Financial Act, 2025

37. Amendment to the Income Tax Act, 2058: In the Income Tax Act, 2058,-

(1) In Section 2,-

(a) In sub-clause (2) of clause (fa), the words "Gaunpalika, Nagarpalika or" have been omitted.

(b) For clause (tla1), the following clause (tla1) has been substituted:-

"(tla1) "Contribution-based retirement payment" shall mean the payment of the amount deposited in an approved retirement fund from the income of a natural person included in his/her income and the amount accrued on that amount."

(c) Sub-clause (5) of clause (kaa) has been omitted.

(2) After sub-section (4a) of Section 4, the following sub-section (4b) has been added:-

"(4b) Notwithstanding anything contained in sub-sections (4) and (4a), the person must have opted for this provision to apply in that income year."

(3) In clause (e) of Section 10, for the word "Province", the words "Province Government" have been substituted.

(4) In Section 11,-

(a) After the words "special industry" in sub-section (2a), the words ", hotel, resort and information technology industry" have been added.

(b) After the words "special industry" in sub-section (3), the words ", hotel, resort" have been added.

(c) In sub-section (3ga), for the words "fifty percent", the words "seventy-five percent" have been substituted.

(d) The explanation in sub-section (3tha) has been omitted.

(e) In sub-section (3na), for the words "up to annual one crore", the words "up to annual ten crore rupees" have been substituted.

(f) After sub-section (3ma), the following sub-sections (3ya), (3ra) and (3la) have been added:-

"(3ya) An industry producing green hydrogen shall be exempt from income tax for five years from the date of commencement of business.

(3ra) An industry producing and assembling electric vehicle charging machines shall be exempt from income tax for five years from the date of commencement of business.

(3la) A person constructing or establishing and operating an industrial zone or industrial village shall be fully exempt from income tax for the first ten years from the date of commencement of business and shall be exempt from fifty percent income tax for the subsequent five years."

(g) After clause (gha) of the explanation of sub-section (6), the following clause (nga) has been added:-

"(nga) "Information technology industry" shall mean a technology park, information technology park, biotech park, software development, data processing, digital mapping, business process outsourcing, data mining, cloud computing related industry."

(5) In sub-section (1) of Section 21,-

(a) In the proviso of clause (kha), the words "tax collected under sub-section (7) of Section 95ka. which could not be adjusted in that income year," have been omitted.

(b) In clause (cha), for the words "clauses (ka), (kha), (ga), (gha), (nga)", the words "clauses (ka), (kha), (ga), (gha1), (gha2), (nga) and (nga1)" have been substituted.

(6) In the heading of Section 33, for the words "Value Transfer", the words "Transfer Value" have been substituted.

(7) In Section 63,-

(a) In the heading, for the words "Approval of Retirement Fund", the words "Retirement Fund" have been substituted.

(b) Sub-section (1) has been omitted.

(c) In sub-section (2), the following explanation has been added:-

"Explanation: For the purposes of this section, "approved retirement fund" shall mean the Employees' Provident Fund established under the Employees' Provident Fund Act, 2019; the Citizens Investment Fund established under the Citizens Investment Fund Act, 2047; the retirement fund operated by the Social Security Fund established under the Contribution-based Social Security Fund Act, 2074; and the retirement fund operated by the Pension Fund established under the Pension Fund Act, 2075."

(8) For clause (kha) of the explanation of Section 67, the following clause (kha) has been substituted:-

"(kha) "Liability to be borne in Nepal" shall mean the liability created from the activities conducted in Nepal of a resident person."

(9) For clause (ta) of sub-section (1) of Section 92, the following clause (ta) has been substituted:-

"(ta) Payment for the rent or transport service of a vehicle or conveyance of a natural person required to deposit tax under sub-section (13) of clause 1 of Schedule-1."

(10) In Section 15ka.,-

(a) Sub-section (7) has been omitted.

(b) For sub-section (8), the following sub-section (8) has been substituted:-

"(8) If a person or entity required to collect advance tax under sub-sections (1), (2), (5), (6), (6ka), (6kha), (6ga), (6gha) and (6nga) has not collected the advance tax, it shall be deemed to have collected the tax at the time it should have been collected."

(11) After sub-clause (3) of clause (ga) of sub-section (2) of Section 96, the following sub-clause (3ka) has been added:-

"(3ka) If an option has been made according to sub-section (4b) of Section 4, information thereof,"

(12) In the proviso of sub-section (3) of Section 97, after the word "Provided that", the words "retirement payment," have been added.

(13) Sub-section (8) of Section 113 has been omitted.

(14) After clause (ga) of sub-section (1) of Section 117, the following clause (gha) has been added:-

"(gha) If a person fails to submit the statement of income for any income year under sub-section (2) of Section 97, an amount calculated at the rate of zero point one percent per annum of the amount arrived at after deducting the income subject to final withholding tax from the assessable income of such person, or five hundred rupees per statement, and if the period is less than one year, one hundred rupees per month, whichever is higher."

(15) In sub-section (17) of clause 1 of Schedule-1, for the words "Section 4ka.", the words "Section 4" have been substituted.

(16) In sub-section (2) of clause 3 of Schedule-2, for the words "sub-sections (2kha), (3cha), (3tha) and sub-section (3) of clause 2 of Schedule-1", the words "sub-sections (2kha), (3cha) and (3tha)" have been substituted.