chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Income Tax Act, 2002

Explanation: For the purpose of this section, "non-resident person" means a resident entity within a group of associated entities whose principal office is outside Nepal. 71. Foreign tax adjustment: (1) A resident person who has deposited any foreign income tax in any income year may claim an adjustment for such foreign income tax in that year, to the extent of the tax deposited in respect of that person's determinable foreign income.

(2) When calculating the foreign tax adjustment claimed under sub-section (1), the following shall be done:

(a) a separate calculation shall be made for the determinable foreign income sourced in each country, and

(b) in respect of each calculation, the claim for such foreign tax adjustment shall not exceed the tax rate that is higher than the average rate of Nepal tax for that person in that year, in respect of the determinable foreign income.

(3) Any foreign income tax deposited by a person in respect of determinable foreign income for which the benefit of foreign tax adjustment under sub-section (1) is not available due to the limit provided in clause (b) of sub-section (2) may be:

(a) carried forward to the following year, and

(b) deemed to have been deposited in respect of that person's future income year's determinable foreign income sourced in the country where such foreign income arose.

(4) Notwithstanding anything contained in sub-section (1), for any income year, a person may forgo the claim for foreign tax adjustment available in that year and instead claim the amount in respect of such foreign income tax as an expense. Explanation: For the purpose of this section,-

(a) "determinable foreign income" means the income from any employment, business, or investment of a resident person in any income year that is included in that person's determinable income, as follows:

(1) income from a foreign source, or

(2) income of a non-resident person deemed to be distributed to that resident person under Section 69, regardless of the source.

amended by the Finance Act, 2075.(b) "average rate of Nepal tax" means the rate arrived at by dividing the tax amount payable under clause (a) of Section 3 by that person in that year, prior to any foreign tax adjustment, by that person's taxable income for that income year, and multiplying the result by one hundred. Chapter-14

Tax Administration and Official Documents

72.
Income Tax Act, 2002

Offices with prescribed jurisdiction shall function as parts of the Department.

(3) The Department may have the following officers and other employees:

(a) Director General,

(b) required number of Deputy Directors General, Chief Tax Administrators, Directors, Chief Tax Officers, Tax Officers, and other officers, and

(c) other employees.

(4) Subject to the directions given by the Government of Nepal, the Director General may:

(a) exercise any power conferred on the Department under this Act,

(b) subject to sub-sections (5) and (6), delegate the power under clause (a) to another officer for exercise,

(c) except for issuing a public circular under Section 75, prescribing documents under Section 77, suspending or otherwise affecting a reviewable decision under sub-section (5) of Section 115, accepting or rejecting wholly or partly the matters mentioned in an application made by a person under sub-section (7) of Section 115, adding and compounding an offence under Section 129, or authorizing an officer under Section 82, designate that all or some powers be exercised by any officer or employee of the civil service.

(5) Subject to the directions given by the Government of Nepal or the Director General, the Deputy Director General, Chief Tax Administrator, Director, Chief Tax Officer, and Tax Officer serving as the head of an office may:

(a) exercise powers other than issuing a public circular under Section 75, prescribing documents under Section 77, suspending or otherwise affecting a reviewable decision under sub-section (5) of Section 115, accepting or rejecting wholly or partly the matters mentioned in an application made by a person under sub-section (7) of Section 115, or adding and compounding an offence under Section 129, among the powers conferred on the Department under this Act, and

(b) subject to sub-section (6), delegate such power to another officer of the Department for exercise.

(6) An officer of the Department other than the Director General, Deputy Director General, Chief Tax Administrator, Director, Chief Tax Officer, or Tax Officer serving as the head of an office may:

(a) exercise any delegated power among the powers of the Department, except the following powers:

(1) issuing a public circular under Section 75, prescribing documents under Section 77, suspending or otherwise affecting a reviewable decision under sub-section (5) of Section 115, accepting or rejecting wholly or partly the matters mentioned in an application made by a person under sub-section (7) of Section 115, or adding and compounding an offence under Section 129, or

(2) authorizing an officer under Section 82 or issuing a notice under Section 109, and

(b) shall not re-delegate any power delegated to him. 73.
Income Tax Act, 2002

73. International agreements: (1) If there is a provision for tax to be levied on any income of a person under this Act or prevailing law, and if the same income is also subject to tax in a foreign country, the Government of Nepal may enter into an international agreement with a foreign government to avoid such double taxation.

(2) This sub-section shall apply if the competent authority of another country, in accordance with an international agreement concluded with Nepal, requests the Department to collect in Nepal an amount payable by a person who has an outstanding liability under the tax law of that other country.

(3) In a case where sub-section (2) applies, the Department may, for the purpose of remitting that amount to the competent authority, notify such person having the tax arrears in writing, requiring that person to deposit such amount in the Department within the date specified in such notice.

(4) This sub-section shall apply if an international agreement provides for Nepal to grant exemption on income or payments, or to apply a reduced rate of tax on income or payments.

(5) In a case where sub-section (4) applies, an entity shall not be eligible for tax exemption or tax deduction facility if:

(a) the entity is deemed to be a resident of the other state party to that agreement for the purposes of that agreement, and

(b) fifty percent or more of the beneficial ownership of that entity is held by natural persons or by entities in which no natural person has an interest, and for the purposes of that agreement, those persons or entities are not residents of either the other state party to that agreement or Nepal. Explanation: For the purpose of this section, "international agreement" means any treaty or agreement entered into with a foreign government that is in force for Nepal, providing for:

(a) relief from double taxation and prevention of financial evasion, or

(b) mutual administrative assistance in the enforcement of tax liability. 74. Rights of a taxpayer: amended by the Finance Act, 2075.(1) A taxpayer shall comply with the duties under this Act.

(2) A taxpayer shall have the following rights in the context of paying tax under this Act:

(a) right to respectful treatment,

(b) right to receive information on tax matters in accordance with prevailing law,

(c) right to an opportunity to present evidence of innocence in tax matters,

(d) right to appoint a legal practitioner or auditor for defence, and

(e) right that tax-related confidential matters shall be inviolable except as provided in this Act.
Income Tax Act, 2002

Explanation: For the purpose of this section, "taxpayer" means a person on whom tax is levied and collected as referred to in Section 3. 75. Public circulars: (1) The Department may issue written public circulars with interpretations regarding the provisions of this Act, to bring uniformity in the implementation of this Act, simplify tax administration, and provide guidance to officers of the Department and persons affected by this Act.

(2) The Department may publish and disseminate the circulars issued under sub-section (1) for public information on the Department's website, in national level newspapers, or through other electronic means.

(3) The Department shall be bound to act in accordance with a circular issued under sub-section (1) until such circular is revoked. 76. Advance ruling: (1) If a person submits a written application to the Department for resolution of any doubt regarding the application of this Act in relation to any proposed or assumed arrangement by him, the Department may, by notifying that person in writing, issue its view by an advance ruling as prescribed.

(2) Notwithstanding anything contained in sub-section (1), if any matter relating to a doubt arising in the implementation of this Act is pending before a court or has already been decided by a court, the Department shall not issue an advance ruling under sub-section (1) on such matter.

(3) If a person has done the following before the issuance of an advance ruling under sub-section (1), the Department shall be bound to implement this Act in accordance with such ruling while it remains in effect for that person:

(a) submitted a complete and true description of the subject matter related to that ruling to the Department, and

(b) the arrangement is in accordance with the points mentioned in the application made by that person for that ruling.

(4) In case of conflict between a public circular issued under Section 75 and an advance ruling issued under sub-section (1), the matters mentioned in the advance ruling shall prevail for the person to whom the advance ruling was issued.

(5) Before issuing an advance ruling under sub-section (1), the Department may give the applicant an opportunity to appear in person or through a representative to submit any missing details if any. Added by the Finance Act, 2081.(6) The Department shall be bound to act in accordance with an advance ruling issued under sub-section (1) until such advance ruling is revoked. 77.
Income Tax Act, 2002

Added by the Finance Act, 2081.(6) The Department shall be bound to act in accordance with an advance ruling issued under sub-section (1) until such advance ruling is revoked. 77. Format of documents: (1) The Department may, from time to time, prescribe the necessary documents, details including income statements, the method and format for submitting tax deduction details, and the format of records, so as to include the notices, details, and information required under this Act and the rules made thereunder, as well as for the effective implementation of this Act.

(2) The Department shall make the formats under sub-section (1) available for public information at the Department, at other places determined by the Department, and through other means. Added by the Finance Act, 2075.(3) The Department may prescribe that any notice, detail, or document required to be submitted to the Department by a person shall be submitted through electronic means. 78. Permanent Account Number: amended by the Finance Act, 2075.(1) Subject to this Act, for the purpose of identifying a person, the Department shall issue a Permanent Account Number to such person. Provided that an entity approved by the Department may issue such Permanent Account Number following the procedure under this Act. A taxpayer receiving a Permanent Account Number so issued shall not be allowed to engage in import amended by the Finance Act, 2081.export transactions until the period prescribed by the Department.

(2) The Department may order any person to mention his Permanent Account Number in any income statement, detail, statement, or other document used for the purposes of this Act.

amended by the Finance Act, 2075.(3) The Department may prescribe the circumstances in which a person must show or mention the

(2) No officer shall exercise any power under sub-section (1) without obtaining written authorization from the Department.
Income Tax Act, 2002

If, when entering any premises or place by exercising a power under sub-section (1), the person in possession of such premises or place or the person having access to any relevant document or property requests to see the Department's authorization, such officer must show such authorization to them.

(3) If an officer of the Department entering any premises or place by exercising a power under sub-section (1) so requests, the person in possession of such premises or place or the person having access to the relevant documents or property must provide all appropriate facilities and assistance for the effective exercise of that power.

(4) The Department may retain documents or property seized under clause (c) or (d) of sub-section (1) for the following periods:

(a) in the case of any document seized under clause (c) of sub-section (1), for such period as is necessary for determining the tax liability of any person or for any other proceeding under this Act, and

(b) in the case of property seized under clause (d) of sub-section (1), until such time as access to the disputed document is obtained and it is not taken into possession.

(5) The person from whom documents have been seized under sub-section (4) may examine such documents and may, under the supervision as determined by the Department and at the cost of the person concerned, take copies or extracts of such documents within office hours.

(6) For the purpose of obtaining access to documents necessary for the implementation of this Act, the provisions contained in this section shall apply, notwithstanding any provision relating to privilege or public interest made in this regard. Explanation: For the purpose of this section, "person in possession" means, in relation to any premises or place, the owner, manager, or any other person present there. 83.
Income Tax Act, 2002

Explanation: For the purpose of this section, "person in possession" means, in relation to any premises or place, the owner, manager, or any other person present there. 83. Power to obtain information by notice: (1) The Department may, by issuing a written notice to any person, whether or not liable to pay tax under this Act, order that person to do the following:

(a) to submit, within the time specified in the notice, any information specified in the notice, including by preparing any document,

(b) to appear before an officer of the Department at the time and place specified in the notice for examination concerning the tax affairs of that person or any other person,

(c) to produce any document under the control of that person, as mentioned in the notice, for the purpose of examination at the time of that person's examination under clause (b).

(2) Any person examined under clause (b) of sub-section (1) shall have the right to be represented by legal or other representation throughout such examination.

(3) For the purpose of obtaining access to documents necessary for the implementation of this Act, the provisions contained in this section shall apply, notwithstanding any provision relating to privilege or public interest made in this regard. 84. Official secrecy: (1) Every officer and other employee of the Department shall keep confidential all documents and information that come into their possession or knowledge in the course of performing their duties under this Act.

(2) Notwithstanding anything contained in sub-section (1), an officer of the Department may disclose documents or information under sub-section (1) to the following persons and in the following manner:

(a) to the extent necessary for the officer to perform their duties under this Act,

(b) upon an order from any court or tribunal in connection with administrative review or proceedings under this Act,

(c) to the Minister of Finance,

(d) where disclosure is necessary for the purposes of any other financial law,

(e) to any person in the service of the Government of Nepal, to the extent necessary for revenue or statistical work,

(f) to the Auditor General or any person authorized by the Auditor General, where such disclosure is necessary in the course of performing official duties, or

(g) to the authorized officer of the government of any country with which Nepal has an international agreement, to the extent provided for in that agreement in this regard.

(3) Any person, court, tribunal, body, or officer receiving documents or information under sub-section (2) shall keep such documents or information confidential, except to the minimum extent necessary. Chapter-16
Payment of Tax

85.
Income Tax Act, 2002

Chapter-16
Payment of Tax

85. Time, place and manner of payment of tax: (1) Tax payable under this Act shall be paid at the place and in the manner prescribed Added by the Finance Act, 2075. and the Department may prescribe that such tax payable shall also be paid through electronic means.

(2) Tax payable under this Act shall, subject to sub-section (1), be paid at the following times:

(a) by a person required to deduct and deposit advance tax, at the time mentioned in sub-section (4) of section 90,

(b) by a person required to pay tax in installments, at the time mentioned in sub-section (1) of section 94,

(c) by a person required to pay assessed tax -

(1) in relation to a tax assessment under section 99, on the date on which the return of income is due to be submitted,

(2) in relation to a tax assessment made under sub-section (2) of section 100, within the period specified in the notice of assessment served under section 102,

(3) in relation to an amended tax assessment under section 101, within the period specified in the notice of assessment served under section 102,

(d) in relation to amounts payable to the Department pursuant to a notice issued under sub-section (8) of section 104, sub-section (1) of section 109, or sub-section (1) of section 110, on the date mentioned in that notice,

(e) in relation to a liability arising under sub-section (2) of section 107 by reason of an entity not paying tax, at the same time as the entity was required to pay the tax,

(f) in relation to an amount demanded under sub-section (3) or (4) of section 108, within seven days from the date of the auction sale and adjustment of the amount, or the date on which the amount could not be adjusted, as the case may be, and

(g) in relation to fees and interest assessed under section 122, on the date mentioned in the notice of assessment.

(3) The due date for payment of tax shall not be affected in the following circumstances:

(a) any action taken by the Department under Chapter-20 for recovery of tax, or

(b) commencement of any other proceeding under this Act. 86. Proof of tax payable: A certificate signed by an officer of the Department stating the name and address of a person and the amount of tax payable by that person shall be sufficient proof of the amount of tax payable by that person in the following proceedings:

(a) any action taken by the Department under Chapter-20 for recovery of tax, or

(b) any proceeding relating to an offense under Chapter-23.
Income Tax Act, 2002

Amended by the Finance Act, 2075.Provided that tax shall be deducted at the following rates on the following payments:

(1) in the case of a retirement payment made by the Government of Nepal or a contributory retirement payment from an approved retirement fund, at the rate of five percent on the benefit calculated in accordance with clause (b) of sub-section (1) of section 65,

(2) in the case of commission paid by a resident employment company to a non-resident person, at the rate of five percent,

(3) when making payment of the amount for aircraft lease (rental), at the rate of ten percent,

(4) in the case of service fee paid to a resident person providing services registered for value added tax or to a resident entity undertaking transactions exempt from value added tax, at the rate of one point five percent of the payment amount,

(5) in the case of a resident person making a payment of rent arising in Nepal, at the rate of ten percent,

Provided that,

(a) on the payment amount for the rental of such vehicle to a person registered for value added tax and engaged in the business of hiring out vehicles, tax shall be deducted at the rate of one point five percent.

(b) tax shall not be deducted on the amount received by a natural person as house rent.

(c) Omitted by the Finance Act, 2077

(6) in the case of payment of return amount distributed to a natural person from a mutual fund, at the rate of five percent,

(7) in the case of payment by a resident person for the use of satellite, bandwidth, optical fiber, telecommunication equipment or electricity transmission line, at the rate of ten percent,

(8) Omitted by the Finance Act, 2078

Provided that, on the payment amount to a person registered for value added tax and engaged in the business of providing transportation services or hiring out transport vehicles, tax shall be deducted at the rate of one point five percent. Added by the Finance Act, 2080.(9) in the case of interest payment by a resident bank or financial institution on loans taken in foreign currency from foreign banks or other financial institutions for investment in sectors specified by Nepal Rastra Bank, Amended by the Finance Act, 2078. at the rate of five percent, Added by the Finance Act, 2077. Added by the Finance Act, 2078.(9a) in the case of interest payment by a reservoir and semi-reservoir hydroelectric project of more than two hundred megawatts, which completes financial closure by Chaitra of the year 2082, on loans taken in foreign currency from foreign banks or other foreign financial institutions, at the rate of five percent.
Income Tax Act, 2002

Added by the Finance Act, 2077.(10) Tax shall not be deducted on the incentive amount provided to a consumer for making payment through electronic payment instruments such as payment cards, e-money (wallet), mobile banking, as per prevailing law, when purchasing goods and services. Added by the Finance Act, 2078.(11) when making payment of registration fee, tuition fee, and examination fee to a foreign school or university, at the rate of five percent of the payment amount. Added by the Finance Act, 2078.(12) in the case of interest paid by a resident bank or financial institution to a life insurance company on deposit, at the rate of five percent. Added by the Finance Act, 2079.(13) when making payment of royalty amount to a resident person for literary articles or compositions, at the rate of one point five percent of the payment amount. Amended by the Finance Act, 2075.(2) A resident person, when making the following payments arising in Nepal, shall deduct tax at the following rates:

(a) in the case of dividend payment, five percent of the payment amount,

(b) when making payment of investment insurance benefit, five percent of the payment amount, or

(c) when making benefit payment from an unapproved retirement fund, five percent of the benefit amount.

(3) Notwithstanding anything contained in sub-section (1), a resident bank, financial institution, cooperative, or any other entity issuing debentures, or a company listed under prevailing law, when making payment of interest or any amount on account of interest on deposits, debentures, debentures, and government bonds to any natural person, shall deduct tax at the rate of Amended by the Finance Act, 2080. six percent on the total payment amount:

(a) which arises in Nepal, and

(b) which is not related to the operation of a business.

(4) Notwithstanding anything contained in sub-sections (1), (2) and (3), this section shall not apply to the following payments:

Amended by the Finance Act, 2075.(a) any payment made by a natural person other than those related to the operation of a business,

Added by the Finance Act, 2075.(a1) payment for articles and compositions published in newspapers.

(b) interest paid to a resident bank or other resident financial institution, or

Omitted by the Finance Act, 2080.(b2)

(c) a payment exempt from tax or a payment from which tax is required to be deducted under section 87.

(d) interregional interchange fees paid to a credit card issuing bank,

(e) dividend and interest paid to a mutual fund. 88a. Deduction of tax on windfall gains: (1) Tax shall be deducted at the rate of twenty-five percent on payment on account of windfall gain.
Income Tax Act, 2002

88a. Deduction of tax on windfall gains: (1) Tax shall be deducted at the rate of twenty-five percent on payment on account of windfall gain. Provided that, the Government of Nepal may, by publishing a notice in the Nepal Gazette, grant exemption from windfall gain tax on national and international level awards received for contribution in the fields of literature, art, culture, sports, journalism, science, technology and public administration.

(2) Notwithstanding anything contained in sub-section (1), windfall gain tax shall not be levied on national and international level awards up to five hundred thousand rupees received for contribution in the fields of literature, art, culture, sports, journalism, science, technology and public administration. Added by the Finance Act, 2081.Provided that, if the award amount exceeds five hundred thousand rupees, windfall gain tax shall be levied on the excess amount. 89. Deduction of tax when making payment under contract or agreement: Amended by the Finance Act, 2075.(1) A resident person, when making a payment exceeding fifty thousand rupees on account of a contract or agreement, shall deduct tax at the rate of one point five percent of the total payment amount.

(2) To ascertain the amount mentioned in sub-section (1), if any other payments have been made in the preceding ten days to the person receiving payment or its related person under the same contract or agreement from the same person or its related person, such payments shall also be added and ascertained.

(3) Notwithstanding anything contained in sub-section (1), a resident person shall deduct tax at the following rates from payments made to any non-resident person under any contract or agreement:

Amended by the Finance Act, 2075.(a) Omitted by the Finance Act, 2077. five percent on contract or agreement,

(b) one point five percent on premium paid to a non-resident insurance company or on commission given from premium amount received from a non-resident insurance company on account of reinsurance,

(c) at the rate specified in the written notice, if the Department has given such notice to such resident person, other than as described in clause (a) or (b). Added by the Finance Act, 2081.Provided that this sub-section shall not apply to payments on account of purchase of weapons, ammunition and communication equipment purchased for their own purposes by the Nepali Army, Nepal Police and Armed Police Force.
Income Tax Act, 2002

Added by the Finance Act, 2081.Provided that this sub-section shall not apply to payments on account of purchase of weapons, ammunition and communication equipment purchased for their own purposes by the Nepali Army, Nepal Police and Armed Police Force. Added by the Finance Act, 2075.(3a.) Tax shall be deducted at the rate of one point five percent on payment amounts exceeding fifty lakh rupees made for the purpose of getting work done through a consumer committee.

(4) Notwithstanding anything contained in sub-section (1), this section shall not apply to the following payments:

Added by the Finance Act, 2075.(a) any payment made to a natural person not engaged in operating a business, other than rent paid for land, house, fittings and equipment installed in the house, arising in Nepal,

(b) a payment granted exemption from tax or a payment from which tax is required to be deducted under section 87, 88, or 88a. Added by the Finance Act, 2075.Explanation: For the purpose of this section, "contract or agreement" means an agreement or contract made for the supply of any goods or labor, or for the construction, installation or erection of tangible property or structure, and any work designated as a contract or agreement by the Department, and if such contract or agreement also covers services related to construction or installation or erection, it also denotes the payment for such services. 90. Details and payment of tax deducted: (1) Every person required to deduct advance tax shall submit a statement to the Department in the manner and format prescribed by the Department within twenty-five days after the end of each month.

(2) Along with the statement referred to in sub-section (1), the person deducting advance tax shall deposit with the Department the tax deducted or the amount deemed to have been deducted under sub-section (3) within the period mentioned in sub-section (1).

(3) If the person required to deduct advance tax has not deducted tax under Amended by the Finance Act, 2075. section 87, 88, 88a, or 89, the tax shall be deemed to have been deducted at the time when such deduction should have been made.

(4) Amended by the Finance Act, 2075. The amount of tax deducted under section 87, 88, 88a, or 89, or the amount deemed to have been deducted under sub-section (3), shall be deposited by the person deducting such advance tax, and in cases where sub-section (5) applies, the person from whom the tax is deducted shall deposit such tax within Added by the Finance Act, 2075. twenty-five days after the period mentioned in sub-section (1).
Income Tax Act, 2002

Added by the Finance Act, 2075.(4a) Notwithstanding anything contained in sub-section (4), Omitted by the Finance Act, 2076. a person paying tax on the basis of turnover under sub-section (4a) of section 4 of the Act shall deposit the advance tax deducted under Chapter-17 at the time of paying the installment tax.

(5) Amended by the Finance Act, 2075. In the following circumstances, both the person from whom advance tax is deductible and the person deducting such advance tax shall be jointly and severally liable to deposit such tax amount with the Department:

(a) if the person deducting advance tax fails to deduct tax from any payment under Amended by the Finance Act, 2075. section 87, 88, 88a, or 89, and

(b) if the person deducting advance tax fails to deposit with the Department the amount deemed to have been deducted under sub-section (3) within the date prescribed for tax deposit under sub-section (4).

(6) If the person deducting advance tax deducts tax under Amended by the Finance Act, 2075. section 87, 88, 88a, or 89 and deposits it with the Department, then, with respect to the payment from which such tax was deducted, any claim made by the person from whom the tax was deducted shall be treated as if the amount had been paid to that person.

(7) Amended by the Finance Act, 2075. If the person deducting advance tax deposits with the Department the amount of tax not deducted under section 87, 88, 88a, or 89, that person shall be entitled to recover an amount equal to the deposited tax amount from the person from whom such deduction should have been made. Added by the Finance Act, 2075.(8) If the Department is satisfied that any person has failed to deposit the statement or tax required to be deposited under sub-section (1) or (2), or that the condition of sub-section (5) exists with respect to any person, it may order the deposit of the amount not deposited or short-deposited, together with interest under section 119, Added by the Finance Act, 2077. and, in the case of failure to deduct tax on a payment from which advance tax should have been deducted, also a fee under section 120. Provided that, before giving such order, the Department shall give a written notice affording a period of fifteen days to show cause and submit evidence of defense with respect to the order, specifying the appropriate reason. 91.
Income Tax Act, 2002

Provided that, before giving such order, the Department shall give a written notice affording a period of fifteen days to show cause and submit evidence of defense with respect to the order, specifying the appropriate reason. 91. Tax deduction certificate: (1) The person deducting advance tax shall provide a tax deduction certificate to the person from whom tax is deducted, at the time specified in sub-section (2), as follows:

(a) certified in the manner prescribed by the Department, if any manner is prescribed, and

(b) Amended by the Finance Act, 2075. showing the amount of tax deducted and the payment amounts under section 87, 88, 88a, or 89.

(2) The advance tax deduction certificate shall be provided within Amended by the Finance Act, 2075. twenty-five days from the date of the end of the month in which the advance tax was deducted, specifying the period for which the advance tax was deducted.

(3) Notwithstanding anything contained in sub-section (2), in the case of tax deducted under section 87, the advance tax deduction certificate shall be provided as follows:

(a) the certificate shall be only for the entire period during which the employee remained engaged in that year.

(b) the certificate shall be provided within thirty days from the date of the end of that year, or if the employee ceased employment with that person deducting advance tax during that year, within thirty days from the date of cessation of such employment. 92. Payments subject to final withholding tax: (1) The following payments shall be considered as payments subject to final withholding tax:

(a) dividend paid by a resident Amended by the Finance Act, 2075. company or partnership firm,

(b) rent paid, arising in Nepal, for land, house, and fixtures and equipment attached thereto, to a natural person other than one engaged in operating a business,

Amended by the Finance Act, 2075.(c) benefit paid by a resident person on account of investment insurance,

(d) benefit paid by a resident person on account of an unapproved retirement fund interest,

Amended by the Finance Act, 2075.(e) interest paid by a bank, financial institution, or any other entity issuing debentures mentioned in sub-section (3) of section 88, or a company or cooperative listed under prevailing law, as follows:

(1) paid to a natural person, where the interest arises in Nepal and is not related to the operation of a business,

(2) paid to an institution eligible for tax exemption under clause (dh) of section 2.

(f) Amended by the Finance Act, 2075. a payment made to a non-resident person from which tax is required to be deducted under section 87, 88, 88a, or 89.
Income Tax Act, 2002

Added by the Finance Act, 2075.(g) all types of retirement payments, including retirement payment made by the Government of Nepal or an approved retirement fund or an unapproved retirement fund (except regularly paid pension),

Added by the Finance Act, 2075.(h) meeting allowance up to twenty thousand rupees per meeting, payment for teaching on a one-off basis, for setting question papers or checking answer books,

Added by the Finance Act, 2075.(i) payment on account of windfall gain,

Added by the Finance Act, 2075.(j) return amount distributed to a natural person from a mutual fund. Amended by the Finance Act, 2062.(k) payment on account of fare or transport service of a vehicle or transport vehicle owned by a natural person depositing tax under sub-section (13) of section 1 of Schedule-1.

(2) If the person deducting advance tax or the person from whom tax is deducted deposits with the Department the tax deducted from a payment subject to final withholding tax under Amended by the Finance Act, 2075. section 87, 88, 88a, or 89, or the tax deemed to have been deducted under sub-section (3) of section 90, the person mentioned in clause (c) of section 3 shall be deemed to have fulfilled the tax liability. 93. Credit and inclusion of tax not finally withheld: (1) For the purpose of calculating the amount of any payment, if any tax has been deducted from such payment, the amount of such tax deduction shall be treated as part of that payment.

(2) If tax has been deducted on any payment other than a payment subject to final withholding tax, the person from whom tax is deducted shall be deemed to have deposited the following tax amounts:

(a) the amount of tax deducted on the payment under section 87, 88, or 89,

(b) if the person deducting advance tax or the person from whom tax is deducted has deposited with the Department the amount of tax deemed to have been deducted under sub-section (3) of section 90 or on the payment, such amount.

(3) The amount under sub-section (2) may be claimed by the person from whom tax is deducted for credit only against the tax amount payable for the income year in which that payment was made. Chapter-18
Installment Added by the Finance Act, 2075. and Advance Tax

94.
Income Tax Act, 2002

Chapter-18
Installment Added by the Finance Act, 2075. and Advance Tax

94. Deposit of tax in installments: (1) Any person who has or is likely to have assessable income from any business or investment in any income year shall deposit tax in three installments as follows:

 Due Date Tax Amount to be Deposited

 By the end of Poush month Balance tax payable out of forty percent of the estimated tax
 By the end of Chaitra month Balance tax payable out of seventy percent of the estimated tax
 By the end of Ashadh month Balance tax payable out of one hundred percent of the estimated tax

Explanation: For the purpose of this sub-section,

(a) "estimated tax" means the estimated installment tax calculated under section 95 by any person required to deposit tax in installments at the time of depositing the installment tax for any year.

(b) "balance tax payable" means the shortfall amount resulting from deducting the following total sum from the amount calculated by the percentage specified in this sub-section for deposit in installments of the estimated tax:

(1) the amount of tax deposited for such income year by way of prior installments under this section before the due date of the relevant installment,

(2) the amount of tax deducted under Chapter-17 from payments included in calculating that person's income for that year before the due date of the relevant installment,

(3) if the agent deducting tax or the person from whom tax is deducted has deposited with the Department before the due date of the installment the amount deemed to have been deducted under sub-section (3) of section 90 from the payments mentioned in sub-clause (2) for that year, such tax amount, and

(4) the tax credit amount for medical treatment expenses that the person can claim under section 51 in relation to approved medical treatment expenses incurred before the due date of the installment. Added by the Finance Act, 2075.(1a) A person paying tax on the basis of turnover shall deposit tax in two installments as follows:

 Due Date Tax Amount to be Deposited

 By the end of Poush month Tax leviable at the prescribed rate on transactions up to the 20th of Poush

 By the end of Ashadh month The tax amount arising after deducting the tax deposited within the end of Poush from the tax amount calculated by estimating the transactions up to the end of Ashadh based on the actual transactions up to the 20th of Ashadh and applying the prescribed rate.
Income Tax Act, 2002

95a. Collection of advance tax: (1) The entity operating a commodity futures market shall collect advance tax at the rate of ten percent from the profit and gain derived by a person trading under the commodity futures market from that business.

(2) If a resident person, other than a resident entity registered under prevailing law dealing in the purchase and sale of securities, derives a benefit from the transfer of an interest in a resident entity, advance tax shall be collected on such benefit calculated under section 37 as follows:

(a) in the case of benefit derived from the transfer of an interest of an entity listed with the Securities Board of Nepal, the entity acting as the securities exchange market shall collect tax Added by the Finance Act, 2075. at the rate of five percent of the benefit amount for an interest owned for more than three hundred and sixty-five days and seven point five percent of the benefit amount for an interest owned for three hundred and sixty-five days or less in the case of a resident natural person, ten percent of the benefit amount in the case of a resident entity, and twenty-five percent of the benefit amount in other cases,

(b) in the case of benefit derived from the transfer of an interest of an entity not listed with the Securities Board of Nepal, the entity whose interest is transferred shall collect advance tax at the rate of ten percent of the benefit amount for a resident natural person, fifteen percent of the benefit amount for a resident entity, and twenty-five percent of the benefit amount in other cases,

Added by the Finance Act, 2076.(2a) When calculating the benefit under clause (a) of sub-section (2), it shall be done based on the weighted average cost of the interest owned by that person in that entity on that date.

(3) When an interest under clause (b) of sub-section (2) is transferred and the Company Registrar's Office registers the shares, it shall do so only after proof of deposit of advance tax on the benefit amount is submitted.

(4) Omitted by the Finance Act, 2079

(5) In the case of capital gain on account of transfer of land or private building of any natural person, the Land Revenue Office shall collect advance tax at the time of registration as follows:

(a) if the ownership of the non-business taxable asset (land and building) transferred is five years or more, at the rate of Amended by the Finance Act, 2079. five percent,

(b) if the ownership of the non-business taxable asset (land and building) transferred is less than five years, at the rate of Amended by the Finance Act, 2076. seven point five percent.
Income Tax Act, 2002

Added by the Finance Act, 2076.(6) In the case of transfer of land or building owned by any person other than as described in sub-section (5), the Land Revenue Office shall collect advance tax at the time of registration at the rate of one point five percent on the transferred value. Added by the Finance Act, 2077.(6a) A resident bank or financial institution providing foreign exchange facility for language test and standardized test fees for students going to study abroad shall collect advance tax at the rate of fifteen percent at the time of providing such foreign exchange facility on the amount of such test fees. Added by the Finance Act, 2078.(6b) If a resident natural person not engaged in operating a business receives payment in foreign currency for providing software or other electronic services of a similar nature outside Nepal, the concerned bank, financial institution, and money transfer institution shall collect advance tax at the rate of Amended by the Finance Act, 2080. five percent of the amount received when providing such payment. Added by the Finance Act, 2078.(6c) If a resident natural person not engaged in operating a business receives any payment in foreign currency for providing consultancy services personally outside Nepal, the concerned bank, financial institution, and money transfer institution shall collect advance tax at the rate of Amended by the Finance Act, 2080. five percent of the amount received when providing such payment. Added by the Finance Act, 2078.(6d) If a resident natural person not engaged in operating a business receives payment in foreign currency for uploading audiovisual content on social media, the concerned bank, financial institution, and money transfer institution shall collect advance tax at the rate of Amended by the Finance Act, 2080. five percent of

(2) The Department may extend the time limit for filing the income return under sub-section (1) by a maximum of three months, whether at once or in installments. 99.
Income Tax Act, 2002

99. Assessment of Tax: (1) If an individual has filed an income return for any income year by the date on which the income return is required to be filed, disclosing the following amounts, such income return shall be deemed to have been assessed:-
(a) In the case of a person referred to in clauses (a) and (b) of Section 3, the amount of tax mentioned in the income return that is payable for that income year, and
(b) The outstanding tax amount for that year as mentioned in the income return.

(2) If an individual fails to file an income return for any income year, it shall be deemed, until the income return is filed, that an assessment has been made as follows on the date the income return was due to be filed:-
(a) The amount of any tax deducted from amounts received under Chapter 17 and any amount deposited by him in installments for that year under Chapter 18 shall be deemed to be equal to the total amount of his tax for that year, and
(b) It shall be deemed that no tax remains payable under the assessment. 100. Best Judgment Assessment: (1) If an income return for any income year or part of an income year is required to be filed under sub-section (5) of Section 96, it shall be done in accordance with Section 99. Amended by the Finance Act, 2075.(2) Notwithstanding anything contained in sub-section (1), in the circumstances referred to in sub-section (5) of Section 96, the Department may fairly assess the tax of such person on the basis of the amounts referred to in sub-clauses (1), (2), and (3) of clause (a) of sub-section (2) of Section 96, for any income year or part thereof.

(3) Where an assessment is made under sub-section (1) or (2), the following shall apply:-
(a) A person whose tax has been assessed for the full income year shall not be required to file an income return under sub-section (1) of Section 96 for that income year, or
(b) A person whose tax has been assessed for a part of an income year shall be required to file an income return for that income year under sub-section (1) of Section 96.

(4) The tax amount deposited in accordance with an assessment for a part of an income year may be adjusted against the tax payable upon the assessment for the full year.

(5) When making an assessment under this section, the Department shall provide a period of seven days to submit evidence of clearance. 101.