In recent years, there has been a substantial surge in the number of Nepali students pursuing higher education abroad, with a notable preference for destinations such as Australia and the United States. However, as this trend gains momentum, the Nepali government has implemented a 3% tax on outward-bound students’ bank transfers for tuition payments. So, the current education tax rate for abroad studies is 3%. While this move is aimed at bolstering the country’s revenue base, concerns have been raised within the education sector about the potential deterrent effect on aspiring students.
The recent tax increase applies for the funds Nepali students transfer to foreign colleges and universities for their tuition fees. According to data from the Nepal Rastra Bank, students remitted a staggering US$571 million (NPR 75 billion) to various countries in the first 11 months of the fiscal year 2022-23. This figure indicates a substantial increase from the US$515 million (NPR 68 billion) sent abroad in the preceding financial year.
Why Government Levies Tax on Abroad Studies
The government’s decision to impose a tax on these transactions appears to be a strategic measure to curb the escalating trend of Nepali students opting for international education. Other reasons government levy tax on abroad studies might be: revenue generation, control over capital outflow, economic policy objectives and addressing brain-drain problems. However, it has sparked concerns among education agents and stakeholders, who fear that the tax hike may dissuade potential students from pursuing education abroad.
Educational Consultancy Association of Nepal’s Perspective
In response to the tax implementation, the Educational Consultancy Association of Nepal (ECAN) has advocated for a more strategic approach. ECAN suggests managing the funds sent by students as an “educational service charge” in the best interest of the students. This recommendation underscores the need for a balance between the government’s revenue objectives and the financial burden imposed on students aspiring to study overseas.
Implications of Education Tax to Students and Parents
The introduction of an education tax poses challenges for both students and educational institutions. Students, already grappling with the high costs associated with international education, now face an additional financial burden. On the other hand, foreign colleges and universities may witness a potential decline in the number of Nepali students enrolling due to the increased financial strain.
While the government aims to shore up its revenue through this tax, it is crucial to carefully evaluate the long-term consequences. Striking a balance between revenue generation and ensuring access to quality education for Nepali students remains imperative.
Refund of tax paid as education tax
In the unfortunate event of a visa rejection, students not only face the disappointment of denied entry, but also the task of reclaiming the funds paid as education tax. This process involves a series of steps and documentation, and understanding it is crucial for those seeking a refund.
Education Tax Refund Process Overview
When a student’s visa application is rejected, leading to the refund of tuition fees by colleges and universities, there is an additional aspect to consider – the refund of the education tax paid. To initiate this process, students are required to visit the bank from which they originally sent the money for their tuition fees.
Documentation Required: To facilitate the education tax refund process, students need to compile a set of essential documents. These typically include:
- Fee Payment Slip: A copy of the original fee payment slip serves as evidence of the transaction and is a prerequisite for processing the refund.
- Visa Refusal Documents: Students must provide official documentation confirming the rejection of their visa application. This may include the visa refusal letter issued by the respective immigration authorities.
- No Objection Certificate (NOC)
Submission and Processing: Once armed with the necessary documents, students can submit their refund request to the bank. The bank will then initiate the processing of the refund based on the provided evidence. It’s important to note that this process may take a considerable amount of time.
Duration for Refund: In general, the education tax refund process tends to be protracted, with students often waiting for more than a year to receive their refunds. Delays can be attributed to administrative procedures, verification processes, and other factors inherent in financial transactions.
As Nepal continues to emerge as a significant sending market for international students, the introduction of an education tax signifies a shift in the government’s approach to manage the outflow of funds for overseas education. While concerns linger about the potential deterrent effect on students, a collaborative effort between the government, educational institutions, and stakeholders is essential to navigate these challenges effectively. Finding a middle ground that addresses fiscal objectives without compromising educational aspirations is key to fostering a sustainable environment for Nepali students seeking global academic opportunities.