Author Name:   Samratdu

Major tax changes by the Finance Act 2067 of Nepal

 

 

PRIVATE CIRCULATION

Major Highlights of Finance Ordinance 2067

 

1.         Education Service Fee (Cause No. 8) - Addition

The educational institution shall raise 1 percent education service fee during the billing of the admission fee and tuition fee. On receipt of information about non-issue of bill as required in Ordinance by IRD, department shall reserve right to take control of all the documents and the financial and administrative section of the educational institution. -8.3

Other procedures of education service fee shall be as specified by IRD. -8.8

Educational institution shall be barred from availing any facilities, service or accreditation provided by District Education Office and other government unless the proof of the deposit of the education service fee is provided to them. – 8.13

2.         Road Construction and Improvement Fee (Clause No. 9) - Amendment

Road construction and Improvement fee shall be levied on import of petrol and diesel at the point of Custom for road construction and improvement in 2067/68. The rate shall be

Rs. 4 per liter of petrol. Previously it was Rs. 2 per liter

Rs. 2 per liter of diesel. Previously it was Rs. 1 per liter

3.         Telephone Ownership Charge (Clause No. 14) - Addition

Telephone Ownership charge collected during the month should be deposited within 25 days of the following month. Interest at the rate of 15 percent on yearly basis shall be charged in case of delay in deposit of Telephone Ownership charge. -14.2, Addition   

The administration of Telephone Ownership charge shall be as specified by IRD. -14.3, Addition

 

 

 

4.         Casino Royalty (Clause No. 16) - Amendment

a.   Person/Entity obtaining the license to operate the casino in Nepal shall pay yearly royalty of 2 crores of every casino for F.Y 2067/68. Previously the liability of the royalty was stated for casino not the person/entity operating it. – 16.1, Amendment

 

b.      Interest rate at the rate of 15 percent on yearly basis shall be charged on the outstanding amount from the period of delay. Additional Fine at the rate of 15 percent on yearly basis shall be levied on the outstanding amount after expiry of 3 months of the due date of deposit. – 16.3, Amendment

 

c.       If person and entity holding license to operate casino do not deposit royalty and fee within 2 months of start of the fiscal year, tax office can claim over their assets, auction the claimed assets, ban the person to go outside the country, realize amount from the agent or realize amount from other means or give order to close down the casino. -16.4, Addition

 

d.      When the order to close down the casino from this section is given, authority giving license shall have to cancel the license. – 16.5, Amendment

e.       Person and entity holding license to operate casino shall have to renew its license for next fiscal year before the end of current fiscal year. – 16.7, Addition

5.                  Refund of Passbook and Bank Guarantee (Clause No. 20) - Amendment

 

Vegetable ghee industries importing raw materials on F.Y 2064/65 and F.Y 2065/66 through bank guarantee or pass book (cash deposit) record facility and obtained the foreign currency by exporting the finished goods by making the value addition of 10 percent on raw materials within stipulated time in law but which could not apply for the release of bank guarantee or pass book (cash deposit) can apply for such release within Poush end 2067 and get their bank guarantee released or cash deposit refunded.

 

6.                  Special provision on fees and interest to be levied on the Co-operative Society (Clause No. 21) - Additions

a.   Cooperative society/union registered under Cooperative Act, 2048 other than tax exempt under section 11.1 of ITA, 2058 having tax liability, if pay their outstanding tax liability and advance tax collected of F.Ys 2064/65, 2065/66, 2066/67 within Chaitra end 2067 then interest and fine to be levied on delay/default shall be exempt and those entity shall not be required to fill tax return of the F.Y prior to the above. 21.1

b.   Tax exempt Cooperative society/union as per Section 10.6 and 11.2 of ITA, 2058 if submits the financial statements and detail of the advance tax deposited of the F.Ys 2064/65, 2065/66 & 2066/67 within Chaitra end 2067 then interest and fine to be levied for delay/default shall be waived. – 21.2

c.   Non-profit cooperative society/union or the cooperative society/union established without profit motive either PAN registered or not submits tax return along with outstanding tax and advance tax of F.Ys 2064/65, 2065/66 & 2066/67 then interest and fine to be levied for delay/default shall be waived. – 21.3

d.   Cooperative society/union not availing the facility under this clause within the specified time period than the tax along with fines and interest shall be recovered. – 21.4

e.   Cooperative society/union defaulting the payment of tax as per the Act shall not be provided any facility and exemption that are provided by the government agencies. – 21.5

7.                  Waiver of fines and interest to those coming into tax bracket (Clause No. 22) – Amendment/Addition

a.   Income earners involved in different employments, occupations or investments, who have not paid or only partially paid taxes (people like consultant, doctors, engineers, layers, auditors, artists, commission agents), if submit tax return of the F.Ys 2065/66 & 2066/67 & pays tax on income earned prior to 2065/66 but tax not paid within Chaitra end 2067 will be exempt from submitting the tax returns of the previous year and enjoy exemption on payment of tax, charge, interest and penalty on it. - 22.1, Amendment

b.   Irrespective of the clause above if journalists, newspaper and publication & media centre submits the tax return of the F.Y 2066/67 and pays outstanding tax amount with in Chaitra end 2067 shall be exempt from submitting the tax return of the previous years and enjoy exemption on payment of tax, charge, interest and penalty on it.- 22.2, Addition

c.   Person or entity specified above not availing the facility as specified above then due tax amount, fee and interest shall be recovered as government due. – 22.3, Amendment

 

8.                  Exemption of the VAT amount and fine on it to be paid by Cold storage services (Clause No. 25) - Addition

Person involved in the Cold Storage Services business shall be exempted outstanding VAT amount and fine on it for the cold storage of the agriculture products. 

9.                  Partial exemption of the License fee (Clause No. 26) - Addition

Partial exemption of 25 percent of the license fee as charged by Excise Act, 2059 shall be provided in case of specified liquor business activities out of the Kathmandu valley.

10.              Exempt to the small tax payers. (Clause No. 27) - Addition

a.   Small enterprises with annual turnover of 20 lakhs and 2 lakhs income who have not deposited income tax of the F.Y 2065/66 will be exempt from paying tax, charge, interest and penalty if the outstanding tax amount is paid within Poush end 2067. Payable tax amount is as follows:

Business within Metropolitan and sub-metropolitan NRs. 3,500.00

Business within municipality NRs. 2,000.00

Business in other area NRs. 1,250.00

b.   Tax payer who have submitted amount more than specified above then such excess amount shall allowed to for credit on following years.

11.              Social security fund provision (Clause No. 28) - Addition

1 percent social security tax collected as per Schedule 1 of ITA, 2058 from individual natural person and couple shall be collected in the separate revenue account.

12.              Leakage of revenue (investigation and Control) Act, 2052 (Clause No. 29) - Additions

a.       Any person who provides information that an offense relating to the leakage of revenue or corruption has been committed or is about to be committed shall be given a reward amounting of 15 percent of the amount realized or 15 lakhs whichever is lower (previously it was 20 percent of the amount realized) after the suit filed under this law is finally disposed off. - 29.1

 

b.      On investigation of the IRD, if it is confirmed that the person has not paid the tax or partially paid it with the intention to avoid tax then the officers involved in the investigation shall be given reward amounting to 5 percent of the amount realized or 5 lakhs whichever is lower. – 29.2

c.       In case the reward is claimed by several persons, the amount of the reward shall be divided equally among them. – 29.3

 

 

 

 

Major Changes by Finance Ordinance 2067

In Value Added Tax (VAT) Act, 2052

 

1.                  Amendment in list of the Business to be registered to VAT – Section 10(2) - Amendment

The business of a person is taxable or is of hardware, sanitary, furniture, electronics, marble, educational consultancy, disco tech, catering service, party palace, parking service, dry cleaners using machine, restaurants with bar and color lab within jurisdiction of the metropolitan, sub-metropolitan, municipality or in area specified by IRD is required to file application for Vat registration in the specified format within 30 days of the effectiveness of the provision or start of business.

2.                  Search, seizure and deposit – Section 23 (Gha), Amendment

Seize the bank account of tax payer up to 3 months. But with the prior permission of Director General, bank accounts could be seized for additional 3 months if in case tax assessment procedure not completed. - Gha

 

3.                  Tax refund from the custom point in case of Re-export - Section 25(b) - Addition

Based on the proof of the re-export of the goods, Vat kept as deposit at the custom point to the extent of re-export shall be refunded from the specified custom point.

4.                  Fine in case of use of defective Software for Computerized billing– Section 29 (1Tha) - Addition

If taxpayers approved to use the computer billing system uses the software system with the facility of the deletion and modification shall be imposed fine of NRs. 5 lakhs.

 

 

 

 

 

 

 

Changes to Schedule 1

of VAT Act, 2052

Vat Exempt Goods

Group 3: Live Animals and animal products - Addition

Metal baral, pata to keep Queen bee, bee brush, main hive roller, gear pump & wheel place and machine of bee keeping business, honey purifier and liquid purifier etc imported for bee keeping activities. – 3 (b)

Group 5: Medicine, Medical and Similar Health services - Addition

a.       Plastic of blood, transfusion set, testing kits, reagent & blood testing, reagent building equipment & chemicals imported in Nepal by Nepal Red Cross Society.- 5 (b)

b.      Equipment used for treatment of kidney related disease. – 5(gna)

c.       Equipment (heading 90.18 and 90.27) used by pharmaceutical industries and hospital for research and development on the recommendation of Drug department.  – 5 (cha)

 

d.      Raw materials used to produce intraocular lens – 5 (cha), Removed

 

Group 9: Passengers and goods transportation services – Addition

Cargo service for export purpose.

Group 11: Other goods or services - Addition

a.       Agricultural product storage facility provided in Cold Storage. - 1

b.   Reinsurance Business - 3

c.   50 percent of VAT collected from the vat registered customers on sale of the mustard oil, vegetable ghee, refined eligible oil produced by the national industrialist involved shall be refunded as specified by IRD. However, such facility shall not be availed by the packing industries bulk import of the refined oil and sale of them after packing (refilling) activities. - 21

 

Major Changes by Finance Ordinance 2067

In Income Tax Act, 2058

 

1.                  Definition of Tax - Section 2 (dha), Amendment

Tax means the tax imposed under this Act. The term includes the following payments:

Amounts to be paid under Section 90 by advance tax deducting (withholding) persons or by tax-deductible persons (withholdees), or amounts to be paid under Section 94 by persons making payments in installments or amounts to be paid under Section 95 (ka) by the person required to pay advance tax or amounts to be paid according to tax assessments made under Sections 99, 100 and 101. – Dha (2), Change Highlighted

2.                   Definition of Non Business Taxable Asset - Section 2 (da), Amendment

 

Non-Business Taxable assets mean lands, buildings and interest in any entity, or securities, other than the following assets:

Land and private house of a natural person which has been disposed of at a price of less than 30 lakhs  rupees (it was 50 lakhs previously).

Clarification: Private house means house and the land surrounding the house or one ropani of land whichever is lower. – Da (3)  

3.                  General Interest Rate - Section 2 (kaba)

General interest rate shall be 15 percent (it was 10 percent previously)

 

4.                              List of the Exempt Amount - Section 10 (chha), Addition

 

The following amounts shall be exempt from tax:

Amounts earned by the Nepal Stock Exchange Board according to its objectives. Chha (4)

 

5.                  Provisions related to Business Exemptions and Concessions - Section 11 Subsection 3, Amendment/Addition

 

Tax shall be imposed as follows on income made by a person from any special industry in an income year:

a.       In case any special industry is operated in a very-undeveloped, undeveloped or underdeveloped area, tax shall be imposed at the rates of 10, 20 and 30 percent (it was 50, 70 & 75 percent previously) respectively of the rates otherwise applicable, for ten years including the year in which the industry started its operation. – 3 (kha), Amendment

b.      Person involved in the exploration and extraction activities of the petroleum and natural gases shall get full tax exempt for first 7 years and 50 of the tax rebate for next 3 years if the commercial production starts within Chaitra 2075. – 3 (3kha), Addition

c.       Industry established in the remote area shall avail facility of the full tax exemption for 10 years from the year of the establishment. - 3 (3kha), Removed

d.      Industry conducting business related to software development, data management, cyber café, digital mapping established in technology park, biotech park and information & technology park as specified in the Nepal Gazette shall obtain rebate of 50 percent of the applicable tax rate. (rebate was 25 percent on the similar industry before). - 3 (3gha), Amendment

e.       In case of export of the goods produced by the manufacturing industry tax rebate of 25 percent on applicable the tax rate shall be provided. - 3 (3gna), Addition

f.       Tax rebate of 40 percent on the applicable tax rate shall be provided on the income earned from the establishment and operation of the road, bridge, airport, tunnel road or from the investment in and operation of tramp and trolley bus. - 3 (3cha), Addition

g.      Industry involved in manufacturing, tourism services industry, hydropower generation, transmission and distribution and those specified in Section 11 (3gha) if listed in the security exchange market then they shall avail tax rebate of 10 percent of the applicable tax rate. - 3 (3chaa), Addition

h.      Industry established in very-undeveloped area producing wine, brandy or slider consuming the locally produced fruits shall be provided tax rebate of 40 percent for 10 years from the year of the start of the production. - 3 (3jha), Addition

i.        Royalty earned from the export of the Intellectual property shall avail tax rebate of 25 percent of the applicable tax rate. - 3 (3jhaa), Addition

j.        Income earned through sale of Intellectual property by way of transfer shall avail tax rebate of 50 percent of the applicable tax rate. - 3 (3aya), Addition

 

6.                              Valuation of the Trading Stock – Section 15, Amendment

 

While calculating the cost of trading stock, the following method shall be followed:

 

a.       In case it is not possible to calculate the trading stock of the business of a person, he may make a choice between the first-in-first-out method and the weighted average-cost method to calculate the trading stock of the business. - Subsection 6

b.      Calculation to be made according to the weighted average- cost  method shall be made as per the generally- accepted principles of accounting under which the cost of a particular type of trading stock is calculated as the weighted average cost of all trading stock of that type in the business. – Subsection 8 (ka)

 

7.                  Provision relating to the carry forward of the loss from a Investment - Section 20, Amendment/Removal

A person may calculate the income made by him from an investment in an income year by deducting any unrelieved loss of the year incurred by him and any unrelieved loss of the previous seven years incurred by the person[1] from that and any other investment.- Subsection 2, Removed

 

Any person has receiving full tax concession (or partial concession previously) in any income from business or investment in any income year, loss of such income year will not allow to carry forward in following years. – Subsection 8, Amendment

 

8.                  New provision of the facilities for the disposal of assets and liabilities during the merger and acquisition of the banking and insurance business – Section 47, Addition

 

I.       Institution involved in the similar type of business activities either in basking business or insurance business decide to merge through merger or acquisition then the provisions of the Section 59 Subsection 2 – ka, kha, gha,gha, cha, chha & Subsection 3 shall not apply to it. Section 57 (2) relates to Changes in Control. – Subsection 1

  

But the accumulated loss of the institution which losses its existence after loss shall be allowed for deduction on equitable (damashahi) basis for the period of seven years. However, so merged institution decide to re-separate before complete deduction of the accumulated loss is required to pay tax on the amount allowed as deduction at the rate applicable on the date of merger through merger or acquisition.

 

II.    The disposal of the assets and liabilities of the so merged institution shall be as follows: - Subsection 2   

a.       Disposal of trading stock and business assets (Ka)

i.        Net expenses incurred on the assets just prior to the disposal shall be assumed to the received by the person disposing the assets.

ii.      Amount as specified above shall be assumed to the cost of the assets to the person acquiring it.

b.      Disposal of the depreciable assets (Kha)

i.        Depreciated value as per Section 4 of the Schedule -2 is assumed to be receipt on the disposal

ii.      Amount as specified above shall be assumed to the cost of the assets to the person acquiring it.

c.       Disposal of Liabilities (Ga)

i.        Market price of the liabilities or the net income just prior to the disposal shall be assumed to be paid by the person disposing the assets.

ii.      Amount as specified above shall be assumed to the received by the person accepting the liabilities.

d.      Institution formed after the merger or acquisition shall treat the cost of the assets or liabilities in existence just prior to the merger or acquisition as acquired for the purpose of calculation a, b & c above. (Gha)

III. Bulk payment for Group retirement to the staffs of the institution loosing existence after merger or the institution in existence after merger shall be allowed tax rebate of 50 percent of the advance tax deducted at the time of such payment. But payment through retirement fund or received as per the provisions of the personnel manual of the institution shall not avail such facility. – Subsection 3

 

IV. Capital gain tax shall be waived on the transfer of the shares through sale by the shareholders in existence just after the merger for the period of 2 years after the merger. – Subsection 4

 

V.    Dividend tax shall be waived to the dividend declared within 2 years of merger in case of the shareholders in existence just after the merger. – Subsection 5

 

VI. The intention letter of merger shall be forwarded to the Inland revenue Office with 2068 Kartik end. – Subsection 6

 

VII.          The process of the merger shall be completed by Kartik end 2070. – Subsection 7

 

VIII.       The institution not forwarding the intention letter or not completing the merger process within the specified time period shall not avail the facility under this Ordinance. - Subsection 7

 

 

 

9.         Definition of Department - Section 72, Amendment

For the purpose of assisting the Department in fulfilling its responsibilities mentioned in in this act GoN may by notification in the Nepal Rajapatra, establish Large Taxpayer Offices or Inland Revenue Offices or taxpayer service offices under the Department and prescribe the jurisdiction of those offices. The offices with jurisdiction prescribed in that manner shall be recognized as part of the Department. Subsection 2, Change Highlighted

 

10.       Tax Deductions While Paying Investment Returns and Service Fees – Section 88,

 

Tax shall be levied at the rate of 10 percent on the profit and gain on the transaction under Commodity Future Market. – Subsection 1(6), Removed. Placed in Section 95 (ka)

11.              Change to the Tax Deductions While Paying for Contracts or Agreements to the non-resident person – Section 89

 

10 percent tax shall be withheld on payment under the contracts or agreements related to Service with a non-resident – Subsection 3(ka), Removed.

 

12.         Tax deduction on gain from disposal of an interest holding by resident entity – Section 89 (ka)

 

Section 89 (ka) ka & kha relating to tax deduction on gain from disposal of an interest holding by resident entity by a person. - Ka & Kha, Removed. Placed in Section 95 (ka)

 

13.              Extension of the timeline of the deposit of advance tax withheld – Section 90

 

Advance Tax withheld during the month shall be deposited within twenty five days of the following month. The period was within 15 days of the following month previously. Subsection 1, Amendment

 

14.              Chapter – 18, Amendment

 

Phrase "Advance Tax" has been added to the title of the Chapter -18. The title is "Installment and Advance Tax" after revision.

 

15.              Recovery of Advance Tax - Section 95 (ka), Additions

 

I.       Organization involved in the providing services related to the Commodity Future Market is required to withheld tax at the rate of 10 percent on the profit and gain earned on the transaction by person involved in the business of the Commodity Future Market. – Subsection 1

 

II.    Tax on gain calculated as per Section 39 from the disposal of the interest in the entity by the person other than those organization dealing in the security under the law enforce shall be withheld as follows: – Subsection 2

a.       In case of the Organization with its securities traded in the stock exchange, the organization involved in the securities business shall withheld tax at the rate of 10 percent in case of natural resident person and 15 percent in case of others. (Ka)

b.      In case of the Organization whose securities are not traded in the stock exchange, the organization whose securities is disposed off shall withheld tax at the rate of 10 percent in case of natural resident person and 15 percent in case of others. (Kha)

 

III. Tax should be deducted at the Land revenue Office on capital gain on the disposal of land and building on the following basis. – Subsection 3

 

a.       If the ownership of the disposed Land or Land and building is 5 years or more, 5 percent. (Ka)

b.      If the ownership of the disposed Land or Land and building is less than 5 years, 10 percent. (Kha)

 

IV. Advance tax is assumed to be withheld as per the provisions of the act irrespective of the status of actual collection. – Subsection 4

 

V.    Advance tax so withheld should be deposited within 25 days of the following month as per the procedures specified in the Act. – Subsection 5

 

16.              Fees to be imposed in the Event of Failure to Keep Documents or Submit Particulars or Returns of Income – Section 117, Addition

 

Fine at the rate of 1.5 percent for the month or part of the month shall be imposed if the person requiring depositing advance tax withheld as per Section 95(ka) is not done. - Subsection 1 (kha)

 

17.              Interest to be Charged in Case Those Paying Tax in Instalments Pay a Lower Amount as Estimated Tax - Section 118, Amendment

 

90 percent (80 percent previously) of the estimate or revised estimate, if it is correct, of total amount payable as the installment of tax for each installment period for the year, and in the case where the estimate or the revised estimate is not correct, of the amount payable by the person referred to in Section 3(a) and (b) as the installment of tax

for each instalment period. – Subsection 1(kha)

 

18.              Interest to be charged In the Event of Failure to Pay Tax – Section 119, Amendment

Interest payable by an advance tax deducting person due to his failure to comply with Sub-Section 8 of section 95 ka or Sub-Section 4 of Section 90 may not be realized by him from the person whose advance tax is deducted. - Subsection 3

 

19.              Realization of interest paid due to default of withholder - Section 119, Amendment

Interest payable by an advance tax deducting person due to his failure to comply with section 95.Ka(8) and 90.4 may not be realized by him from the person whose advance tax is deducted. – Subsection 3

 

20.              Penalty for Aiding and Abetting – Section 121, Amendment

A person who knowingly or recklessly aids or abets another person to commit an offence of a type referred to in this act (previously Chapter 23), or counsels or induces another person to commit such an offence shall be liable for a penalty equal to 100 percent of the underpayment of tax that. Change Highlighted

 

21.              Offence of Making False or Misleading Statements – Section 124, Addition

Clarification

 

For the purpose of this section, a statement made to the Department means the statement filed to the department or filed to the competent authority in the course of fulfilling duty under this act and it shall include the following as well:

 

a. Application, description, notice, complain, justification or any other document files for the purpose of this act. (Ka)

b. Document submitted to the department or the director of the department. (Kha)

c. Question asked by the department or the director of the department to any person. (Ga)

d. Description provided by the person having information about the return filed through an agent to the department of the director of the department.   (Gha)     

 

 

 

Changes to Schedule -1

 

of Income Tax Act, 2058

 

Tax Rates

 

1.                  Additional Tax under 25% slab to the Resident Natural Person – Section 1, Addition

Resident natural person having taxable income exceeding NRs. 2,500,000.00, shall be charged additional tax at the rate of 40 percent on the tax amount calculated as per clause (ga). –Subsection 1 & 2

2.                  Remote Area Allowance - Section 1, Amendment

Tax shall be calculated only on residual taxable income remained after subtracting the amount of prescribed remote area allowance not exceeding NRs. 50,000.00 (previously 30,000.00) of an individual residing in a remote area prescribed by GoN. - Subsection 5

 

3.                  Tax Limit to Small Tax payers – Section 1, Amendment

 

Tax to the business as per Section 4 Subsection 4 (if the income and turnover of the business does not exceed the threshold of Rs. 2,00,000 and 20,00,000 respectively) shall be as follows: - Subsection 7

 

Area	Tax amount (Current) NRs.	Tax amount (Previous) NRs.
Metropolitan or Sub- Metropolitan Cities	3,500.00	5,000.00
Municipalities	2,000.00	2,500.00
Other Area	1,250.00	1,500.00

 

4.                  Facility for Income from Export – Section 1, Amendment

 

Natural person earning income from the export during the year shall be taxed at the rate of 15 percent on the 25 percent tax slap. Previously the provision was to tax income at the rate of 20 percent if earned from the export. - Subsection 15

 

5.                  Clarification – Section 2

 

Ropeway means ropeway operated for the carriage of goods or persons and it includes cable car as well. - Subsection 3 kha 1

 

 

 

 

Changes to Schedule -2

 

of Income Tax Act, 2058

 

Calculation of Depreciation

 

 

1. Facility of  Depreciation – Section 3, Addition

 

a.       If the manufacturing industry invests in the assets generating energy required for self-consumption shall be allowed 50 percent of the assets procured during the year as allowable depreciation for the year. - Subsection 3

 

b.      Computerized system of billing through fiscal printer and cash machine then the whole amount expended in the procurement of the assets shall be allowed as depreciation expenses in the same year. Subsection 4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Major Changes by Finance Ordinance 2067

In Excise Act, 2058

 

1.                  Responsibility of payment of Excise Duty – Section 4(ka), Amendment

 

In case of import Name of the person mentioned in document to receive the goods like Bill of Lading, Air way bill, bill or custom clearance documents. - Gha

 

2.                  Application for the cancellation of the license by license holder – Section 9 (ka), Addition

 

a.       Licensed person shall apply for the cancellation of license within 15 days of stopping the business of the goods and services attracting excise duty. – Subsection 1.

b.      Excise director shall inquire into the matter of request for the cancellation of the licenser. If the license is decided to be cancelled same shall be informed to the license holder within 30 days of application on the matter. - Subsection 2.

c.       License holder is not required to submit the returns as required under this act (10 ka) of the next month after receipt of information of the cancellation of the license. - Subsection 3.

d.      License holder is not required to renew license as required under Section 9 of the act for the period of the cancellation of the license. – Subsection 4.

 

3.                  Cancellation of the license in case of non-submission of the Excise duty – Section 10, Addition

 

Department may cancel the license provided under this act under the following circumstances:

 

In case of the dissolution of the Entity or in case license holder applies for the cancellation of the license – Gha

 

4.                  Excise Director shall have authority to determine the Excise Duty - Section 10

 

But except in case of the 1 (Ga) – fake excise return & 1 (Ja) – evasion of the excise duty the excise duty shall be determined with four years of filling of the excise return. - (Gha), Removed    

 

5.                  Recovery of the outstanding Excise Duty – Section (Ja), Addition

 

By auctioning of the closing stock with the license holder. - Chha

 

 

 

 

Changes to Annexure

 

Related to Section 3

 

 of Excise Act, 2058

 

Excise Rate

 

1.                  Changes in the Excise Rate

 

ü  Increase in Excise rate of Liquor and Liquor related products from 10-12 percent.

ü  Increase in Excise rate of Cigarette and Cigarette related products from 8.69-25.71 percent.

ü  Increase in Excise rate of Portland cement, aluminum cement and other hydraulic cement related products from 5.88 percent.

ü  Increase in Excise rate of three or four wheelers from 3.44-16.66 percent.

ü  Increase in Excise rate of Motorcycle by 33.33 percent.

ü  Decrease in Excise rate of Television receiver by 33.33 percent.

 

2.         Clarification – Clause (10), Addition

 

Brandy produced from the locally produced fruits by the industry in the very undeveloped sector shall be provided 80 percent rebate on the excise duty charged on the production.

 

 

 

 

 

 

 

 

 

 

 

 

A.                Income Tax rate for Natural Person

 

A.1      Income Tax rate for Individual Natural Person

 

S. No.	Particulars	2063-64 (NRs.)	2064-65 (NRs.)	2065-66 (NRs.)	2066-67 (NRs.)	2067-68 (NRs.)
1.	Tax Exemption limit to individual 1% social security tax form 2066-67	100,000	115,000	115,000	160,000	160,000
2.	Tax Exemption limit to individual having pension income 1% social security tax form 2066-67	125,000	143,750	143,750	200,000	200,000
3.	Tax Exemption limit to handicapped individual except for income year 2066-67 1% social security tax for 2066-67	150,000	172,500	172,500	240,000	240,000
	Tax Rates Social Security Tax @ 1% on Basic Exemption Limit First NRs. 75,000.00 First NRs. 85,000.00 First NRs. 100,000.00 Balance Amount If taxable income is more than NRs. 2,500,000.00 (40% tax on tax amount calculated as per the slab of 25% tax rate)	-   15% - - 25% -	- -   15% - 25% -	- -   15% - 25% -	1% - - - 15% 25% -	1% - -   15% 25% 10%
	Special charges	1.5% under the slab of 25% tax rate	1.5% under the slab of 25% tax rate	Withdrawn	Withdrawn	Withdrawn

 

 

 

 

 

 

A.2      Income Tax rate for Couple

S. No.	Particulars	2063-64 (NRs.)	2064-65 (NRs.)	2065-66 (NRs.)	2066-67 (NRs.)	2067-68 (NRs.)
1.	Tax Exemption limit to couple 1% social security tax form 2066-67	125,000	140,000	140,000	200,000	200,000
2.	Tax Exemption limit to individual having pension income 1% social security tax form 2066-67	156,250	175,000	175,000	250,000	250,000
3.	Tax Exemption limit to handicapped couples 1% social security tax form 2066-67	187,500	210,000	210,000	300,000	300,000
	Tax Rates Social Security Tax @ 1% on Basic Exemption Limit First NRs. 75,000.00 First NRs. 85,000.00 First NRs. 100,000.00 Balance Amount If taxable income is more than NRs. 2,500,000.00 (40% tax on tax amount calculated under the slab of 25% tax rate)	-   15% - - 25% -	- - - 15% - 25% -	- - - 15% - 25% -	1% - - - 15% 25% -	1% - -         15% 25% 10%
	Special charges	1.5% under the slab of 25% tax rate	1.5% under the slab of 25% tax rate	Withdrawn	Withdrawn	Withdrawn

 

 

 

 

 

 

 

A.3      Special provisions applicable for individual and couple

S. No.	Particulars	2063-64 (NRs.)	2064-65 (NRs.)	2065-66 (NRs.)	2066-67 (NRs.)	2067-68 (NRs.)
1	Tax rebate has been provided to the women who have remuneration income only.	-	-	10%	10%	10%
2	Foreign allowance for Nepalese staff working in Different Embassy	-	75% deduction allowed	75% deduction allowed	75% deduction allowed	75% deduction allowed
3	Life Insurance		7% of the sum or the insured amount or NRs. 10,000 whichever is lower	Paid Premium amount or NRs 20,000 whichever is lower	Paid Premium amount or NRs 20,000 whichever is lower	Paid Premium amount or NRs 20,000 whichever is lower
4	Remote allowance reduction for 5 class of remote area specified by IRD.	Up to 30,000.00	Up to 30,000.00	Up to 30,000.00	Up to 30,000.00	Up to 50,000.00
5	Natural person conducting special industries during the whole income year	20%	20%	20%	20%	20%
6	Income earned by natural person from export	20%	20%	20%	20%	15%  rebate on 25% tax slab
7	Non- resident person	25%	25%	25%	25%	25%

B.        Corporate Tax Rates for Entity

B.1      For Bank, Financial Institution and Co-operatives

 

S. N	Particulars	2063-64	2064-65	2065-66	2066-67	2067-68
1	Bank, Financial Institutions, or General Insurance Business	30%	30%	30%	30%	30%
2	Co-operative Society established under Co-operative Act, 2048 conducting other than those tax exempt transactions	20%	20%	20%	20%	20%

 

B.2      Special Industries

S. N	Particulars	2063-64	2064-65	2065-66	2066-67	2067-68
1	Special Industry, Entity engaged in the construction of road, bridge, tunnel, rope-way, or flying bridge, operation of any trolley bus, or train	20%	20%	20%	20%	20%
2	Projects (building of public infrastructure, own operate and transfer to HMG), Power Generation, transmission, or distribution	20%	20%	20%	20%	20%
3	Any Entity operating as special Industry in whole year as per Section11 of I. Tax Act 2058	20%	20%	20%	20%	20%
4	Special industry and IT industry  providing direct employment to 300(two year back 500) or more Nepali citizens	90% of the applicable tax rate (i.e. 18%)	90% of the applicable tax rate (i.e. 18%)	90% of the applicable tax rate (i.e. 18%)	90% of the applicable tax rate (i.e. 18%)	90% of the applicable tax rate (i.e. 18%)
5	Special Industry Providing direct employment to 1200 or more Nepali Citizen	90% of the applicable tax rate (i.e. 18%)	90% of the applicable tax rate (i.e. 18%)	90% of the applicable tax rate (i.e. 18%)	80% of the applicable tax rate (i.e. 16%)	80% of the applicable tax rate (i.e. 16%)
6	Special industry providing direct employment to 100 or more Nepali citizen including women, dalits and disabled in the proportion of 33%	20%	20%	20%	80% of the applicable tax rate (i.e. 16%)	80% of the applicable tax rate (i.e. 16%)
7	Special industry operating in following regions have following tax rates for first 10 years: a.  Underdeveloped Regions   b.  Undeveloped Regions   c.  Partly developed Regions	a.70% of applicable tax rate (i.e. 14%)   b.75% of applicable tax rate (i.e. 15%)   c. 80% of applicable tax rate (i.e. 16%)	a. 70% of applicable tax rate (i.e. 14%)   b. 75% of applicable tax rate (i.e. 15%)   c. 80% of applicable tax rate (i.e. 16%)	a. 70% of applicable tax rate (i.e. 14%)   b. 75% of applicable tax rate (i.e. 15%)   c. 80% of applicable tax rate (i.e. 16%)	a. 50% of applicable tax rate (i.e. 10%)   b. 70% of applicable tax rate (i.e. 14%)   c. 75% of applicable tax rate (i.e. 15%)	a. 10% of applicable tax rate (i.e. 2%)   b. 20% of applicable tax rate (i.e. 4%)   c. 30% of applicable tax rate (i.e. 6%)
8	Entities (Manufacturing, Tourism, Hydro electricity production, distribution and transmission) listed in Securities Market	25%	25%	25%	25%	90% of applicable tax rate (i.e. 22.5%)

B.3      General provisions for entity

 

S. N	Particulars	2063-64	2064-65	2065-66	2066-67	2067-68
1	Entities producing cigarette, bidi, cigar, tobacco, khaini, liquor, beer	30%	30%	30%	30%	30%
2	Entity engaged in  petroleum operations under the 1983 Nepal Petroleum Act	30%	30%	30%	30%	30%
3	Other Firms, Companies	25%	25%	25%	25%	25%
4	Small and low income entrepreneurs NRs 2 Lac income or NRs 20 Lac transactions - Metropolis /Sub metropolis - Municipality - Others	Per Annum NRs.     2,000 1,500 1 000	Per Annum NRs.     2,000 1,500 1 000	Per Annum NRs.     5,000 2,500 1,500	Per Annum NRs.     5,000 2,500 1,500	Per Annum NRs.     35,00 2,000 1,250
5	Additional Tax	1.5%	1.5%	Withdrawn	Withdrawn	Withdrawn

 

B.4      Concession tax rate for other entity

 

S. N	Particulars	2063-64	2064-65	2065-66	2066-67	2067-68
1	Industries established in Special Economic Zone situated in mountainous districts and hilly districts prescribed by Nepal Government  - For the first 10 years - After such period	Tax Exempt 50% of the applicable tax rate	Tax Exempt 50% of the applicable tax rate	Tax Exempt 50% of the applicable tax rate	Tax Exempt 50% of the applicable tax rate	Tax Exempt 50% of the applicable tax rate
2	Industries established in Special Economic Zone situated in other regions - For the first 5 years - After such period		Tax Exempt 50% of the applicable tax rate	Tax Exempt 50% of the applicable tax rate	Tax Exempt 50% of the applicable tax rate	Tax Exempt 50% of the applicable tax rate
3	Industry established in Remote Areas	Tax Exempt for first 10 years	Tax Exempt for first 10 years	Tax Exempt for first 10 years	Tax Exempt for first 10 years	Tax Exempt for first 10 years
4	Income from Foreign technology and management service fee and royalty of Foreign investor in Special Economic Zone		Tax Exempt 50%  of the applicable tax rate	Tax Exempt 50%  of the applicable tax rate	Tax Exempt 50%  of the applicable tax rate	Tax Exempt 50%  of the applicable tax rate
5	IT industry established within IT Park, biotech park and technology park as specified in the Gazette	25% tax rebate on applicable tax rate	25% tax rebate on applicable tax rate	25% tax rebate on applicable tax rate	25% tax rebate on applicable tax rate	50% tax rebate on applicable tax rate

 

B.5      Rate for non-resident person

           

S. N	Particulars	2063-64	2064-65	2065-66	2066-67	2067-68
1	Non-Residents Providing Shipping, Air Transport or Telecommunication Services	5% on turnover	5% on turnover	5% on turnover	5% on turnover	5% on turnover
2	Non-Residents Providing Shipping, Air Transport or Telecommunication Services within the Nepal	2% on turnover	2% on turnover	2% on turnover	2% on turnover	2% on turnover

 

 

 

ISBN No: 978-81-928510-1-3
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