CHAPTER- III

RESEARCH METHODOLOGY
Research methodology sets the sketch of the study. It defines what activity is to be
done, how it would be done, and what data will be followed. A researcher can get data
from both primary and secondary sources. The secondary sources are the ones that
have been already available or published, for instance the annual reports, brochures,
magazines, journals and others. However, the primary sources demand the collection
of the data by the researcher himself. A questionnaire can be a good source of primary
data.
3.1 Research Design
Research design is a plan structure and strategy of investigation conceived so as to
obtain answer to research questions and to control variances. The study aims to
portray on the VAT administration of Nepal. The research design followed for this
study is basically a historical, empirical and descriptive-cum-analytical.
3.2 Sources of Data
This study is conducted on the basis of both the secondary data and primary data
relating to VAT administration. The secondary data have been extracted mainly
through the annual reports Inland Revenue Department and Economic Surveys.
Besides these, the annual report of Nepal Rastra Bank has also been equally reviewed.
Similarly, various data and information are collected from the periodicals, economic
journals, managerial magazine and other published and unpublished reports and
documents from various sources. For the primary data collection, a set of
questionnaire has been prepared and requested to the employees of tax office,
customers and businessmen to provide their best answers.
3.3 Sample Size
This research study has included the sample size of 45 respondents representing 20
taxpayers/businessmen, 10 tax employees and 15 customers. Moreover, although the
VAT is implement in Nepal from the fiscal year 1997/98, the VAT implementation of
only the last decade is analyzed.
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3.4 Data Collection Procedure

Various numerical data and information were collected as per objectives of the study
and research questions. Firstly, law, rules, regulation and policies related to income
tax were studied. Secondly, different libraries such as Chamber of Commerce and
NRB were also visited. Thirdly, numerical were collected from different year budget
speeches, economic surveys, annual reports of IRD, publications of TU. Lastly
various journals and national newspapers were also studied.
3.5 Data Presentation and Analysis Procedure
The collected data were classified and tabulated for the presentation of data. Various
tables and diagrams were presented for data analysis and presentation. More specially,
the bar diagram, pie chart and trend figure were used. Also, the growth percentage and
variance have also been used.
3.6 Tools Used
Both accounting tools and mathematical tools are used in data analysis. The major
accounting tools of the study are;

Contribution of VAT to Total Revenue

Contribution of Firms on VAT

Number of Registrants on VAT

Forced Registrants on VAT

Number of Firms upgrading from PAN to VAT

Decrease in Number of VAT Defaulters

Legal Action against VAT Defaulters

Deregistration/Suspension of VAT/PAN

Questionnaire Related to VAT Collection

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