Nepal Tax

Banskota & Co.
, Chartered Accountants Nepal tax provision 2011-12

Tel: +977-1-4440935, e-mail: cauprety@gmail.com Page 1

Contents
1. Heads of Income ==+ +- .......................................................................................................... 2
2. Types of Tax payer +-+ ++ ....................................................................................................... 2
3. Tax rates for individual |+= =a=: ++ - ................................................................................... 3
4. Presumptive taxation +- -+- + ................................................................................................... 8
5. Entities -+= .................................................................................................................................... 9
a. Rate of tax for entities -+=+ === =- ++ ........................................................................ 9
b. Concessional Rates of Tax =-==-+- ++ - ......................................................................... 10
c. Deductions for business +; -- +=- ...................................................................................... 14
d. Depreciation Rates -=+ - ................................................................................................. 15
6. Double Tax Avoidance Agreements (tax rates) - + =a ==~- ++ - ................................ 16
7. TDS provisions ............................................................................................................................... 16
a. TDS on employment === + +; ....................................................................................... 16
b. Tds rates + +;+ ............................................................................................................... 16
c. TDS on disposal of shares, land and buildings etc =, == :=+ -=== + +; ................. 18
d. Payments for which TDS not required to be deducted ~a- = + +; =- -+- =- .............. 19
e. Deposition of TDS += =|+ ++ ~a- .................................................................................. 20
f. Distribution of TDS certificate + +; +=-++ =+=+ ==- +- .................................................... 20
8. Due date for Returns of income == --- = =- +- =- ............................................................. 21
9. Due dates amount to be deposited while filing estimated tax
+--= =-=-- + = =- +- =- +=- ................................................................................. 21
10. Interest and Penalties -+ - == ................................................................................................. 22
11. Special Provision for women through FinanceAct. =-=+ == =+ |- : - =-- ................... 23
12. Health service tax ---= =- + ....................................................................................................... 23
13. Education service fee =- -+ ................................................................................................. 24
14. Contact .......................................................................................................................................... 25

Banskota & Co., Chartered Accountants Nepal tax provision 2011-12

1. Heads of Income ==+ +-
- Income from Employment === ==-
- Income from Business =-=== ==-
- Income from investment ==-= ==-
- Income from windfall gains =+-=+ =~= ==-

2. Types of Tax payer +-+ ++

Natural Person ++-+ =a Entity -+=
Individual |+= =a
Couple =+a c-= =-
++-+ =a
Sole proprietorship |+==
+=
Partnership firm =~ +=
Trust ==
Company +=+-
V.D.C. =-=
Municipality -=+=+
D.D.C. ==
Government of Nepal -+= =+
Foreign Government =+
An organization established
under any treaty or agreement
=-== ==s-
Foreign Permanent Establishment
-= =-+-


3. Tax rates for individual |+= =a=: ++ -
a. Slab For Individual/ Couple/ Sole proprietorship business
|+= =a / =+a / |+== +==: --=
For individual
|+= =a
For couple
=+a
Tax rates
++
Up to 160,000
-, ===
Up to 200,000
-, ===
1%** (SST)
Next 100,000
+ , =
Next 100,000
+ , =
15%
Balance up to Rs. 25 lacs
- = ===
Balance up to 25 lacs
- = ===
25%
Excess of Rs. 25 lacs
-,, ~ t ===
Excess of Rs. 25 lacs
-,, ~ t ===
35%
(25%+25%*40%)
** a) 1% SST to be deducted only to the extent of employment income of a
natural person having income from employment, business and
investment and not to be deducted on the income in excess of such
employment income.
==, =-== - ==-= =- == -- ++-+ =a+ -+= === ~|+
==+ ===== +-- + =- == == -~|+ =--= =a +-- +
-=-
b) Not applicable for sole proprietorship business. |+== += - ~|+
+-+ -+= =+a === |+ +-- + -=-
c) 1% tax, also called Social Security Tax, should be deposited in a
separate revenue account. === =|+ % += c; =-- -= === =- +-

b. Resident Female = =-=
In case of resident female taxpayer having employment income only, rebate
of 10% shall be allowed on the total tax liability.
+- = ++-+ =a +=+ == =+ ==- =- =-= -c ~- =-- ++-+ =a=
-- +- + +== +-- c= --c

c. Non-resident individual = = ++-+ =a
The taxable income of a non-resident individual for an income-year is taxed
at the rate of 25 percent = = ++-+ =a+ +- == -+ +== === +-==
+--+ = + =- c


d. Concessional tax rates for natural person =-==- ++
Income from special business specified in sec 11.
+ = =-=- - === ==== +- ==
20% slab rate instead
of 25%
Income from export -+== ~|+ +== == 20%

e. Gains from disposal of Non-business Chargeable Assets = =-==+
+== ==+a+ -==+ =~= +
Land and building**
== - -= ~--
- If owned for more than 5 years
- --=- - ~ t ~|+ c ~-
- If owned for less than 5 years
-=- - ~ += -+ c ~-

2.5%

5%
Gains of transaction in commodity future market
Sdf]l86L o'r/ dfs]{6df ePsf] nfe
10%
Gains on disposal of listed securities
+-++ -:= ==+- ~|+ -+=+ --+ -=== +-
=~
5%
Gains on disposal of non-listed securities
+-++ -:= ==+- -~|+ -+=+ --+ -=== +-
=~=
10%
** Private Land and building are deemed to be Non-business chargeable
assets if it has been disposed for a sum of Rs. 30 lacs or less and in case of a
private residence of an individual which has been owned by him
continuously for 3 years or more or resided by him continuously or
intermittently for 3 years or more.

== - ~--+ ==+= = =-==+ +== ==+a : +- ++-+ =a+ =--c- --
- - = ~ t =-+ --=-= -+ - = =a= =--c- - +=+ +=+ = +=
--- - = ~ t = = =+ +- -= ~--, - |+ +: += ~ += =-== -==
=+ == - -= ~--


f. Income from windfall gains =+-=+ =~ = ==-
Income from windfall gains means lottery, gift, prize, baksis, award for
wining (jitauri) and other similar types of gains. Such incomes are taxed at
the rate of 25% and are final withholding payments.
=+-=+ =~ = =ss, =+-, +-+, +==, =- - == +- +- =+-=+ +=
+- -- =~=: =-=c =-- =~= +- === - +--+ = ~a-+ ==== +
+; =- +c =-- += =-= += + +; -- ~a- =-- ~|+= =-- += ===
=== =- +-
g. Deductions ==- +=- +=-
i. Retirement contribution to an Approved Retirement fund
--+- =-+ + ==- -

Retirement contribution to an Approved Retirement fund is allowed
as a deduction subject to the limit of Rs. 300,000 or 1/3
rd
of
assessable income, whichever is lesser.
--+- =-+ ++ --++ ++ -+ =a= + - == -= = += =+
=-+ ==- =+- +== ==+ =-- =, =-+ ==- - = -
=+- -+-== ==+ |+ --:= =- = -c = - =- =+- c

ii. Donation =
Donation given to exempt organisation + c= +|+ =--=: :|+
= =+-
Donation given to an approved tax-exempt organisation is
deductible subject to a limit of Rs. 100,000 or 5% of adjustable
taxable income, whichever is lower.+- =a= +- == -= --+-
+- + c= +=- =-=: ==+- |+ += - |+ = += - =
=a+ = -+ ====- +== ==+ += +--== =- = -c = +=
=: =- =+- c
ii. Remote area allowance == + ~a -- c=
Location
+
Deductions Rs. (P.a)
c=+ +- -
Area A 50,000
Area B 40,000
Area C 30,000
Area D 20,000
Area E 10,000


iii. Foreign Allowance Deduction -+ ~a c=
75% of Foreign Allowances received by employees of diplomatic
mission of Nepal shall be deduced from the total taxable income.
-+=+ - -- +=--+ -=== +=- +==+ -+ ~a+ +=-a
+-- += +== === =: + -- +== =+ ++ =-- =- c

iv. Additional deduction for pensioners ---~- == ~|+ =
++-+ =a=: + c=
A resident individual earning pension income is allowed additional
deduction of 25% of Rs. 160,000 for individual and Rs. 200,000 for
couple or such pension income, whichever is less.
---~- == ~|+ = ++-+ =a+ == -, |+= =a+
-+= - -, =+a c-= =- ++-+ =a+ -+= + +-== +--
- ---~- == == += += === ==- +=- c-

v. Deductions for resident differently-able persons =+: =
++-+ =a=: c=
50% of the basic exemption limit (Rs. 160,000 for individual and
Rs. 200,000 for couple) is allowed as deduction incase of resident
differently-able persons.
+- = ++-+ =a =+: -c ~- =-- ++-+ =a+ == -,
|+= =a+ -+= - -, =+a c-= =- ++-+ =a+ -+= +
+== +-- + += +== === =: -+ -- +== =+ ++ =--
=- c

vi. Life insurance premium ==- =-- = =+ =a
A deduction of the amount paid by a resident natural person for life
insurance or Rs. 20,000 whichever is less is allowed while
calculating taxable income.
+- = ++-+ =a= ==- = =+ -c ~- = -+- ~a- =+
-+ +=== - -= -= += = =- = -c = += +== === =:
+ -- +== =+ ++ =-- =- c


h. Tax credit + ==-
a) Medical Tax Credit (med-claim) =+ =+= +- + ==-
A resident individual can claim a tax credit of an amount incurred for
medical expenses upto a limit of Rs. 750 or 15% of approved medical
expenses, whichever is lower.+- = ++-+ =a= =+ =+= +- +
==-+ += === --+- =+ =+= = +=+ ++ +--+ = -- += -
== =- = -c = += =: =- =+- c

b) Foreign tax Credit -+ + ==-
A resident person may claim foreign tax credit for any foreign income
tax paid during a year.
+- = =a= +- == -= = =+ +- - ==+ = =a+
-+-== - == +- = =|+ ++ -=== = == -= = -
==+ +- + ==-+ =- =+- c


4. Presumptive taxation +- -+- +
a. Small tax payers =- + -
A resident individual whose income consists exclusively from
business having source in Nepal and the income or turnover does not
exceed Rs. 200,000 or Rs. 2,000,000, as the case may be, and he
elects to apply this provision, provided he does not claim medical tax
credit and credit for TDS withheld is taxable as follows:
-+== =- ~|+ =-=== +- == =+ ~|+ |- =+ =+= = === +
+; -+- + ==- =- - -=+ |- =-=== +- == -,
=-==+ + -,, ~ t -~|+ =+-= == -= = =-- ==
-- = c-= =+ = ++-+ =a+ -+= -=- === + =- c :

Location of Business
=-== ~|+ +
Tax Amount (Rs.)p.a
++ +- -
Metropolitan or Sub- Metropolitan Cities
=--=+=+ - =+=--=+=+ +
3,500
Municipalities -=+=+ + 2,000
Other places == +- --= 1,200

b. Vehicle owners ~:+ =-=+- +--
Owners of Vehicle plying vehicle on hire shall be taxed as follows:
~:+ =-=+- +--= -= ===+ -+ + === =- c :
Type of vehicle
=- =+-+ ++
Tax Amount (Rs.)p.a
++ +- -
Mini-bus, Mini-truck, Truck and Bus
=-=, =- =+, =+ =
1,500
Car, Jeep, Van, Micro-bus
+, =+, -=-, =:+ =
1,200
Three-wheeler, Auto-rickshaw, Tempo
--=, == +=, ==+
850
Tractor, Power Tiller
=+= +- ==
750


5. Entities -+=
a. Rate of tax for entities -+=+ === =- ++
S. No Type of business
-+=+ -
Tax rates
++
1. General Business entities.
=== =-== =- -+=
25%
2. Entities involved in producing Tobacco and Alcohol related
products.
=-== === === ===- =- -+=
30%
3. Banking and Financial Institutions, and Insurance companies
+, a= =-, -= =-== =- -+=
30%
4. Entity engaged in petroleum business.
+==== += =- -+=
30%
5. Special industries.
- === ===- =- -+=
20%
6. Entities engaged in operating any road, bridge, tunnel, rope-
way, or fly-overs constructed by the entity or engaged in
operation of trolley bus and trams.
=:+, +=, =-=, +- - =+ += -=- = ===- =- -+=, - ==
= - == ===- =- -+=
20%
7. Entities engaged in Co-operative business, other than tax
exempt cooperatives.
+ c= -++ =-+ =- = ==- =- -+=
20%
8. Income derived by an entity from export having a source in
Nepal.
-+=+ =-= -+= = == +- =- -+=
20%
9. Entity wholly engaged in building public infrastructure, and
owning, operating and transferring (BOOT) it to the
Government of Nepal.
=-=-+ +-+ ==-+ -=- - ===- = -+= =+=:
----- =- ===-
20%
10. Entities engaged in generation, transmission, or distribution
of electricity.
=- =- -=-, =+- +=- == =-- -+=
20%
11. Estate of a deceased resident individual or trust of an
incapacitated resident individual.

+- =- = =a+ ==+a +- =- - =- - =a =
++-+ =a+ ==

Same rate
of tax as
was
applicable
to the

deceased
or
incapacitat
ed
individual.

b. Concessional Rates of Tax =-==-+- ++ -
S. No Type of business
-+=+ -
Tax rates
++
1. Agricultural income derived from sources in Nepal other than
the income from an agriculture business derived by a
registered firm, or company, or partnership, or a corporate
body, or through the land holding above the ceiling as
prescribed in the Land Act, 2021.
+- +=, +=+-, =~ += - ==s- =-+ += - = +
=-== = +- =+ === ~===+ |-, -- + + - + -:
z = =-= ~| ===+ === + =-==-= +- ~|+ -+
== + ==-

NIL
2. Incomes derived by cooperative societies, registered under
Cooperative Act, 2048 (1991), from business mainly based
on agriculture and forest products such as sericulture and silk
production, horticulture and fruit processing, animal
husbandry, diary industries, poultry farming, fishery, tea
gardening and processing, coffee farming and processing,
herbiculture and herb processing, vegetable seeds farming,
bee-keeping, honey production, rubber farming, floriculture
and production and forestry related business such as lease-
hold forestry, agro-forestry, cold storage established for the
storage of vegetables and business of agricultural seeds,
insecticide, fertilizer and agricultural tools (other than
machine operated)and rural community based saving &
credit cooperatives and Dividends distributed by such
societies.
=-+ |-, -= === - ~: ===- ~|+ + - -- +-=
=+- = - - = =+-, +=+= - =+- - +=+=
++-, ++=-, : ===, ++=-, =-=+=-, == - - ++-,
++ - - ++-, =:-= - - ++-, -++ -= -=-
=+-, =+=-, =- =+-, -, +-==- --, |=+ = =
NIL

=-==+ -- ==+ =-==- =-- + - --== ===-, -+
~-:+ == -+- - ~-:, +==+ -= -=-, + =-, -,
+=-+ =+, == - + = = =++ a= =---+ +
+- =- =-+ =- - ==- ==== =+- =- - =-
=-+ =- - =+ == + -=-
3. Special industries providing direct employment to following
number of Nepali citizens during each day of the year:
- ~ -=- =r== -+= -=+=: += == - ===:
300 or more - = ~ -t

1200 or more - - = ~ -t

100 or more (including 33% women, dalits and
differently-able persons) - = ~ -t = ==
+=-= =-=, =- =+:

18%

16%

16%
4. Information technology companies providing direct
employment to six hundred or more Nepali citizens during
each day of the year:
- ~ -=- =r== -+= -=+=: += == - ==- ++
===:
300 or more - = ~ -t

1200 or more - - = ~ -t

100 or more (including 33% women, dalits and
differently-able persons) - = ~ -t = ==
+=-= =-=, =- =+:

22.5%

20%

20%

5. Special industries operating in a remote area.
=- =-+- += ===- -- - ===

2% for 10
years
6. Special industries operating in an undeveloped area.
=-+=-+= ===- -- - ===

4% for 10
years
7. Special industries operating in an underdeveloped area.
=-+-+=- += ===- -- - ===

6% for 10
years
8. Industries established in special economic zones of
Mountainous districts and specified Hilly districts (industries
0% for
first 10

specified in sec.3 of Industrial Enterprises Act, 1992).
-== =-= -+= =+= -++ +-: =-=+ =+ +=
-+- === ===+ =-== |-, - + + = =-=- ===

years, and
10%
thereafter
9. Special economic zones in other areas (industries specified in
sec.3 of Industrial Enterprises Act, 1992).
== ++ =+ += -+- === ===+ =-== |-, -
+ + = =-=- ===

0% for
first 5
years, and
10%
thereafter
10. Entities engaged in the exploration and extraction of
petroleum and natural gas and operating before Chaitra 2075.
- =+=== =++ +- ===- =- +==== - ++-+ ==
=-- - =-- =- ===

0% for
first 7
years, and
50%
rebate for
the next 3
years
11. Entities engaged in software development, data processing,
cyber caf, digital mapping business in the Information
Technology parks established by Government of Nepal by
publication in the Official Gazette .
-+= =+= -+= =++= ==- ++- = - + + =+-== ++, =
=+ ++ ==- +-+ ++ ~+ =+=-= -+=, -=+ ++-, =:-
+=+, :=== ==+= ==+ ===

12.5%
12.a Entities engaged in production, or production and
transmission ,or production and transmission ,or production,
transmission and distribution of electricity, which
commercially start production, transmission, or distribution
of electricity before Chaitra 2075. (including solar, wind and
bio gas energy).
-=-+ =+-, +=-, --- =- =-=- +- =a= ==- - =+
=--=== =++ += ==-=-+ =+-, =+- +=-, =+-
--- - =+-, +=- --- == ==, -= - =-+ +=
=+- -- -=- ==-

0% for
first 7
years, and
50%
rebate for
the next 3
years
12.b Entities commencing their work within Bhadra 7, 2071 and
producing electricity by Chaitra 2075.

==- - == ~ =- ~+ -=- +=~ =- ==-=- ===-=
==- - == =+ =--=== =++ += ==-=-+ =+- =
0% for
first 10
years, and
50%

=+ ===

rebate for
the next 5
years
12.c Entities that obtained license before 2058/12/19 and
generating power by Ashad 2066.
-=- = =-=-++ +- ~|+ - --- =t ==- ~+
=+- += = =+ ===

0% for 15
years from
COD
12.d Entities generating electricity after Ashad 2066 but before
Chaitra 2075, whenever the license may be obtained.

=-=-++ =-= +| +-, --- =t ==- +c - - =+ ==- =
=+- += = =+ ===
0% for
first 7
years from
COD,
50%
rebate for
the next 3
years
12.e Entities that obtained license after 2058/12/19 and generating
power after Ashad 2066 but before Chaitra 2075.

-=- = =-=-++ +- ~|+ - --- =t ==- ~+
=+- += = =+ ===

0% for
first 7
years of
COD,
50%
rebate for
the next 3
years
12.f Entities that obtained license after 2058/12/19 and generating
power before Ashad 2066.
-=- +c =-=-++ +- ~|+ , --- =t ==- ~+ =+-
+= = =+ ===
No
concession
13. Income from export of goods manufactured by a
manufacturing industry.
=+-==+ ==== =+- =+ --- -=- == + - ===
25%
Rebate
14. Entities involved in building and operation of roads, bridges,
airports, and tunnel ways.
=:+, +=, -=--=, = = == -=- ===- == == +- ===
40%
Rebate
15. Income earned by an entity on investing and operation of
trams and trolley bus.
==, ==-== ==- = ===- == = = +- ===
40%
Rebate
16. Listed entities engaged in manufacturing sector, tourism
sector and generation, transmission and distribution
10%
Rebate

hydroelectricity and entities specified in sec 11(3d).
+-++ == ==+- ~|+ =+-==+, +==- =-, ==-=- =+-,
--- - ====- =- + + = = =-= ~|+ -+=
17. Entities established in remote areas and engaged in
production of brandy, cider and wine from fruits.

=- =-+=- += -+- +=+== =+- -:, =:: |-= -:-
=+- =- == =
40%
Rebate for
the first 10
years of
start of
business
18. Royalty earned on export of Intellectual properties.
+- =a= :+ ==+a -=- -+- +- =-= ===

18.75%
19. Income earned by sale of intellectual properties.
+- =a= -:+ ==+a+ -----: -+ = +- =+ ===

12.5%
20. Repatriation of income of a foreign permanent establishment
of a non-resident person situated in Nepal.
+- = = =a+ -+=-- - -= =-+-= - +s|+
===

5%
21. Non-residents Providing Shipping, Air Transportation or
Telecommunications Services within Nepal.
-+= =+== =+ - ==+= +- = +-- --- == =+, --:
=-=- - == =- =+=+ ==- = =+ +== ===

5%
22. Non-residents Providing Shipping, Air Transportation or
Telecommunications Services outside of Nepal.
-+= =+== =+ - ==+= +- = +-- -- == =-=-,
--:=-=- - == =- =+=+ ==- = -= =a+ -+=
2%

c. Deductions for business +; -- +=-
- General Deductions === +=
- Interest ==
- Cost of Trading Stock =+ =-+ ==-+ =
- Repair and Improvement Costs ==- - =+ =
- Pollution Control Costs +- -=+- =
- Research and Development Costs =-=+- -+= =
- Depreciation Allowances -=+= =
- Losses from a Business or Investment =-== - ==-= -+=-

d. Depreciation Rates -=+ -
Pool Details Rate
A Buildings, structures, and similar works of a permanent nature
~--, -=+= -= ++-+ =-- +++ == -=-
5%
B Computers, data handling equipment, fixtures, office furniture, and
office equipment
+===, -=: +==- =++-, +-=, ++-= +=== =++--
25%
C Automobiles, buses, and minibuses
===:-=, = - =-=-
20%
D Construction and earth-moving equipment, unabsorbed pollution
control cost and research and development cost and any depreciable
asset not included in another class of assets
-=- - =-- ==+ =++-- += -~|+ +- -=+- = =-=+-
-+= = == +- ==- --|+ -= == ==+a-
15%
E Intangible assets other than depreciable assets included in Class "D"
-= = =-= ~|+ -=== ==+a- -++ == ==+a-
**
** rate in percentage calculated as the cost of assets divided by the useful life of
the asset in the pool most recently acquired by the person and rounded down to
the nearest half year.
==+a =+ -= =a ==+a+ ==-=: ==+a+ +==-+= ~= = -+=-= =+ -=
==- = -- ==- +--=


6. Double Tax Avoidance Agreements (tax rates)
- + =a ==~- ++ -
S.No. Country Dividend tax Tax on Interest Royalty tax
1. India 10%, 15% 10%, 15% Not more than 15%
2. Norway 5%, 10%, 15% 10%, 15% Not more than 15%
3. Thailand 15% 10%, 15% Not more than 15%
4. Srilanka 15% 10%, 15% Not more than 15%
5. Mauritius 5%, 10%, 15% 10%, 15% Not more than 15%
6. Austria 5%, 10%, 15% 10%, 15% Not more than 15%
7. Pakistan 10%, 15% 10%, 15% Not more than 15%
8. China 10% 10% Not more than 15%
9. South Korea 5%, 10%, 15% 10% Not more than 15%
10. Qatar 10% 10% Not more than 15%

7. TDS provisions
a. TDS on employment === + +;
An employer shall deduct TDS on the amount payable to the employees
after allowing reduction of medical tax credit, if any. Such TDS shall be
withheld on a monthly basis as is equal to the annual tax liability divided by
12.
+- ==-= +==-= =+ =+= -+- + ==- =- +=- ~| ===: ==- =,
+ +=+= =- ++ ==-+ -=-= ==+ += === + +; =- +-

b. Tds rates + +;+
S.No. Details of payment
~a-+ +==
TDS Rate
+;+
Final or not
1. Interest having source in Nepal.
=== == ~a-
15% Non final
2. Payment for natural resources, royalty, service
fees, sales bonus.
++-+ -, =-=, =- -+, +=- - -+ --=
=
15% Non final
3. Meeting allowance, part time teaching
allowance.
15% Final

-s+ ~a, +=+ += =|+ ==+- =| +-+ ~ a-
4. Payment from approved retirement fund
exceeding the higher of 50% of retirement fund
or Rs.500,000.
-+= =+ - --+- =-+ += ~|+ =-+
~a-= ,, - +-- == =- t -c
= =: + -- ~a-
5% Final
5. Payment of commission by resident employer
company to a non resident.
-= == +=+-= = -= =a=: ~a- =+
+=-
5% Final
6. Payment relating to lease of airplane.
-==-+ == +; -+-+ += ~a-
10% Non final
7. Service fee to service provider registered in
VAT.
=-= =~-: += - ~|+ =-+=+ -= =a=:
~a- =+ =- -+
1.5% Non-final
8. Payment of rent relating to land and building,
including furnishing and fittings, to natural
person not relating to business.
++-+ =a+ =-==== ==-+- -~|+ ==
--== ==| -+-+ ~: = == -+ ==-=+
==-+ |+== ~:
10% Final
9. Payment of rent having a source in Nepal to
others.
-+== =- ~|+ ~: ==
10% Non-final
10. Dividend
=~
5% Final
11. Gain from investment insurance
==- -=+ =~
5% Final
12. Gain from unapproved insurance
--+- -=|+ =-+ += =~+ ~a-
5% Final
13. Interest, not relating to business, paid to natural
person by resident bank, financial institution,
institutions issuing debentures, or listed
companies on deposits, debentures and
government bonds.
-+== =- ~|+ =-== ===-== ==+- -~|+
-:= = +, -a= =- - =-++ = =- ==
+- -+= - +==- +-- === ==+- ~|+
+=+-= +- ++-+ =a=: -+, =-++, :-= -
5% Final

=+ --:+ +- ~a- =- ==
14. Income from windfall gains.
=+-=+ =~
25% Final
15. Contractual payment exceeding Rs. 50,000.
+ - s++ -+- , ~ -t +=+ ~a-
1.5% Non-final
16. Contractual payment made to Nonresident.
= -= =a=: ~a- -- =- ==+ s++ -
+=
15% Final
17. Repair and other contracts of airplane made to
Non-resident.
= -= =a=: ~a- -- -==- ==- - ==
s++ - +=
5% Final
18. Other payment made to non residents.
= -= =a=: -- == ~a-=
As per the
direction of
the
department
Final

c. TDS on disposal of shares, land and buildings etc
=, == :=+ -=== + +;
S.No. Details of payment
~a-+ +==
TDS Rate
+;+
Final or
not
1. Gain on transaction in commodity future market
+=:= o'r/ dfs]{6df ePsf] nfe
10% Non-final
2. Gain on disposal of listed security of a resident
entity:
+-++ -:= ==+- ~|+ -+=+ --+ -=== +-
=~

-received by natural persons
+++ -= ++-+=a+ -+=

- received by others
==+ -+=

5%

10%

Final

Non-final
3. Gains from disposal of not listed securities
+-++ -:= ==+- -~|+ -+=+ --+ -===
+- =~=

-received by natural persons +++ -= ++-+
=a+ -+=

10%

Final


- received by others
==+ -+=

15%

Non- final
4. Capital gains on disposal of land and/ or
building by a natural person
+- ++-+ =a+ - == -== -+- ~|+
+==- =~=

- If Ownership of 5 years or more --=-
- ~ t ~|+ c ~-

- If ownership is less than 5 years --=-
- ~ += -+ c ~-

2.5%

5%

Final

Final

d. Payments for which TDS not required to be deducted
~a- = + +; =- -+- =-
- Payments made by an individual other than in conducting a business, or
payment of rent for the lease of a building, including goods and equipments
therein.
++-+ =a= =+ =-== ===-== ==+- ~ a- - , == === =:- ==-
- =++- ~:= =| +- -+ ~: -++ == +- ~a-

- Payment made to person contributing articles in a newspapers and
magazines
+++++= ++- = =- -+-+ ~a-

- Payment made for preparation of question paper or checking of answer
sheets.
+-++ -= = - =a +--+ == = -+-+ ~a-

- Interest paid to resident banks or resident financial institutions.
= + - = = -a= =-=: -+ ==

- Payment of tax exempt income.
+ c= +|+ ~a-

- Inter-regional interchange fee payment to banks issuing Credit Cards.
+:= +: = =- -+=: -+ :-==-= :-=== -+


- Interest and fees payable by Government of Nepal to a Foreign Government
or an International organization as per a bilateral agreement.
-+= =+ - =+ - -+= =+ + ~|+ =-== =- -= ~|+ +- ==~-
=== -+= =+= - =+ - =-== =-=: ~a- =+ == - -+

- Interest upto Rs. 10,000 p.a. made by micro finance, cooperatives etc, based
in a rural community.
==- ==== =+- = -a =-, ==- -+= +, -=+ =- + |-+ + -
=== =-+= === =+ -+= ==- -+ -= +====+ == ~a-

- Re-insurance premium paid to Non-resident insurance company.
= -= =a=: ~a- -- +-= +===

e. Deposition of TDS += =|+ ++ ~a-

Details of TDS to be filed and the sum deposited in the designated bank
accounts within 25
th
day of the next Nepali month
=== + +; =- +- +=+ =a= +=+ =-- ==- ~|+ - - ~+, - = =-
+- + +; =|+ += ~== - =-- - = ==- -- += = =- +-

The deductor and decductee jointly and severally liable for deposition of
TDS, if TDS not deducted or if the deducted TDS is not deposited in the
prescribed manner.
+ +; -== - + +; =+ =-- += -~== = -== === + +; -- =a
= === + +; =- =a - =- ==a += c;c; += = + += -~== =
=- ===- --

f. Distribution of TDS certificate + +; +=-++ =+=+ ==- +-

In case of TDS on
employment

== === + +;
==+=
30 days after the end of the year or, where
the employee has ceased employment with
the withholding agent during the year, no
more than 30 days from the date on which
the employment ceased.
- ==- ~|+ =-= -= -~+ =+=+ =:
=+-+-c - = -= = +=== = === + +;
=- =a+= == =- c:+ ~| = ==
c:+ =-= -= -~+ = +=-++ =+=+ ==-

+-c

TDS deduction in other
cases
== + +;+ -+=
A withholding certificate shall be
delivered within 15 days after the end of
the month specifying the period for which
tax is withheld.
=== + +; =+ =-+ =: === + +; =+
=-- ==- ~|+ =-= ++ -~+ === + +;
+=-++ +- =- +-c

8. Due date for Returns of income == --- = =- +- =-
Tax return to be filed not later than 3 months (Ashoj) after the end of each
income year, which can be extended further upto 3 months (Poush) by
submitting a written request to the department
== - ==- ~|+ -- =-- === === ~+= -~== -++ --= == --- =
=- +-c -- =--=== == + =- =+-c -~= == + ==+ == =- ---
|= -~== ==--- = =- +- == =-- =+ === + =- =+- c

9. Due dates amount to be deposited while filing estimated tax
+--= =-=-- + = =- +- =- +=-

Installment
+--
Due Date
= =- +- =-
Amount
1
st
By the end of Poush
+ =--+ =====
40% of the estimated tax.
=-=-- ++ % +=
2
nd
By the end of Chaitra
=+ =--+ =====
=-=-- ++ % +=
3
rd
By the end of Ashad
=t =--+ =====
=-=-- ++ % +=

Where the amount of total installments to be paid is less than Rs 5,000,
estimated tax installments need not be paid.
~=- +- === +--+ === += += -= += ~ += ~|= =-- +--+ +=
~=- +- c -

10. Interest and Penalties -+ - ==
Failure to file Statements of
estimated tax
+- == -+ =-=-- == ---
= -==
Rs. 2,000 per statement

+- --- : -= +=
Failure to file Return of Income
+- == -+ == --- =
-==
For Small tax payers =- + -+ -+=
Rs. 100 per month |+ == += +- =--

For other tax payers == +-+ -+=
0.1% p.a of assessable income without
allowing for any deductions or Rs. 100 per
month, whichever is higher
+- += -+=: + - += ==- =- +- ~| =
==- = -- -+-== ==+ +=+ ==
== |+ +-- +- -+ = -- += - |+ ==
+= +- =--+ = -- +=== =- t -c =
+=
Failure to maintain required
documents
+- =a= +- == - r- +-
+==- -=
0.1% of assessable income without allowing
for any deductions or Rs. 1,000 whichever is
higher.
+- += -+=: -+-== ==+ = ==- |+
+--= -- += - |+ -= += == =- t -c
= +=
Withholding agent who fails to
file a statement

=== + +; =- +- |=-== ---
+ -==
1.5% p.a of the tax required to be withheld
for every month or part thereof during which
the failure persists.
+=+ =-- =--+ ~=+ == === + +; =-
+- + +=+ -+ :t +--+ = -- +=
Interest for Understating
Estimated Installment
+--= = =-= += =-=--
+ -- = ~|= =- ==

15% p.a on the shortfall in the payment of
estimated tax installments
+--= + ~=- +- += += ~|= = +=
~|+ +=+ -+ % +--+ = -- +=
Interest for Failure to Pay Tax

+ -~|= == =-
15% p.a of the outstanding amount for every
month or part thereof of such delay
-+ -+ +== +=+ =-- =--+ ~== -+
% +--+ = -- +=
Penalty for Making False or
Misleading Statements
~; - ~=+- --- = =-=:
=- -+


- If made without
knowingly or recklessly
=-=- - =+-+-+
-=+

- If made knowingly or
recklessly =-=- -
=+-+-+ =+

- 50% of such underpayment
= + +=+ +== +--

- 100% of such underpayment
= + +=+ |+ == +--
11. Special Provision for women through Finance Act. =-=+ == =+ |-
: - =--
Where the title of the land and building is transferred to a female, in
whatever manner, then rebate on the registration fees is allowed as follows:
=-=+ ++= =-=+ -== --=- +- -- = +- -- =-= == |- ===
==:|+ == ==- --= -=- c= --c :
- In case of municipal areas 25%
-= ++ ~| - +--

- In case of V.D.C 30%
=-= ++ ~|= +--

12. Health service tax ---= =- +

- Health service tax is levied and collected on services of entities other than
Government hospitals and Public hospitals. 5% tax is levied on the invoice
value issued by such entities.
-+= =+= +- =- ---= =- ===+ =-+-=-== +- =- ---= =- -++
== -+=-== +- =- ---= =--== = =+ =-=+ += +--+ = ---= =-
+ ==:- ====+ =-c

- Such tax shall be collected by the natural persons, instutions or entities by
issuing tax invoice.
=- + =-- =- +- =- =a, =- - -+== =+ = = ====+ =- +-c

- The details of such tax shall be filed on trimester basis within 25 days of the
end of such trimester.

=+ --- ===+ =+= +=+ ===+ =-+ ==- ~|+ +-== -~+ ==+-
=-+ =-- +==== = =- +-c

- Interest and fees -+ - ==
If tax is not deposited within the
specified time
==~+ + = -==
15% p.a
If the return is not submitted within
time.
--- = -==
Rs. 1,000 per return

13. Education service fee =- -+
- 1% Education service fee is levied and collected on admission fee and
monthly tuition fee of all Private education institutions providing education
service above Higher Secondary Level and educational institutions situated
in Kathmandu valley, sub-metropolitan cities, municipality, district
headquarters and areas specified by the IRD of respective areas.
-= += ===- ~+ =-= ===+ ~ =+ +- =- - =--=,
+s=: =+=+~+ - =+=--=+=+, -=+=+ =-= ==+=-- =-=
===+ ===+ +- =- - =--== === =- ~- -+ ==+ -
-+= |+ +--+ = =- -+==:- ====+ =-c

- Education service fee shall be collected by such educational institutions by
issuing a tax invoice.
=- -+ =-- - =--== =+ = = ====+ =- +-c

- Educational institutions collecting Education service fee shall submit the
details of such fees and deposit such fees with 25 days of the end of every
trimester in the IRD department or the in the District Treasury Office.
=- -+ === =- - =-= === =+ += =+ --- ===+ += +=+
===+ =-+ ==- ~|+ +-== -~+ =-+ =-- +=== ~|+ =-== =
+==== =-+ =-- +=== -~|+ =-== + - = -=++ +==== =
=- +-c


- Interest and fees -+ - ==
If tax is not deposited within the
specified time.
==~+ + = -==
15% p.a
If return is not submitted within time.
--- = -==
Rs. 1,000 per return

- 1% Education service fee shall be levied and collected from the students
departing for abroad study at the time of providing foreign exchange.
- ===- =- =- -==: - -+ +- - =+ ==- =-+ =-- ==-
+== |+ +-- =- -+ ==:-c ====+ =-c

14. Contact
Shailendra Uprety, ACA
Partner
Banskota & Company
Chartered Accountants
46, New Plaza Road
Putalisadak Kathmandu, Nepal
P.o. Box.: 5637
Tel: +977-1-4440935
Fax:+977-1-4440928
e-mail: cauprety@gmail.com

Disclaimer: This booklet is for general information purposes only. The information on this booklet consists of
materials which have been obtained from Income Tax Act 2058, IT Rules 2059 and manuals and material from similar sources. However, this
does not constitute advice or guidance. We encourage users to cross-check the information before taking any action thereon. We accept no
liability for the results of any action taken on the basis of the Information provided in this booklet. Information in this booklet is not offered as
advice on any particular matter and must not be treated as a substitute for specific advice.

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Nepal Tax

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Banskota & Co.

, Chartered Accountants Nepal tax provision 2011-12

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