chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Revenue Leakage (Investigation and Control) Act, 1995

9. Powers of the Department Regarding Investigation and Inquiry: (1) While conducting investigation and inquiry into revenue leakage Omitted by the Corruption Prevention Act, 2059. pursuant to this Act, the Department may exercise the following powers:
 (a) Order the relevant office or any person to send relevant documents or evidentiary instruments or any other thing in their possession to the Department or to present them before the Department within a specified time; or
 (b) Summon the person accused of the offense of revenue leakage Omitted by the Corruption Prevention Act, 2059. or any person whom the Department believes has knowledge of the relevant facts, and interrogate such person and record their statement.
 (2) After the Department has recorded the statement of the person accused of the offense of revenue leakage Omitted by the Corruption Prevention Act, 2059. , it may, as necessary, Amended by the Finance Act, 2075. detain such person, demand bail, release them on a bond of appearance when required, or place them on interim bail (tarekh).
 (3) Amended by the First Amendment. If there is sufficient reason to believe that a public servant, against whom investigation and inquiry is underway for an alleged offense of revenue leakage, while remaining in office, may destroy or conceal evidence against themselves or cause obstruction, hindrance, or adverse effect on the investigation and inquiry, the Department may send a letter to the competent authority through the Office of the Prime Minister and Council of Ministers for suspension, stating grounds and reasons.
Revenue Leakage (Investigation and Control) Act, 1995

If such a letter is received, the competent authority shall suspend such employee.
 (4) If there is any reasonable cause to believe that the person against whom proceedings for the offense of revenue leakage have been initiated Omitted by the Corruption Prevention Act, 2059. may abscond and disappear Omitted by the Corruption Prevention Act, 2059. , or if loss or damage of misappropriated amount (bigo) is found, the Department may release the person on interim bail (tarekh) against a guarantee or bail equivalent to the misappropriated amount (bigo) and the amount of potential penalty leviable; and if such guarantee or bail is not provided, Added by the First Amendment. may freeze the person's business activities and detain them.
 (5) Where the Department has sent a letter to the relevant office or employee fixing a time to present any instrument or other thing or provide information, or has ordered a person to appear before the Department:
 (a) If such office fails to present such instrument or thing or provide information within the specified time, the Department shall send a letter to Amended by the Certain Nepal Acts Amendment Act, 2075. the Office of the Prime Minister and Council of Ministers to initiate departmental action against the head of the relevant office; and upon receipt of such letter, the Ministry of Finance shall take immediate action.
 (b) If such employee fails to present the instrument or thing or provide information within the specified time, or if such person fails to appear before the Department, the Department may impose a fine up to one thousand rupees on them.
 (6) If, even after departmental action or fine pursuant to sub-section (5), any office, employee, or person fails to comply with the Department's order, the Department may issue an arrest warrant as prescribed, arrest the head of such office, employee, or such person, produce them before it, and obtain or cause to obtain such instrument or thing or obtain necessary information from them. If the head of office, employee, or person arrested thus fails to present such instrument or thing or provide related information before the Department, the Department may order them to be detained for a maximum of seven days.
 (7) As necessary, the Department may, pursuant to prevailing law, search or cause to search any place, and may take into its custody any object or document found necessary during such search, or take copies of such documents. The Department shall provide a receipt for the objects or documents taken into custody in this manner.
Revenue Leakage (Investigation and Control) Act, 1995

The Department shall provide a receipt for the objects or documents taken into custody in this manner. Inserted by the Finance Act, 2075.(8) If there is sufficient reason to believe that a person under investigation and inquiry is likely to go abroad with the intention of evading proceedings, the Department may send a letter to the relevant authority to prevent such person from going abroad, take their passport into custody, or have it blocked. Inserted by the Finance Act, 2075.(9) During the course of investigation and inquiry pursuant to this Act, the Department may request from the relevant office, association, institution, or any bank, financial institution, cooperative society, or association, the details of transactions of the person under investigation or details of financial transactions in the securities market for the purpose of investigation. It shall be the duty of such entities to provide the requested details within the Amended by the First Amendment. time prescribed by the Department. Inserted by the Finance Act, 2075.(10) If, during the investigation and inquiry of an offense related to revenue leakage pursuant to this Act, the charge cannot be proven based on the collected evidence, the Department may create a memo of the relevant complaint along with reasons and file it. Provided that, if new evidence is found subsequently, nothing in this Section shall be deemed to bar the resumption of investigation and inquiry proceedings on such complaint. Inserted by the Finance Act, 2075.(11) If a decision is made to file the complaint pursuant to sub-section (10), information thereof shall be given to Amended by the First Amendment. the Office of the Prime Minister and Council of Ministers. 10. Power to Appoint Investigation Officer: (1) Pursuant to this Act, the Director General may, as necessary, himself conduct investigation and inquiry into offenses relating to revenue leakage Omitted by the Corruption Prevention Act, 2059. or may appoint Amended by the Finance Act, 2075. any officer-level employee of the Department or subordinate office to act as an Investigation Officer.
 (2) Notwithstanding anything written in sub-section (1), the Government of Nepal may, as necessary, assign the work of investigation and inquiry into offenses relating to revenue leakage Omitted by the Corruption Prevention Act, 2059. to other government bodies or government employees.
 (3) Inserted by the Finance Act, 2075. If, during the investigation and inquiry of an offense initiated under this Act, it is found that an offense punishable under other prevailing law has been committed, the Department may send a letter to the relevant body or competent authority to proceed with action under that other law. 11.
Revenue Leakage (Investigation and Control) Act, 1995

If, during the investigation and inquiry of an offense initiated under this Act, it is found that an offense punishable under other prevailing law has been committed, the Department may send a letter to the relevant body or competent authority to proceed with action under that other law. 11. Duties, Functions, and Powers of Investigation Officer: (1) The duties, functions, and powers of the Investigation Officer regarding investigation and inquiry conducted under this Act shall be as follows:
 (a) To arrest and take action against the offender if the offense of revenue leakage Omitted by the Corruption Prevention Act, 2059. is committed in the presence of the Investigation Officer.
 (b) While investigating or collecting evidence related to the offense of revenue leakage Omitted by the Corruption Prevention Act, 2059. , to arrest persons involved in the offense, search any government, semi-government, or non-government office, godown, or other place as necessary, seal such godown or place, take relevant documents or goods into custody, record the statement of the accused, prepare site inspection reports, and exercise all powers available to the police under prevailing law.
 (c) While conducting investigation and inquiry, the Investigation Officer may also exercise powers equivalent to those of a judge hearing the case under prevailing law regarding placing the accused on interim bail (tarekh), releasing them on bail or guarantee, and detaining them if they cannot provide bail or guarantee.
 (d) While performing duties under this Act, not to breach the confidentiality of any matter or document submitted that comes to their knowledge by virtue of their position, except in circumstances compelled by prevailing law. Provided that, if the judge hearing the case finds that such matter or document constitutes necessary evidence for other cases or proceedings, disclosure of such confidential matter or document by the judge's order to a person authorized by law shall not be deemed a breach of confidentiality.
 (e) When it is necessary to seize any goods or documents in the course of investigation and inquiry under this Act, the Investigation Officer shall provide a receipt thereof to the concerned office or person and keep such goods or documents safely.
 (f) To submit a report of every action taken by the Investigation Officer in the course of investigation and inquiry under this Act to the Director General.
 (g) Inserted by the Finance Act, 2075.
Revenue Leakage (Investigation and Control) Act, 1995

If there is reasonable cause to freeze the movable and immovable property of a person or entity under investigation for an offense related to revenue leakage, the Investigation Officer may send a letter to the relevant authority to freeze such property.

 (2) If the Director General himself Added by the First Amendment. conducts investigation and inquiry into an offense under this Act, he may also exercise any or all powers available to the Investigation Officer under sub-section (1). Inserted by the Finance Act, 2075.11A. Service of Notice: (1) A notice, order, or document issued by the Director General or any Investigation Officer Added by the First Amendment. under this Act shall be served by delivering it to the concerned person or employee of the office.
 (2) If a notice cannot be served pursuant to sub-section (1), it shall be affixed at the residence or office of the concerned person in the presence of local persons of the place where such person or office is located.
 (3) If a notice cannot be served pursuant to sub-section (1) or (2), it may be served by sending it to the address of such person or office by registered post, courier, fax, or other electronic means.
 (4) If a notice cannot be served pursuant to sub-section (1), (2), or (3), it may be served by broadcasting or publishing the notice in the name of the concerned person or office via radio, television, or any national-level newspaper.
 (5) Notwithstanding anything written in prevailing law, a notice served pursuant to this Section shall be deemed duly served. Amended by the Act to Amend, Consolidate, Adjust and Repeal Certain Nepal Laws, 2074.12.
Revenue Leakage (Investigation and Control) Act, 1995

Amended by the Act to Amend, Consolidate, Adjust and Repeal Certain Nepal Laws, 2074.12. Power to Arrest: (1) If any person needs to be arrested in the course of investigation of any offense under this Act, the investigating officer shall submit an application to the judge hearing the case for permission to arrest, along with the reason for arrest and details identifying such person.
 (2) If the reason for arrest appears reasonable from the application submitted under sub-section (1), the judge hearing the case may grant permission to issue an arrest warrant.
 (3) A person against whom an arrest warrant has been issued under sub-section (2) shall be arrested by the police and produced before the judge hearing the case within twenty-four hours, excluding travel time.
 (4) Notwithstanding anything written in sub-section (1), if there is reasonable cause to believe that the offender would abscond or escape or destroy evidence or clues if not arrested immediately, or if a person absconding in connection with the offense is found, or if a person is found committing an offense, the investigating officer may immediately issue an emergency arrest warrant and arrest such person at any place and produce them before the judge hearing the case Added by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081. within twenty-four hours, excluding travel time, along with the arrested person for approval. 13. Power to Detain: A person arrested under this Act may be detained in the course of investigation for a maximum period of Amended by the First Amendment. ninety days, not exceeding fifteen days at a time, with the approval of the judge hearing the case. Amended by the First Amendment.13A. Power to Send Letter to Relevant Body: (1) If, during investigation of an offense related to revenue leakage, the Investigation Officer finds it necessary to make additional assessment and collect income tax, value added tax, excise duty, customs duty, other taxes or non-taxes, or additional revenue payable under prevailing law, he shall submit a report to the Department stating such fact.
 (2) Upon receipt of a report under sub-section (1), if the Department finds that revenue leakage up to Amended by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081. three crore rupees has occurred, it may send a letter to the relevant institution or body to assess and collect such income tax, value added tax, excise duty, customs duty, or other taxes or non-taxes.
Revenue Leakage (Investigation and Control) Act, 1995

Omitted by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081.
 (3) If a letter is received pursuant to sub-section (2), the relevant institution or body shall assess the revenue and provide information thereof to the Department.
 (4) While conducting investigation and inquiry, if the Department finds deficiencies in the procedures and working systems adopted by the revenue collecting body, the Department may send a letter to the relevant institution or body through the Office of the Prime Minister and Council of Ministers to prevent or rectify such deficiencies.
 (5) If a letter is received pursuant to sub-section (4), such institution or body shall rectify the said deficiency as soon as possible and inform the Department thereof.
 (6) Notwithstanding anything written in sub-section (2), if revenue leakage exceeds Amended by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081. three crore rupees, a case must be filed pursuant to this Act. Added by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081.(7) Notwithstanding anything written in sub-sections (2) and (6), if, before a case is filed under this Act, the concerned person submits an application stating they will pay the misappropriated amount (bigo) and applicable penalty, the Department shall collect the misappropriated amount (bigo) and applicable penalty and submit it to the Government Attorney's Office for a decision not to file a case. Added by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081.(8) If a letter is received pursuant to sub-section (7), the Government Attorney's Office shall decide not to file such a case. Inserted by the Finance Act, 2075.13B. Computer Processed Records Admissible as Evidence: (1) Notwithstanding anything written in prevailing law, unless proven otherwise, records prescribed by the Department that are processed or developed by electronic means may be taken as evidence.
 (2) Other provisions regarding obtaining, analyzing, or processing details and data of records under sub-section (1) shall be as prescribed. Inserted by the Finance Act, 2075.13C. Implementation of Web-based Online Transport Vehicle Monitoring System: (1) Amended by the Finance Act, 2076.
Revenue Leakage (Investigation and Control) Act, 1995

Inserted by the Finance Act, 2075.13C. Implementation of Web-based Online Transport Vehicle Monitoring System: (1) Amended by the Finance Act, 2076. Goods transported for commercial purposes from one place to another by a vehicle registered under law must only be transported after entering the details into a web-based central information system.
 (2) The user of the means of transport under sub-section (1) must keep a printed copy of the goods declaration and documents prescribed by the Department in their possession during the transport period.
 (3) The owner of a means of transport registered or to be registered within Nepal must register the serial number of a functional geo-location device (GPS device) meeting the standards prescribed by the Department with the Department and mandatorily install it in their means of transport.
 (4) Notwithstanding anything written in sub-section (3), the Department may prescribe that mandatory installation of a GPS device is not required for certain types of means of transport or for vehicles operating in certain areas. Added by the First Amendment.(4a) For acting contrary to the provisions mentioned in sub-section (1), (2), or (3), the Director General may impose a fine of up to fifty thousand rupees on the owner or user of the concerned means of transport for the first instance, and up to one hundred thousand rupees for each subsequent instance.
 (5) Provisions under this Section shall apply from a date appointed by the Government of Nepal by notification published in the Nepal Gazette. Chapter 4

Chapter 4 Repealed by the Corruption Prevention Act, 2059. Chapter 5

Case Proceedings and Provisions Relating to Offenses

Amended by the First Amendment.18. Judge Hearing the Case: (1) The initial proceedings and adjudication of a case relating to the offense of revenue leakage under this Act shall be Amended by the Certain Nepal Acts Amendment Act, 2082. conducted by the District Court of the district where the investigating body for the relevant case is located. Amended by the Certain Nepal Acts Amendment Act, 2082. (2) Upon the commencement of this sub-section, cases, reports, petitions, and related case files pending before the relevant High Court at that time shall be transferred to the relevant District Court under sub-section (1). 19. Government of Nepal to be the Plaintiff: The Government of Nepal shall be the plaintiff in cases under this Act. Amended by the First Amendment.20.
Revenue Leakage (Investigation and Control) Act, 1995

19. Government of Nepal to be the Plaintiff: The Government of Nepal shall be the plaintiff in cases under this Act. Amended by the First Amendment.20. Provisions Relating to Filing of Case: (1) If, upon completion of investigation and inquiry of an offense under this Act, it appears necessary to file a case, the Investigation Officer shall submit the case file, along with his opinion and attached evidence and proofs related to the investigation, to the relevant Government Attorney's Office for a decision on whether or not to file a case.
 (2) Upon receipt of the case file under sub-section (1), the relevant Government Attorney's Office shall return the case file to the Investigation Officer, stating the same if no case is to be filed, or, if a case is to be filed, stating the person against whom to file, the charge and penalty against him, the claim to be made in the charge sheet, and, if applicable, the reduction in penalty under Section 23A.
 (3) Notwithstanding anything written in sub-section (2), if, while studying the received case file, the Government Attorney's Office finds it necessary to conduct further investigation on the matter, it shall specify the subject matter requiring further investigation and Added by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081. return the case file to the Investigation Officer within thirty days from the date of receipt, stating the grounds and reasons therefor.
 (4) If the case file is returned for further investigation on any matter pursuant to sub-section (3), the Investigation Officer shall conduct further investigation and submit the case file, along with the proposed charges and claims, back to the Government Attorney's Office Amended by the Act to Amend Certain Nepal Acts Related to Economic and Business Environment Improvement and Investment Promotion, 2081. within sixty days from the date of receipt of the case file.
 (5) Upon receipt of the case file under sub-section (4), the relevant Government Attorney's Office shall decide whether or not to file a case under sub-section (2) and return the case file to the Investigation Officer.
 (6) After receipt of the case file from the Government Attorney's Office with a decision to file a case under sub-section (2) or (5), the Investigation Officer shall file the case before the judge hearing the case in the name of the Government of Nepal within thirty days.
 (7) While filing a case under this Act, only the confiscated goods or samples of evidence need to be submitted. Provided that, samples of agricultural produce, perishable goods, or goods already auctioned need not be submitted. Added by the First Amendment.20A.
Revenue Leakage (Investigation and Control) Act, 1995

22. Procedure of the Case: While conducting proceedings of a case for an offense under this Act, the judge hearing the case shall follow the procedure of the Special Court Act, 2059. Amended by the First Amendment.23. Punishment: (1) A person committing the offense of revenue leakage shall be subject to recovery or confiscation of the misappropriated amount (bigo), a fine equal to one hundred percent of the misappropriated amount (bigo), and imprisonment according to the gravity of the offense as follows:
 (a) For a misappropriated amount (bigo) up to one crore rupees, imprisonment from one month to six months,
 (b) For a misappropriated amount (bigo) from one crore to five crore rupees, imprisonment from six months to one year,
 (c) For a misappropriated amount (bigo) from five crore to ten crore rupees, imprisonment from one year to three years,
 (d) For a misappropriated amount (bigo) of ten crore rupees or more, imprisonment from three years to five years.
 (2) For the purpose of sub-section (1), if the goods or services for which the misappropriated amount (bigo) is to be determined have been sold or are not found, an amount equivalent to the misappropriated amount (bigo) of such goods and services shall be recovered.
 (3) An abettor of the offense of revenue leakage mentioned in this Act shall be liable to half the punishment prescribed for the principal accused.
 (4) Interest shall also be leviable on the revenue amount payable under sub-section (1) as mentioned in the prevailing law relating to revenue.
 (5) If a firm, company, or organized institution or body commits any act deemed an offense under this Act, the partners involved at the time of such act in the case of such firm or body, and the officer primarily responsible for work in the case of a company or organized institution, shall be deemed to have committed such an offense. Provided

Amended by the First Amendment.34.
Revenue Leakage (Investigation and Control) Act, 1995

Provided

Amended by the First Amendment.34. Departmental Action to Be Taken: (1) If an investigating officer or other employee involved in investigation and inquiry under this Act is proven to have knowingly done any act with the intention of causing trouble to any person or to have assisted in revenue leakage with mala fide intent, such employee shall be subjected to departmental action, and the person thereby aggrieved shall be given compensation in accordance with the prevailing law.

(2) If, while conducting an investigation and inquiry into the offence of revenue leakage under this Act, any public servant is found to have failed to responsibly fulfill the duties of office prescribed by the prevailing law, violated matters relating to official conduct, or acted negligently causing revenue leakage, the Department may, with reasons and grounds, send a written communication to the authorized officer through the Office of the Prime Minister and Council of Ministers for departmental action against such public servant.

(3) Upon receipt of a written communication pursuant to subsection (2), the authorized officer shall take departmental action against such public servant in accordance with the prevailing law.

(4) The fact that a public servant has been subjected to departmental punishment under this section shall not bar the filing of a case and imposition of punishment for the offence of revenue leakage. 35. Protection for Acts Done in Good Faith: The Director General, investigating officer, or other employee involved in investigation and inquiry shall not be personally liable for any act or action done in good faith while performing their duties under this Act. 36. Delegation of Powers: Any or all of the powers vested in the Department or the Director General under this Act may be delegated to an investigating officer or any other employee as needed. 37. Provision of Revenue Police: For the purpose of implementing the objectives of this Act, the Government of Nepal may establish a Revenue Police under the Department and operate it as prescribed. Added by the Finance Act, 2075.37A.
Revenue Leakage (Investigation and Control) Act, 1995

37. Provision of Revenue Police: For the purpose of implementing the objectives of this Act, the Government of Nepal may establish a Revenue Police under the Department and operate it as prescribed. Added by the Finance Act, 2075.37A. May Deploy as Revenue Police: (1) Until a separate arrangement of Revenue Police is made as mentioned in Section 37, the Government of Nepal may, as required, deploy Armed Police Force, Nepal Armed Police to work as Revenue Police under the Department.

(2) The Revenue Police shall work under the direct command and control of the Director General.

(3) If there is a reasonable cause that a person has committed or is about to commit revenue leakage, the Revenue Police shall, on the order of the Director General or the concerned investigating officer, prevent such person from doing such act.

(4) If, while attempting to prevent under subsection (3), such person creates a disturbance or uses force, the Revenue Police shall warn and counsel him/her not to do so.

(5) If, even after warning and counseling under subsection (4), such person creates a disturbance or uses force, the Revenue Police may arrest him/her.

(6) If, while attempting to arrest under subsection (5), such person uses force or attempts to escape or abscond, or if it is not possible to arrest immediately, on the order of the Director General or the concerned investigating officer, the Revenue Police deployed at the scene may, for self-defense and the performance of duty, first fire in the air to prevent such incident, and if even then the situation is not controlled or if the person creating disturbance also has a weapon, may fire bullets causing minimal damage.

(7) If there is suspicion that goods evading revenue are being transported from any conveyance or vehicle, the Revenue Police may order to stop or cause to stop such vehicle. If such order is disobeyed and an attempt is made to flee without inspection by creating a disturbance or using force, or if it is fled, the Revenue Police, with an order from the Director General or the concerned investigating officer, may fire bullets causing minimal damage to the wheels of such vehicle.

(8) In the event that firing becomes necessary pursuant to subsection (6) or (7), if the order was given by an investigating officer, information thereof shall be given by quick means to the Director General and the Chief District Officer of the concerned district, and if the order was given by the Director General, information shall be given to the concerned Chief District Officer and the Office of the Prime Minister. Added by the Amending Some Nepal Acts Act, 2062.37B.
Revenue Leakage (Investigation and Control) Act, 1995

Added by the Amending Some Nepal Acts Act, 2062.37B. Revenue Leakage Control Coordination Committee: (1) To make effective the work of controlling and preventing revenue leakage, there shall be a Revenue Leakage Control Coordination Committee at the national level as follows:-

(a) Minister of Finance - Coordinator
(b) Secretary, Office of the Prime Minister and Council of Ministers - Member
(c) Secretary, Ministry of Finance - Member
(d) Secretary, Ministry of Home Affairs - Member
(e) Director General, Revenue Investigation Department - Member-Secretary

(2) The functions, duties, and powers of the committee pursuant to subsection (1) shall be as follows:-

(a) To identify major areas of tax and non-tax revenue leakage,
(b) To prepare a capacity development strategy for the Revenue Investigation Department,
(c) To provide policy feedback for reform and effectiveness of revenue administration,
(d) To give necessary directives to the Department to make revenue leakage investigation and control effective.

(3) The meeting of the committee pursuant to subsection (1) shall be held at least once every two months on the date, time, and place specified by the Coordinator of that committee.

(4) The procedure of the meeting of the committee pursuant to subsection (1) shall be as determined by the committee itself.

(5) To carry out work relating to the control and prevention of revenue leakage, there shall be a District Revenue Leakage Control Coordination Committee in each district as follows:-

(a) Chief District Officer - Coordinator
(b) Head of the concerned Inland Revenue Office - Member
(c) Head of the district office of Nepal Police - Member
(d) Head of the district office of Armed Police Force, Nepal - Member
(e) Head of the concerned Revenue Investigation Office - Member-Secretary

(6) In the case of a district where a Customs Office is located, the head of the Customs Office shall also be a member of the committee pursuant to subsection (5). 38. Government of Nepal May Give Directives: The Government of Nepal may give necessary directives to the Department to make effective the actions for controlling and preventing revenue leakage. 39. Report to Be Submitted: The Director General shall submit a report of the investigation and inquiry work done or caused to be done by him/her for the period from Shrawan 1 to Poush end and from Magh 1 to Ashad end each year to the Office of the Prime Minister. 40. Power to Make Rules: For the purpose of implementing the objectives of this Act, the Government of Nepal may make necessary rules. Amended by the First Amendment.40A.
Inter-governmental Fiscal Management Act, 2017

Inter-Governmental Financial Management Act, 2074

Certification and Publication Date
2074.6.27

Amending Acts

1. Finance Act, 2075 2075.3.32
2. Some Nepal Acts Amendment Act, 2075 2075.11.19
3. Act to Amend Some Nepal Acts to Make them Consistent with the Constitution of Nepal, 2075 2075.11.19

Act Number 21 of the Year 2074

An Act Made to Provide for Inter-Governmental Financial Management

Preamble: Whereas, it is desirable to make necessary provisions regarding the revenue authority of the Government of Nepal, Province and Local Level, revenue sharing, grants, loans, budget management, public expenditure, and fiscal discipline,

The Legislature-Parliament has enacted this Act pursuant to Sub-article (1) of Article 296 of the Constitution of Nepal. Chapter-1
Preliminary

1. Short Title and Commencement: (1) This Act may be cited as the "Inter-Governmental Financial Management Act, 2074".

(2) Sections 5, 6 and 7 of this Act shall commence from the 1st day of Shrawan of the year 2075, and the other Sections shall commence immediately. 2. Definitions: Unless the subject or context otherwise requires, in this Act,-

(a) "Commission" means the National Natural Resources and Fiscal Commission constituted pursuant to Article 250 of the Constitution.

(b) "Deficit Budget" means a budget in which expenditure is provided for in excess of the sum of revenue and grants.

(c) "Province Consolidated Fund" means the Province Consolidated Fund constituted pursuant to Article 204 of the Constitution.

(d) "Ministry" means the Ministry of Finance of the Government of Nepal.

(e) "Plan" includes a scheme, project, or program.

(f) "Fiscal Equalization Grant" means the grant referred to in Section 8.

(g) "Special Grant" means the grant referred to in Section 11.

(h) "Complementary Grant" means the grant referred to in Section 10.

(i) "Conditional Grant" means the grant referred to in Section 9.

(j) "Local Consolidated Fund" means the Local Consolidated Fund constituted pursuant to Article 229 of the Constitution.

(k) "Federal Consolidated Fund" means the Federal Consolidated Fund constituted pursuant to Article 116 of the Constitution.

(l) "Constitution" means the Constitution of Nepal. Chapter-2
Revenue Authority

3.
Inter-governmental Fiscal Management Act, 2017

Chapter-2
Revenue Authority

3. Power to Levy Taxes, Fees, and Royalties: (1) The Government of Nepal may levy and collect the taxes and non-taxes specified in Schedule-1 in accordance with federal law.

(2) A Province may levy and collect the taxes and non-taxes specified in Schedule-2 in accordance with provincial law.

(3) A Local Level may levy and collect the taxes and non-taxes specified in Schedule-3 in accordance with local law.

(4) The Government of Nepal, Province and Local Level shall collect fines and penalties within their authority, imposed under the prevailing law.

(5) While levying taxes pursuant to Sub-section (2) or (3), the Province or Local Level must do so in a manner that does not adversely affect the national economic policy, the flow of goods and services, capital and labor markets, and neighboring Provinces and Local Levels.

(6) The Government of Nepal may levy and collect royalties on natural resources in accordance with federal law. 4. Basis for Determining Non-Tax Rates: The Government of Nepal, Province and Local Level shall determine the rates of non-taxes based on the cost of goods or services, and operating and maintenance expenses. Amended by Finance Act, 2075.5. Single Tax Administration: (1) Notwithstanding anything contained in this Section or in the prevailing law, the taxes mentioned below, which are included in the lists of authority of both Province and Local Level in the Schedules of the Constitution, shall be levied and collected as follows:-

(a) The rate of vehicle tax shall be levied and collected by the Province,
Provided that, the rate of vehicle tax on tanga, rickshaw, auto-rickshaw and e-rickshaw shall be levied and collected by the Rural Municipality or Municipality.

(b) The rate of house and land registration fee shall be levied by the Province and collected by the Rural Municipality or Municipality,

(c) The rate of entertainment tax shall be levied by the Province and collected by the Rural Municipality or Municipality,

(d) The rate of advertisement tax shall be levied and collected by the Rural Municipality or Municipality.

(2) Of the amount collected from the taxes pursuant to Clauses (b), (c) and (d) of Sub-section (1), sixty percent shall be deposited in the Local Consolidated Fund of the concerned Rural Municipality or Municipality, and forty percent shall be deposited monthly in the Province Consolidated Fund. Chapter-3
Revenue Sharing

6.
Inter-governmental Fiscal Management Act, 2017

Chapter-3
Revenue Sharing

6. Sharing of Value Added Tax and Excise Duty: (1) For the purpose of sharing the amount of value added tax and excise duty collected from internal production among the Government of Nepal, Provinces, and Local Levels, the Government of Nepal shall establish a Federal Divisible Fund and deposit such amount in that Fund.

(2) Of the amount deposited in the Federal Divisible Fund pursuant to Sub-section (1), seventy percent shall be distributed to the Government of Nepal, fifteen percent to the Provinces, and fifteen percent to the Local Levels.

(3) Of the amount distributed among the Government of Nepal, Provinces, and Local Levels pursuant to Sub-section (2), the amount receivable by the Government of Nepal shall be deposited in the Federal Consolidated Fund, and the Government of Nepal shall establish the following divisible funds and deposit therein the amount receivable by the Provinces and Local Levels:-

(a) Provincial Divisible Fund for the amount receivable by the Provinces,

(b) Local Divisible Fund for the amount receivable by the Local Levels.

(4) The amount deposited in the Provincial Divisible Fund and the Local Divisible Fund pursuant to Sub-section (3) shall be distributed to each Province and Local Level in accordance with the basis and framework determined by the Commission, subject to the Constitution and this Act.

(5) The amount receivable by each Province from the distribution pursuant to Sub-section (4) shall be made available monthly to be deposited in the concerned Province Consolidated Fund, and the amount receivable by each Local Level shall be made available monthly to be deposited in the concerned Local Consolidated Fund.

(6) Accounts shall be reconciled in the last month of the fiscal year for the amounts distributed pursuant to this Section. Inserted by Finance Act, 2075.6a.
Inter-governmental Fiscal Management Act, 2017

Inserted by Finance Act, 2075.6a. Sharing of Vehicle Tax: (1) The amount collected from the vehicle tax levied and collected by the Province pursuant to Clause (a) of Sub-section (1) of Section 5 shall be deposited by the Provincial Government in the Provincial Divisible Fund.

(2) Of the amount deposited in the Provincial Divisible Fund pursuant to Sub-section (1), sixty percent shall be distributed to the Provincial Government and forty percent to the Local Levels.

(3) Of the amount deposited in the Provincial Divisible Fund pursuant to Sub-section (2), the amount receivable by the Provincial Government shall be deposited in the Province Consolidated Fund, and the amount to be provided to the Local Levels shall be deposited in the Local Divisible Fund.

(4) The amount deposited in the Local Divisible Fund pursuant to Sub-section (3) shall be distributed by the Provincial Government to the Local Levels in accordance with the basis and framework determined by the Commission, subject to the Constitution and this Act.

(5) The Provincial Government shall deposit the amount receivable by each Local Level from the distribution pursuant to Sub-section (4) monthly in the concerned Local Consolidated Fund.

(6) Accounts shall be reconciled in the last month of the fiscal year for the amounts distributed pursuant to this Section. 7. Sharing of Royalties from Natural Resources: (1) For the purpose of sharing royalties received from natural resources among the Government of Nepal, Provinces, and Local Levels in accordance with federal law, the Government of Nepal shall establish a Federal Divisible Fund and deposit the amount received from such royalties in that Fund.

(2) The Government of Nepal shall distribute the royalties held in the Fund pursuant to Sub-section (1) annually as per Schedule-4.

(3) The amount distributed pursuant to Sub-section (2) shall be made available so that the amount receivable by the Government of Nepal is deposited in the Federal Consolidated Fund, the amount receivable by a Province is deposited in the concerned Province Consolidated Fund, and the amount receivable by a Local Level is deposited in the concerned Local Consolidated Fund. Chapter-4
Provisions on Grants

8. Fiscal Equalization Grant: (1) The Government of Nepal shall distribute fiscal equalization grants to Provinces and Local Levels, based on their expenditure needs and revenue capacity, upon the recommendation of the Commission.

(2) A Province shall distribute fiscal equalization grants under provincial law to Local Levels within the Province, based on their expenditure needs and revenue capacity, upon the recommendation of the Commission, taking into account the grant received from the Government of Nepal pursuant to Sub-section (1) and the revenue collected from its own sources. 9.
Inter-governmental Fiscal Management Act, 2017

9. Conditional Grant: (1) The Government of Nepal shall provide conditional grants to Provinces and Local Levels, based on the criteria set by the Commission pursuant to Clause (c) of Sub-section (1) of Article 251 of the Constitution, for implementing any plan of the Province, Local Level, or the Government of Nepal.

(2) While providing a conditional grant pursuant to Sub-section (1), the Government of Nepal shall specify necessary conditions regarding the implementation of the plan, and the concerned Province or Local Level shall comply with such conditions.

(3) A Province shall provide conditional grants to Local Levels under provincial law based on the criteria set by the Commission. 10. Complementary Grant: (1) The Government of Nepal may provide complementary grants to Provinces and Local Levels for implementing any plan related to infrastructure development.

(2) While providing a complementary grant pursuant to Sub-section (1), the following matters shall be taken as basis:-

(a) Feasibility of the plan,

(b) Cost of the plan,

(c) Return or benefit derived from the plan,

(d) Financial and physical capacity or manpower to implement the plan,

(e) Need and priority of the plan.

(3) A Province may provide complementary grants to Local Levels under provincial law.

(4) The complementary grant pursuant to Sub-section (1) and (3) shall be provided based on the proportion of the total cost of the plan.

(5) The procedures for providing complementary grants and other arrangements shall be as determined by the Government of Nepal. 11. Special Grant: (1) The Government of Nepal may provide a special grant for a specific plan to be operated by a Province or Local Level with any of the following objectives:-

(a) To develop and supply basic services like education, health, and drinking water,

(b) To ensure balanced development among Provinces or Local Levels,

(c) To uplift or develop a class or community that is discriminated against economically, socially, or in any other manner.

(2) A Province may provide special grants to Local Levels under provincial law.

(3) The procedures for providing special grants and other arrangements shall be as determined by the Government of Nepal. Chapter-5

Foreign Assistance and Internal Loans

12.
Inter-governmental Fiscal Management Act, 2017

Chapter-5

Foreign Assistance and Internal Loans

12. Authority to Obtain Foreign Assistance: (1) The authority to obtain foreign grants or loans shall vest in the Government of Nepal.

(2) While obtaining foreign grants or loans, the Government of Nepal must do so in a manner that ensures the macroeconomic stability of the country.

(3) The Government of Nepal may obtain foreign grants or assistance for plans or programs to be implemented by Provinces or Local Levels.

(4) No Province or Local Level shall, without prior approval of the Government of Nepal, obtain any kind of foreign grant or assistance, or implement or cause to implement any plan or program under foreign grant or assistance. 13. Areas and Use of Foreign Assistance: (1) The Government of Nepal must obtain foreign assistance transparently, assessing the return and achievement from the mobilization of such assistance.

(2) The Government of Nepal must mobilize foreign assistance received pursuant to Sub-section (1) in the following areas of national need and priority:-

(a) Construction, maintenance and rehabilitation of physical infrastructure,

(b) Education, health and human development,

(c) Domestic production and productivity enhancement,

(d) Employment creation and capacity development within the country,

(e) Disaster management,

(f) Development and transfer of science and technology,

(g) Environmental protection and climate change,

(h) Investment to be made under public private partnership,

(i) Areas among those where the capacity of public, private, cooperative and community sectors is insufficient, which the Government of Nepal determines to be suitable for obtaining foreign assistance. 14. Internal Loans: (1) The Government of Nepal, Province and Local Level may obtain internal loans within the limit recommended by the Commission. Provided that, the Province or Local Level must obtain the consent of the Government of Nepal before taking an internal loan.

(2) The Government of Nepal and a Province may raise internal loans by issuing bonds, subject to the prevailing law.

(3) When a Province or Local Level requests the consent of the Government of Nepal to take an internal loan, it shall submit to the Ministry a proposal containing the plan for which the loan is sought, the return and achievement likely to be derived from the plan, the loan repayment plan, and details of the lending institution.

(4) If the proposal submitted pursuant to Sub-section (3) appears feasible, the Government of Nepal may grant consent to the concerned Province or Local Level to take the internal loan. 15.
Inter-governmental Fiscal Management Act, 2017

15. Government of Nepal May Provide Loans: (1) The Government of Nepal may provide loans to a Province or Local Level.

(2) A Province or Local Level may request the Ministry for a loan, specifying the use of the loan amount, the method of repayment, and the time limit.

(3) If the request received pursuant to Sub-section (2) appears reasonable, the Government of Nepal may grant approval to provide the loan.

(4) If approval is given by the Government of Nepal to provide a loan pursuant to Sub-section (3), the Ministry shall enter into an agreement with the concerned Province or Local Level.

(5) If a loan received from the Government of Nepal is not repaid by the Province or Local Level within the period specified in the agreement, the Government of Nepal may recover such loan amount from the grants provided to the concerned Province or Local Level. Chapter-6

Public Expenditure Arrangements

16. To Prepare Estimated Statement of Public Expenditure: (1) The Government of Nepal, Province and Local Level shall prepare an estimated statement of public expenditure to be incurred on matters within their respective functional areas in each fiscal year.

(2) While preparing the statement pursuant to Sub-section (1), amounts required for current expenditure, capital expenditure, and financing arrangements shall be segregated. 17. Medium-Term Expenditure Framework to be Prepared: (1) While preparing the statement of public expenditure pursuant to Section 16, the Government of Nepal, Province and Local Level shall prepare a medium-term expenditure framework including projections of expenditure for the next three fiscal years.

(2) The medium-term expenditure framework to be prepared pursuant to Sub-section (1) shall specify the following details:-

(a) Objective of the proposed plan,

(b) Justification of the need to conduct a feasibility study or allocate expenditure for the proposed plan,

(c) Return and achievement likely to be obtained in the fiscal year in which the proposed plan can be implemented and in the subsequent two fiscal years,

(d) Details of expenditure required to implement the proposed plan,

(e) Source of financing the expenditure and projection of return and achievement likely to be made from the amount spent,

(f) Medium-term expenditure strategy of the proposed plan and its consistency with the annual expenditure,

(g) Actual details of whether targets were achieved according to the expenditure allocated in the previous fiscal year, if the plan is ongoing.

(3) Notwithstanding anything contained in Sub-section (1), a Province or Local Level may, for up to three years from the date of commencement of this Act, prepare the medium-term expenditure framework pursuant to the same Sub-section based on their own priorities and needs. 18.