Kathmandu: An unprecedented rise in the number of people living on rent in the Capital city has also given rise to the trend of house owners evading house rent tax.

Landlords charge tenants a hefty sum, but they pay the revenue department peanuts, it has been revealed. Even those collecting Rs 50,000 from a single renter show the department in paper that they are charging a mere Rs 5,000. If the present market situation is anything to go by, a commercial room at the New Road area costs as much as Rs 50,000 per month. “Tenants often sign agreements with house owners by undervaluing the rented room/house. Bringing such owners to book is tough as they have the agreements in written,” said Janak Raj Sharma, the chief tax officer at the New Road Tax office.

According to the Tax Deducted at Source (TDS) law, tenants should cut 10 percent of tax and give it to the house owner. “Though the law states people staying in the rent should sever tax and pay the rent, but there is lack of implementation,” said Deputy Director General Krishna Prasad Devkota.

IRD has access to only three to four percent of households in the Kathmandu Valley to monitor landlords. “There should be consistency in rent. The house owners charge us as per their wish,” said Manoj Parajuli, one of the tenants staying in Gwarko.

The renters told the Post that they are charged unfair rent hiked repeatedly. Those who tried to convince owners not to increase the rent were told to leave rooms, leaving no other option than to keep quite.

“I am fed up of the house owner. They increase the rent unexpectedly and it’s hard for us to pay the amount,” said Ramesh Bhandari, who stays in rent at Tinkune.

Devkota said the IRD has planned a house rent survey targeting 25,000 houses within this fiscal year where they will set criteria for the uniformity of house rent. “We will provide cards to tenants so that they will pay tax coming to the revenue department,” he said.  The IRD report for fiscal year 2011/12 shows an increase in the number of households from 1,073,263 to 1,102,759.

Source: The Kathmandu Post,11 Feb 2012