them 50 percent are
remuneration tax payers and 30 percent are business holders and remaining 20 percent are self
employed.

3.3 Sources of Data:

Both primary and secondary source of data have collected in order to achieve the real and fact
result from this research. Questionnaires are used to collect the primary data. The major source
of secondary data is tax law and practical bank, Annual report Income tax Act 2058, and current
tax policy.

3.4 Measures:

Simple category scale and multiple choice single responses, ranking scale are used to measure
the response of respondent required tax planning.

3.5 Data Processing:

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After the collections of data from primary and secondary sauces, data are firstly tabulated in
separate format systematically and sources are developed tabulated data are analyzed by simple
percentage method, mean, correlation and regression etc statistical tools.

3.6 Limitation of the study:

This study can't free from the limitation. The study is conducted within the framework of
research design. The study is limited to the secondary data of primary information are gathered
from sample of tax offices tax experts, businessman, trader's tax payers.

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 References:

Agrawal Govind Ram (1984) Direction of Tax Reform in Nepal

Agrwal Govinda Ram, KasyathaNarendralal, Rai Bal Prasad and Das Arun Kumar
lal(1978) Resource Mobilization for development, The reform of finance
tax in Nepal.

Azmi, A, C and Bee, N, G. (2010). “The Acceptance of the e-Filing System by

Malaysian Taxpayers: a Simplified Model” Electronic Journal of e-
Government, Volume 8 Issue 12010,(pp13 - 22), available online at
www.ejeg.com.

Bhandari Hari (2005). Contribution of income tax to economic development of Nepal.

Chawla Dr. Chanchal, Jain Dr. Vipin, Joshi Anand, Gupta Dr. Vinayak (2014) A
Study of Satisfaction level and Awareness of tax-payers Towards E-filing of
income tax Return-with reference to Moradabad city, International monthly
refereed journal of Research in management & technology, volume II,
November 13 60-66
Text book of MBS second Year 2073

Income Tax Act 2058

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 A research or proposal on awareness of tax planning in Nepal

Problem and suggestion:

Dear Sir,

I would like to introduce myself as a student of BMC, faculty of management and

MBS program then thesis year engaged in a research work. In order to fulfill the partial
requirements of MBS Studies. I have prepared a dissertation on "tax public Awareness in Banke
district of Nepal " problems and suggestion.

I humbly request for your valuable comments, review, suggestions and information on this
which would very useful for my study. That's why I request you to fill up the following
questionnaire. I would very much appreciate if you would provide your time for filling this
questionnaire.

I assure that the information, you provide me will be useful in research work. I hope for your
kind cooperation and support with many thanks as soon as possible.

Ghanshyam Adhikari

Researcher

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Questionnaire:

Dear respondent,

I am Ghanshyam Adhikari MBS final year student of Mahendra Multiple Campus, presently
preparing thesis titled "A study of Public Awareness of Tax Paying System in Banke District. So
for this purpose you are kindly requested to response to the statement in the following
questionnaire.

Taxpayers Introduction.

Name…………………………Address…………… ...........Age………… Job/Profession

Post………………………… Name of Institution/firm/company...........………………
PAN No…………………………

Your answer will be treated with absolute confidentiality, and will only be use for research
purposes.
Please tick (˅) in the appropriate box

1. Please objectively mention your age__________

2. Gender: Male Female Other

3. Nationality Nepali Indian Other( specify)

4. Marital status: Unmarried Married Separated Divorced Other

5. Highest level of education you have completed __________________

6. Taxpayers types Sole trading Partnership Private Ltd

Public Ltd Co-operative Individual salary earner other

7. Visiting rate to the Inland Revenue Tax Office

Always Every month Every six month Yearly When

needed Never

8. How regular have you been pay taxes to the Government?

Very regular 2. Quite 3 Moderately 4. Not regular

5.Moderately 6. Very irregular

9. Tick among the most important one from the following for getting tax information to you.

Newspaper _____________ Radios________________________

Television______________________ Internet/ website ___________________
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 10. Do you agree or disagree with the statement please tike (˅)

Agree Disagree

Paying tax to the government is one's duty

Failure to pay tax lead to strict punishment

Incentive for paying taxes regularly are attractive

The Government is unfairly levying taxes

The Government has clearly defined tax policies

The tax procedures are clear and simple

13. Have you ever participated in the training/awareness program conducted by IRO?

Yes No

14. Are you satisfied with the program? Yes No

If yes Very much satisfied Very satisfy Satisfactory Just

OK

15 Kindly rate your response on accessibility of tax information

Excellent Very Good Satisfa Poor Very Extremel

Good ctory poor y Poor

Notice and Circular published in

newspaper by IR Office

Easy in getting tax related

information from IR Office

Tax information broadcast from radio

and television

Thank you fulfilling the question on the study of Public Awareness of Tax Paying System in Banke District.
Your cooperation is guidelines for my study.

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