chhatramani/Nepal-Legal-Text-Corpus-44laws huggingface dataset:
Income Tax Act 2058

Chapter 10 Special Provisions for Entities

Section 58 : Provision restricting reduction of dividend tax
1) An arrangement made by any entity upon maintaining all of the following arrangements shall be deemed to have made an arrangement made for reducing dividend tax:-
a) Where the profit of such entity is reserved, current or expected,
b) Where any person who acquires an interest in the entity and the recipient of the interest or his/ her associated person makes any payment to the present or previous beneficiary of the entity or his associated person, irrespective of whether or not it is related to the acquisition of interest and whether or not it is made at the time of acquisition of interest,
c) Where the payment is fully or partly reflected in the profits of the entity, and
d) Where the entity distributes dividends to the recipient of interest after the recipient of interest has acquired interest from the entity and the profits cover the dividends fully or partly.
2) If dividends are distributed by any entity under an arrangement reducing dividend tax made pursuant to sub-section (1), the arrangement shall be deemed to be as follows:-
a) Payment made by the recipient of interest or his/her associated person shall not be deemed as payment made by that person but as distribution by that entity of dividends to the previous or present beneficiary as referred to in clause (b).
b) The dividends distributed by that entity to the recipient of interest shall be deemed as equal to a sum to be set by subtracting the amount of payment said to have been made from the dividends as referred to in clause (a).

Income Tax Act 2058

Chapter 11 Special Provisions on Banking and Insurance Business

Section 59 : Banking business
1) In computing the income or loss made by any person carrying on a banking business from that business in any income year, it shall be separately computed as if the banking business were a business distinct from any other business carried on by that person.
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1A) Amount up to five percent of the amount of loan due to be recovered kept in the risk-bearing fund by the person operating the banking business, and the amount managed for non-banking property shall be deducted as expenses, subject to the standards prescribed by the Nepal Rastra Bank.
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1B) Amount up to five percent of the amount of loan due to be recovered kept in the risk-bearing fund by a cooperative organisation shall be deducted as expenses.
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1C) If expenses are accounted from the profits where the risk-bearing fund is maintained pursuant to sub-sections (1A) and (1B), the same shall not be remitted, and if the amount held in such fund is capitalised or profit or dividend is distributed, its shall be included in the income in the year in which it is distributed.
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2) ……
3) ……
1 Inserted by the Financial Act, 2075.
2 Removed by the Financial Act, 2075.
Income Tax Act 2058

Chapter 11 Special Provisions on Banking and Insurance Business

Section 60 : General insurance business
1) In computing the income or loss made by any person carrying on a general insurance business from that business in any income year, it shall be separately computed as if the insurance business were a business distinct from any other business carried on by that person.
2) In computing the income of any person carrying on the insurance business in any income year, it shall be done as follows:-
a) In income, in addition to any other amounts required to be included, the following amounts, as well, have to be included:-
(1) Amounts for premium of insurance including premium for reinsurance received by that person from that business in that year, and
(2) Amounts received in that year from payments referred to in sub-clause (1) of clause (b) for any contract of reinsurance, security, guarantee or compensation.
b) In expenses, in addition to the amounts that can be deducted, the following amounts, as well, maybe deducted:-
(1) Payments made by that person as an insurer in operating that business in that year and
(2) The premiums included pursuant to subclause (1) of clause (a) in computing the income earned from that business in that year or last year and returned to the insured in that year.
3) Sum of the following amounts kept in the risk-bearing fund:
a) Amount up to fifty percent of the net insurance cost shown in the profit and loss account of any year, and
b) Amount up to one hundred and fifteen percent of the remaining amount for payment of claim at the end of any year.
Provided that the amount received as a deduction in expenses in any year pursuant to this sub-clause in the income of the insurance business in a forthcoming income year.
1
3) .
1
4) 
1 Removed by the Financial Act, 2075.
Income Tax Act 2058

Chapter 11 Special Provisions on Banking and Insurance Business

Section 61 : Investment insurance business
1) In computing the income or loss made by any person carrying on an investment insurance business from that business in any income year, it shall be separately computed as if the investment insurance business were a business distinct from any other business carried on by that person.
2) It shall be as follows In computing the income of any person carrying on the investment insurance business in any income year, it shall be as follows:-
a) Except the following amounts, other amounts that can be included pursuant to this Act have to be included:
(1) Amounts reinsurance for premium of insurance including premium received by that person in operating that business in that income year, and
(2) Amounts received in that year from payments referred to in sub-clause (1) of clause (b) for any contract of reinsurance, security, guarantee or compensation.
b) Except the following amounts, other amounts that can be deducted pursuant to this Act have to be deducted:
(1) The payments made by any person as an insurer in operating that business and
(2) Premiums referred to in sub-clause (1) of clause (a) returned to the insured.
3) The amounts referred to in sub-clauses (1) and (2) of clause (a) of sub-section (2) and sub-clauses (1) and (2) of clause (b) of sub-section (2) shall not be considered as incomes and expenses for the property or liability of that person.
4) The investment insurance agreement of the investment insurance business of any person shall not be deemed as the property and liability of that person.

Income Tax Act 2058

Chapter 11 Special Provisions on Banking and Insurance Business

Section 62 : Amount received from insurance
1) For purposes of computing the income of any person, the provisions contained in Section 31 shall apply in respect of the amount received by that person from insurance.
2) Notwithstanding anything contained in sub-section (1), the following provisions shall apply in respect of the profits made from investment insurance:-
a)If a resident person makes payment of such amount, tax shall be imposed on the insured through final tax deduction and
b) If a non-resident person makes payment of such amount, it shall be computed by including that amount in the income of the insured.
Explanation:
For purposes of this Section, “profits made from investment insurance” means the excess sums of payment received by any person for investment insurance in respect of that insurance over the premiums paid by that person.
Income Tax Act 2058

Chapter 12 Special Provisions on Retirement Saving

Section 63 : Approval of retirement fund
1) If a resident person who desires to hold a retirement fund makes an application to the Department for having the retirement fund, the Department shall give approval as prescribed.
Provided that such funds as the Citizens Investment Trust formed under the Citizen Investment Fund Act, 2047 or the Social Security Fund formed under the Contribution-Based Social Security Fund Act, 2074, if it wishes to maintain a retirement fund, the Employee Provident Fund Act, 2019 or the Retirement Fund formed under the Retirement Fund Act, 2075 operates a retirement fund, it shall not be required to obtain approval for such fund.
2) A natural person who is a beneficiary of the retirement fund may make a claim to have the retirement contribution made to the fund in any income year deducted while computing his income.
3) Notwithstanding anything contained in sub-section (2), the amount claimed by any person for deduction in any income year pursuant to that sub-section shall not exceed the prescribed limit of retirement contribution.

Income Tax Act 2058

Chapter 12 Special Provisions on Retirement Saving

Section 64 : Tax in retirement fund
1) For purposes of assessing the income of the retirement fund, the amounts to be included or deducted pursuant to this Act shall be included or deducted in computing the income.
Provided that,-
(a) Contributions made to the fund shall not be the income of the fund, and such contributions shall not be included in computation.
(b) Retirement payments shall not be the expenses of the fund and such payments shall not be deducted in computing the income.
(c) Interest of any beneficiary in the retirement fund shall not be a liability of the fund.
2) No tax shall be levied in the income of the retirement fund.
3) If any retirement fund ceases to remain in the form of such fund, such fund has to pay tax at the rate mentioned in sub-section (1) of Section 2 of Schedule I by subtracting the amount referred to in clause (b) from the amount referred to in clause (a).
a) All retirement contributions paid to the fund between the period from the date when the fund got approval as a retirement fund and the date when the recognition ceased to exist and all income amounts treated as taxable incomes in cases where sub-section (2) is not applicable,
b) All retirement payments made by the fund between the period from the date when the fund got approval as a retirement fund and the date when the recognition ceased to exist.
Income Tax Act 2058

Chapter 12 Special Provisions on Retirement Saving

Section 65 : Retirement payments
1) For purposes of computing retirement payment income earned by any natural person from the interest based on contribution held in any approved retirement fund or retirement payment from the Government of Nepal, the following provisions shall apply:-
a) Retirement payments made by the fund for the interest in the fund have to be included in the income and
b) Notwithstanding anything contained in clause (a), if such payment is made in a lump sum, the payment to be set by subtracting fifty percent of the paid amount or five hundred thousand rupees, whichever is higher, from the amount so paid shall be deemed as the profit made by the person from the disposal of his non-business taxable assets.
2) For purposes of computing the profit made by any natural person from the interest in any retirement fund that has not obtained approval, the following provisions shall apply:-
a) Where a resident person has made the payment, tax shall be imposed on the beneficiary in that amount as withholding of tax finally, and
b) Where a non-resident person has made the payment, that amount has to be included in computing the income of the beneficiary.
Explanation:
For purposes of this Section, “profit made from the interest in any retirement fund that has not obtained approval’ means if retirement payments made from a retirement fund which has not obtained approval to a beneficiary natural person for his interest in the fund exceed the amounts of retirement contributions paid by that person to that fund for his interest in the fund, the amount to the extent of such excess.
Provided that payment made from any non-contributory fund shall not be considered as benefit from an interest held in the retirement fund not approved.

Income Tax Act 2058

Chapter 12 Special Provisions on Retirement Saving

Section 66:
1
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1 Repealed by the Financial Act, 2075.
Income Tax Act 2058

Chapter 13 International Tax

Section 68 : Foreign permanent establishments
1) Notwithstanding anything contained in Section 3, any foreign permanent establishment of a nonresident person situated in Nepal shall be liable to pay the tax payable on the income of such establishment, subject to other provisions of this Act.
2) The income of a person having ownership of a foreign permanent establishment shall be separated from the income of that establishment, pursuant to Section 69.
3) Tax shall be imposed on the permanent establishment referred to in clause (b) of Section 3 in the income sent abroad by the foreign permanent establishment of a non-resident person situated in Nepal.
4) The income sent abroad in any income year by the foreign permanent establishment of a non-resident person situated in Nepal shall be equal to the amount of dividends distributed by that foreign permanent establishment in that year.
Income Tax Act 2058

Chapter 13 International Tax

Section 70 : Tax chargeable on non-resident person providing water traveling/rafting, air transport or telecommunications service in Nepal
1) The taxable income of any non-resident person who operates water travelling, charter service or air transport in any income year shall consist of the amounts derived from the following acts except the amounts derived from trans-shipment in that year:-
a) Carriage of passengers departing from Nepal, or
b) Carriage of the mail, animals or goods dispatched from Nepal.
2) The taxable income of any non-resident person who carries on a business of cable, radio, optical fibre or satellite communication in any income year shall consist of the amounts derived from the dispatch of news or information through any device established in Nepal, whether originated in Nepal or not.
3) Tax shall be levied on the amounts to be included in the taxable income of any non-resident person pursuant to sub-section (1) or (2) at the rate specified in sub-section (7) of Section 2 of Schedule I.
Provided that, –
a) Those amounts need not be computed in computing the tax payable in respect of any due taxable income of that person,
b) The expenses related to the computation of those amounts shall not be allowed to be deducted in computing that due taxable income and
c) That person shall not be entitled to any facility of tax adjustment from the amount of tax payable by that person.
Explanation: For purposes of this Section, “non-resident person” means a resident entity within the group of associated entities with head offices outside Nepal.
Income Tax Act 2058

Chapter 13 International Tax

Section 71 : Foreign tax adjustment
1) Any resident person may claim for adjustment of tax for the foreign income tax paid by that person in any income year to the extent of the tax paid for assessable foreign income of that person in that year.
2) When computing the foreign tax adjustment claimed pursuant to sub-section (1), it shall be done as follows:-
a) Separate computation has to be done for assessable foreign income having source in each country and
b) Foreign tax adjustment claim shall not be made, in respect of the assessable foreign income, at the rate of tax higher than the average rate of tax of Nepal payable by that person in that year in respect of each computation.
3) Any foreign income tax paid in respect of the assessable foreign income of any year who is not entitled to foreign tax adjustment facility pursuant to sub-section (1) by virtue of the limit provided for in clause (b) of sub-section (2) may be dealt with as follows:-
a) It may be carried forward in the coming year, and
b) It shall be deemed to be paid in respect of the assessable foreign income in the future income year of the person having a source in the country where such foreign income has been earned.
4) Notwithstanding anything contained in sub-section (1), any person may give up a claim for foreign tax adjustment to which he is entitled in any income year and also claim for credit for foreign income tax for which such adjustment facility is available in that year.
Explanation:
For purposes of this Section,-
(a) “Assessable foreign income” means the following income to be included in the assessable income earned by any resident person in any income year from any employment, business or investment:-
(1) Income earned from a foreign source, or
(2) Income of a non-resident person deemed as distributed to that resident person under Section 69, irrespective of the source.
(b) “Average rate of tax of Nepal” means the rate resulting from the division of tax amount to be paid by the person referred to in clause (a) of Section 3 in any income year, prior to adjustment of any foreign tax of that person in that year, by his or her taxable income of that year and multiplication by one hundred.
Income Tax Act 2058

Chapter 14 Tax Administration and Authentic Docunments

Section 73 : International agreements
1) If any income of any person is taxable pursuant to this Act or the laws in force and the same income is also taxable in a foreign country, the Government of Nepal may conclude an international agreement with the foreign country for the avoidance of double taxation.
2) This sub-section shall be applicable in cases where, pursuant to any international agreement concluded with Nepal, the competent authority of the other country requests the Department to collect in Nepal the amount payable by any person who is in arrears of that amount, pursuant to the taxation law of that other country.
3) If sub-section (2) is applicable, the Department may, for the purpose of sending that amount to that competent authority, send a notice in writing to the person who is in arrears of tax and require him to pay such amount to the Department within the date mentioned in that notice.
4) This sub-section shall be applicable in cases where any international agreement contains a provision under which Nepal has to exempt income or payment or has to apply the reduced tax rate to income or payment.
5) If sub-section (4) is applicable, any of the following entities shall not be entitled to enjoy tax exemption or tax deduction facility:-
a) An entity that is considered a resident of the other party of the agreement for purposes of the agreement and
b) Where fifty percent or more portion of the vested ownership of that entity is owned by natural persons or by the entities in which any natural person has no interest and, for purposes of the agreement, the persons or entities are residents of both Nepal and of the other country party to the agreement.
Explanation:
For purposes of this Section, “international agreement’ means any treaty or agreement containing the following provisions, concluded with any foreign government and applicable to Nepal:
(a) To avoid double taxation and prevent fiscal evasion, or
(b) To render reciprocal administrative assistance in the implementation of tax liability.

Income Tax Act 2058

Chapter 14 Tax Administration and Authentic Docunments

Section 74 : Taxpayer’s rights
1) The taxpayer shall fulfil the duties referred to in this Act.
2) In the context of paying tax pursuant to this Act, a taxpayer shall have the following rights:-
a) The right to be treated with honour,
b) The right to receive information on tax-related matters pursuant to the laws in force,
c) The right to have an opportunity to furnish proof in defense on tax-related matters,
d) The right to appoint a legal practitioner or auditor for defence and
e) The right to have tax related secret matters inviolable except as otherwise mentioned in this Act.
Explanation:
For purposes of this Section, “taxpayer” means a person on whom tax is imposed and collected as mentioned in Section 3.
Income Tax Act 2058

Chapter 14 Tax Administration and Authentic Docunments

Section 75 : Public circular
1) In order to bring about uniformity in the implementation of this Act, simplify tax administration, and give guidelines to the officers of the Department as well as the persons affected by this Act, the Department may issue written public circulars accompanied by explanations, on the provisions made in this Act.
2) The Department may publish and transmit the circular issued pursuant to sub-section (1) on the website of the Department or a newspaper of the national level or other electronic means for the information of the punlic.
3) The Department shall be compelled to take action according to the circular issued pursuant to sub-section (1) unless and until such circular is revoked.

Income Tax Act 2058

Chapter 14 Tax Administration and Authentic Docunments

Section 76 : Advance ruling
1) If any person makes an application in writing to the Department for the removal of any confusion as to the application of this Act to any arrangement proposed or accepted by such person, the Department may issue its version by an advance ruling as prescribed, by notifying the person in writing.
2) Notwithstanding anything contained in sub-section (1), the Department shall not be entitled to issue an advance ruling referred to in sub-section (1) on any matter of confusion that occurred in the implementation of this Act in cases where such matter is
sub judice
in the court or has already been decided by the court.
3) In cases where any person acts as follows prior to the issuance of an advance ruling pursuant to sub-section (1), the Department shall be compelled to implement this Act as per that ruling until the ruling issued to that person remains valid:-
a) If the full and actual statements of the matter related to that ruling are presented to the Department and
b) f the arrangement corresponds to the point mentioned in the application made by that person for the ruling.
4) In cases where the public circular issued pursuant to Section 75 and the advance ruling issued pursuant to sub-section (1) are mutually contradictory, priority shall be given to the matters mentioned in the advance ruling in the case of the person to whom such ruling has been issued.
5) Prior to the issuance of the advance ruling pursuant to sub-section (1), the Department may give an opportunity to the applicant to furnish further statements, if any, in person or through his representative.