Important Highlights of Finance Bill F.Y.68.69

Santosh Kr. Mishra (9851011940) Prakash Kr. Jha (9751017769)

(Only for private Cerculation)

IMPORTANT HIGHLIGHTS ON GENERAL TAXATION & FINANCE BILL F/Y 2068/69 (2011-012)

A) Direct Tax 1. INCOME OF NATURAL PERSON

a) Resident Natural Person

Individual FamilyRemuneration Firm Remuneration Firm

First Rs. 1,60,000 for Individual 1% - - -First Rs. 2,00,000 for Family - - 1% -Upto Next Rs. 1,00,000 15% 15% 15% 15%Balance Amount 25% 25% 25% 25%

If taxable Income is more than 25 lakhs, Excess amount (more than 25 lakhs) shall be taxed @ 35% [25%+40% of 25%], Subject to gain from Non Business chargeable Assets, Capital gain on interest/ securities listed in NEPSE.

However, if natural person is female & she has income from employment only, she will get 10% rebate on tax payable.

b) Individuals under Section 4(4) of Income Tax Act 2058 having maximum Rs. 2,00,000 Income and Rs.20,00,000 turnover of the business shall be taxed as follows:

i) Individuals conducting business in the Metropolitan or Sub-Metropolitan Cities Rs. 3,500.

ii) Individuals conducting business in Municipalities Rs. 2,000 or

iii) Individuals conducting business anywhere else other than above in Nepal Rs.1,250

c) A resident person is eligible to get deduction of actual premium paid against Investment Insurance or Rs. 20,000 whichever is lower.

d) Contribution in Approved Retirement Fund is deductible to the limit of 1/3rd of Assessable Income or Rs. 3,00,000 whichever is less.

e) Medical Treatment and Medicinal Expenses up to Rs. 750 can be settled in Tax assessed. The expenses for the above clause are:

i) Health Insurance Premium

ii) Medical Treatment and Medical Expenses from approved Hospital, Nursing Home, Health Centre or Doctor as per Bill.

f) Tax shall be calculated @ 20% instead of 25% in case of a natural person engaged in Special Industry (as defined in Section 11 of Income Tax Act) for the whole year entirely.

g) Tax shall levied @ 15% on Taxable Income of a natural person from Exports.

h) Non-resident natural persons shall be taxed @ 25% of Taxable Income

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2. INCOME OF ENTITY & TAX RATES

S.N. Particulars Tax Rate

1 For any Cigarettes, Bidi, Cigar, Chewing Tobacco, Khaini, Liquor, Beer related Entity and Bank, Financial Institutions, General Insurance Company or Petroleum related entities (Under Nepal Petroleum Act 2040)

30%

2 i) For Special Industries (as defined in Section 11 of Income Tax Act) for the complete year.

ii) For the entities constructing and operating road, bridges, tunnel, ropeway, over bridges, trolley buses or train. (Ropeway includes cable car for passenger carriage or goods carriage.)

iii) For the entities engaged in Projects conducted so as to build Public infrastructure, own, generate and transfer it to Nepal Government and in power generation, transmission or distribution.

iv) Export Income.

v) Co-operative Society other than Operating Tax Exempted Transaction.

20%

3 i) On repatriated Income of permanent foreign establishment of Non-Resident Person situated in Nepal.

ii) On Non-Resident Persons providing Shipping, Air Transportation Service or Telecommunication Service in Nepal.

However, Non-Resident Person providing water transportation, Air transportation & telecommunication services to foreign countries from Nepal but not departing from Nepal shall be taxed @ 2%.

5%

4 All the entities not specifically mentioned above. 25%

3. EXEMPTION OF TAX ON INCOME & DIVIDEND DISTRIBUTED:

i) @ 50% of the Tax amount shall be exempted on industry related to software development, processing of data, cyber cafe, digital mapping established in Technology Park, Biotech park and Information Technology park, prescribed by Nepal Government in Nepal Rajpatra.

ii) Industries established on Hilly Area as prescribed by Nepal Government and Special Economic Zone of Hilly Area shall be allowed 100% Tax Exemption for its income for the period of 10 years from commencement of Industry and 50% of tax shall be exempted for the following years.

iii) Industries established on other Special Economic Zones shall be allowed 100% tax exemption for its Income for the Period of 5 Years from the date of commencement of Industry and thereafter only 50% of tax amount shall be exempted for the following years.

iv) 100% Tax on dividend distributed by the Industry established in special Economic Zone will be exempted for the period of 5 years from the date of commencement of transaction and 50% exemption for next 3 years on the same.

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v) Tax on Income from Foreign Technology or Management Service Fee and Royalty of Foreign Investor invested in Industry established in special Economic Zone shall be exempted by 50%.

vi) 100% of Tax amount on Income of Specified operation of Co-operative Society established in Remote Area under Co-operative Act, 2048 shall be exempted.

vii) Special Industry & Information Technology Industry

Special Industry & Information Technology Industry providing direct employment through out the year for 300 or more Nepali Citizens shall be levied tax @ 90% on applicable tax.

Special Industry providing direct employment through out the year for 1200 or more Nepali Citizens shall be levied tax @ 80% on applicable Tax.

Special Industry providing direct employment through out the year for more than 100 Nepali Citizens including at least 33% handicapped, women or dalit shall be levied tax @ 80% on applicable tax.

viii) 25% Rebate on applicable tax rate shall be available for profit on export income from goods produced of industry.

ix) 40% rebate on applicable tax rate shall be available on income of construction & operation of Road, Bridge, Airport, Tunnel or investment & operation of tram, trolly bus.

x) 10% rebate of tax amount shall be available for Listed entity engaged in production, tourism, hydropower generation, distribution & transmission and specified industry established in special economic Zone u/s 11(#u{

xi) 40% rebate on tax shall be available to the industry established in least Developed Area producing wine, brandy, sider from the date of commercial production.

xii) 25% rebate on applicable tax rate shall be available on royalty income from export of intellectual property [af}lbs ;DklQ{

xiii) 50% rebate on applicable tax rate shall be available on income from sale of intellectual property . [af}lbs ;DklQ{

xiv) Tax Exemption on Hydro Power/ petroleum and natural gas

Any body corporate commercially starts generation, generation & distribution, distribution of hydropower and any person engaged in research & extraction of petroleum and natural gas commercially start the transaction within Chaitra End 2075 shall enjoy the following tax exemptions:

No. of Years from the Commencement Tax Exempt

First 7 Years 100%

Next 3 Years 50%

However, any body corporate start to construct with in 2071, Bhadra 7 and start commercial production of hydro power within Chaitra end 2075 shall enjoy the following tax exemptions.


First 10 Years 100%

Next 5 Years 50%

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However, the terms of the license time shall be applicable if commercial production is prior to 068.04.01. for hydropower.

4. DEDUCTIONS

a) Gifts or Donation to Registered Tax exempt entities can be claimed as deduction for subject to the limits of Rs. 100,000 or 5% of Taxable Income before such Gift or Donation, Interest (as per Sub Section 2 of Section 14 of Income Tax Act), Pollution Control Expenses or Research & Development Expenses, whichever is less.

b) Repair & Improvement Expenses is deductible up to 7% of the depreciation basis of the block of the Assets. However, this limit shall not be applicable in case of Airline Service.

c) It is mandatory to charge Depreciation as per Income Tax Act and Amendments thereof.

d) Expenditure on Heritage and Development of Sports

If any Company with prior approval of IRD, incurred Expenditure within Nepal for protection & conservation of Historical (Prachin), Religious or Cultural Heritage or incurred Expenditure on Construction of Public Infrastructure for Sports, can deduct the lower of the following amount in calculating Taxable Income of the Year.

i) Rs. 10,00,000 or ii) 10% of Assessable Income

5. CARRY FORWARD & SET OFF OF LOSS

Particulars Years

Business Loss (general)

Business Loss (as below)

BOOT Projects

Entity engaged in petroleum under petroleum Act, 2040.

Construction of power house, generation and transmission.

Upto 7 Years

Upto 12 Years

Investment Loss Upto 7 Years

6. SPECIAL PROVISION FOR GENERAL INSURANCE BUSINESS

Person operating General Insurance Business can deduct the following amount under Risk Reserve for calculating Income or Loss of such Business:

i) Upto 50% of Net Premium shown in Profit & Loss Account and

ii) Upto 115% of Unpaid Claim Outstanding at the end of Year.

However, amount deducted as expenses above in One year should be included in the Income of next year for calculating such business income or loss for next year.

7. OTHER

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i) Medical Service Tax/VAT

Medical Service Tax shall be levied 5% on Invoice Value on all medical service provided by any entity except provided by Government & Community Hospitals.

Medical Institution may register on VAT Voluntarily.

ii) Education Service Tax

Education Service Tax shall be levied @ 1% on admission & monthly Education Fee charged by Educational Institution providing education higher than Higher Secondary Level & Private Educational Institutions in Kathmandu Valley, Sub-Metropolitan City, Municipality & District Head Quarters (Gilla Sadar Mukam) and area prescribed by IRD provides education upto Higher Secondary Level.

Private Education Institution doesn’t include Institute providing Trainings.

iii) Facilities on Infrastructures Development Projects Of National Interest

Source of Income shall not be inquired for the investment made within Chaitra End, 2075 for the following projects:

a. Infrastructure Development Projects like Hydropower Projects, International Airports, Underground Road & Roads, Railway and

b. Production oriented industries which gives employment to more than 300 local people and consume more than 50% of local raw materials (except cigarette, liquor & beer Industry)

iv) Depreciation on Assets for generator of power (Energy)

Manufacturing Industry may deduct its 50% of capitalization amount on Assets for generating power required for its use in the year of acquisition as depreciation.

v) Depreciation on Fiscal Printer & Cash Machine

Any person may deduct the expenditure incurred in fiscal printer & cash machine as depreciation if the person is sue bills through it.

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8. WITHHOLDING (TDS)

For the following payments Tax should be deducted as Source.

Notes:

a) Except as indicated above, Tax Deducted on the payments made to non resident and rent for lease of land or building and associated fittings and fixtures to an individual other than in conducting business shall be treated Final Tax.

b) TDS shall be deducted @ 1.50% on payment of Vat Invoice of Service Fee to Resident Service Provider Registered in VAT.

SN Particulars Ratei. Remuneration (Sec.87) Above as per

Natural Personii. Investment Returns & Service Fees (Sec.88)a. Natural Resource Payment 15%b. Rent – Individuals 10% (Final Tax)c. Rent – Others 10%d. Royalty 15%e. Dividend (from Resident Company to Resident Person)

(from partnership firm to partner)5% (Final Tax)

f. Income from Investment Insurance 5% (Final Tax)g. Service Fees, Commission, Sales Bonus 15%h. Meeting Allowance 15% (Final Tax)i. Interest by Financial Institutions and Company to Individuals (not

related to business)5% (Final Tax)

j. Interest- Others 15%k. Gain on Retirement Payment from Unapproved Fund 5% (Final Tax)l. Gain Retirement Payment from Approved Fund or Nepal

Government under Sec 65(1b) (50% of payment to an individual or Rs.500000 which ever is higher is not taxable)

5% (Final Tax)

m. Part Time Teaching 15% (Final Tax)iii. Insurance Premium to Non Resident insurance company 1.50%iv. Payment on Lease of Air Craft 10%v. Commission paid by Resident Employment Company to Non

Resident Person5%

vi. Gain on Disposal of Interest/Securities of Resident Entity (Other than Resident Entity dealing in Security Trade registered under Current Law) - Interest/Securities listed in Security Board Gain on Disposal to Entity Gain on Disposal to Natural Person

10%5%

- Interest/Securities not listed in Security Board Gain on Disposal to Entity Gain on Disposal to Natural Person

15%10%

vii. Capital Gain Tax on Land & Building (Non Business Chargeable Assets) to Natural Person- Ownership more than 5 years 2.5%- Ownership less than 5 Years 5%

viii. Casual Income 25% (Final Tax)ix. Gain on Commodities Future Market 10%

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c) No Tax needs to be deducted while making following payments.

i) Payment of Interest to a resident bank or other Financial Institution.

ii) Payments exempt from Tax.

iii) Payment made for articles in newspaper/magazine.

iv) Payment for setting question paper or checking answer copies.

v) Payment of Inter-regional Interchange Charges paid to Bank issuing Credit Card.

vi) Interest or Fee paid by Nepal Government to Foreign Government or International Organizations under any Agreement between Nepal Government and Foreign Government or International Organizations.

vii) Interest income upto Rs. 10,000 against the deposit in rural community based Micro Finance, Rural Development Bank, Postal saving Bank, Co-operative Society as specified in Sec 11(2).

d) No Tax shall be levied on dividend distributed by Co-operative Societies engaged in Tax Exempted Transactions.

e) Contract Payment above Rs. 50000 (Sec. 89):

The amount referred above shall be determined by aggregating a payment made by a person under a contract with any other payment made by the person or an associate of the person during the previous ten days under the same contract to the same payee or an associate of the payee.

Withholding tax shall be as follows on contract payment:

Contract payment by Resident Person to Resident Person- 1.5%

Contract payment by Resident Person to Non Resident:-

i) Air Craft Maintenance & Other Contract - 5%ii) Premium paid to Non resident Insurance Company - 1.5%iii) In other cases, as rate specified by IRD Here the meaning of Contract includes the following:i) Supply of any goods or labour or ii) any agreement or contract entered into, for the construction or

installation or establishment of tangible assets or infrastructure and iii) any act prescribed by IRD as contractiv) any payment against the Service associated with such construction,

installation or establishment is deemed to be the payment under such contract.

9. CASH PAYMENT ABOVE RS. 50,000 BY A PERSON HAVING ANNUAL TURNOVER ABOVE RS. 20,00,000. (SEC. 21(2))

Cash Payment in excess of Rs. 50,000 is not allowed as deduction, other than in the following conditions: Payment to Nepal Government, constitutional body, corporation owned by Nepal

Government or bank or Financial Institutions. Payment to a farmer or a producer producing primary agricultural products. Retirement Contribution or retirement payment. Payment made in area not having Banking Service (Area having Banking Service

means the area where Banking Facilities exist within the surrounding of 10 kilometers) Payment necessarily to be made in Cash or on a day when Banking Service are closed;

or

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Payment made into Bank Account of the Payee.

NOTE: PAYMENT SHOULD BE MADE THROUGH ACCOUNT PAYEE CHEQUE FOR PAYMENT ABOVE Rs. 50000.

10. ADVANCE INCOME TAX

Income Tax on Current Year’s Income shall be paid in three-installment viz. 40% by the end of Poush, 70% by the end of Chaitra and 100% by the end of Ashad. Where an installment of tax paid by a person is less than 90% of the stipulated amount of Tax payable, the person shall be liable to pay interest for each month and part of month from the date of first installment on the amount to the excess of installment that would have to be paid over the installment paid.

11. ADVANCE RULING

The Practice of Advance Ruling is available to facilitate clarification on the matters, which are ambiguous in Income Tax Act, for which an application shall be made to the Inland Revenue Department.

12. FINE & PENALTY

a) Non-filing of Return U/S 96(1), 0.10% p.a. of turnover or Rs. 100 per month whichever is higher. However Rs. 100 per month for person described under Section 4(4).

b) Penalty for Non-filing of Estimated Tax Return U/S 95 is Rs. 2000 per Return.Non-maintenance of Books of Accounts U/S 81, 0.10% of turnover or Rs. 1,000 per year

whichever is higher.c) Penalty for Non filing of Return u/s 95 (s) (5) is 1.5% p.a. on monthly basis at

amount of TDS to be deducted.

13. ADMINISTRATIVE REVIEW

Assessee can appeal to Inland Revenue Department against the Assessment order issued by Tax Office within 30 days of receipt of such order on cash deposit of one third (1/3 rd) amount of disputed Tax Payable. (For Both Income Tax & VAT Assessment Order).

14. RATE OF INTEREST 15% Rate of Interest shall be applicable.

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B) Indirect Tax

1. VAT

1.1 Value Added Tax (13%)

a) Threshold

Threshold Limit for compulsory registration under VAT Act is the turnover of Rs. 20,00,000 over last 12 months.

However, persons dealing in Hardware, Sanitary, Furniture & Fixture, Furnishing, Automobiles, Electronics, Motor Parts, Marbles Educational Consultancy, Disco, Health Club, Catering Service, Party Palace, Parking Service, Dry Cleaners using machine, Restaurant with Bar and Colour Labs within Metropolitan City, Sub-metropolitan City or Municipality areas shall have to be compulsorily registered under VAT specialized Area within 30 days from the date of transaction.

b) Computerized Billing

Rs. 500000 shall be charged as fine if tax payer used software having elimination & modification option.

c) Provision for Non Registered Party

Persons not registered in VAT should also maintain Sales and Purchase Register duly certified by Tax Payer. Otherwise, Penalty of Rs. 1000 each time shall be charged.

d) Persons having transactions of Rs 10 Lacs or more even though not registered should issue invoice mentioning his own name, address and PAN number along with serial number.

e) Transportation of taxable goods above Rs. 10000 to an area outside prescribed area needs to be accompanied with tax invoice.

f) If the registered person does not issue the VAT invoice, non registered person said in (c) & (d) above does not issue invoice as prescribed, penalty of Rs 5000 will be levied for every time.

g) Diplomats or such other person will not get VAT refund on the purchase made upto Rs. 1500 at a time.

h) If tax officer find the purchase/Sales Stock Store of two businesses cannot be separated then he may take as one for tax Assessment purpose.

i) VAT Refund on Damaged Goods

VAT Refund can be claimed on the goods damaged by fire, theft, accident, wear and tear as prescribed.

j) Vat Refund To Regular Exporter

Any Register person exports more than 40% of total monthly sales, can claim refund as prescribed.

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k) VAT Refund to Industry and Importer:

i. VAT Refund to Textile, Matches (Wooden Stick Only), Tyre Tube Industries:

Equal amount of balance of VAT Amount after deducting VAT paid on Purchase/Import from VAT collected on Sales shall be refunded as prescribed by IRD.

ii. VAT Refund to Flour (Maida) Industries:

Only 25% of balance amount of VAT Amount after deducting VAT paid on

Purchase/Import from VAT collected on Sales of Flour (Maida) shall be refunded as prescribed by IRD.

iii. VAT Refund to Mobile Producer (Local Industry) & Importer:

60% of VAT paid for Raw Material of Mobile or Finished Goods shall be refunded as prescribed by IRD if the Local Industry or Importer submit the evidence of Sales of such goods to VAT Registered party.

iv. VAT Refund to Mustard oil & vegetable ghee & oil industry

50% of VAT collected on sale of own produced mustard oil by domestic mustard oil industry and 50% of VAT collected on sale of locally produced vegetable Ghee by Ghee Industry & other processed cooking oil industry, if sold to VAT registered person shall be refunded as prescribed by IRD.

However it is not applied to Refilling Industries.

v. VAT Refund to Sugar Industry.

70% of VAT collected on sale of its production shall be refunded as prescribed by IRD if sugar sold to VAT Register Party.

vi. If goods re-exported VAT taken as deposit at custom shall be refunded from custom office.

l) Purchase of Under Valued Goods

If it seems that the sales have been undervalued in comparison to the market of the goods, the Department may act to Purchase the same at the undervalued rate.

m) Foreigners leaving Nepal through Air route can claim refund of VAT on Taxable Purchase above Rs. 15,000.

n) Computer Database

Department can have continuous access to the Computer Database of Tax Payer.

o) Hire Purchase Loan or Mortgage of Capital Goods

VAT refund can be claimed on the Capital Goods Purchased Under Hire Purchase , Loan or Mortgaged in the name of Financial Institutions.

p) Additional Fee and Interest on late payment of VAT Amount (sec. 19 & 26)

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If VAT amount payable to Inland Revenue is not paid within stipulated time, additional fee of 10% annually shall be imposed on payable VAT amount and 15% interest annually shall be imposed on such outstanding amount.

r) Advance Ruling

The practice of Advance Ruling is available to facilitate the clarification of ambiguous matters in the Act for which an application shall be made to the Department on the subject matter.

s) Tax Plate

If tax plate is not kept, penalty @ 2000 per week and if not kept at prescribed place, penalty @ Rs. 1000 shall be imposed.

t) Fine for Non registration according to Sec 10 (1) & (2)

-Fine of Rs. 10000 per Tax period.

u) Provision regarding Non-Filer of Return

The name of assessee who has not submitted tax return for a consecutive period of 6 months, shall be publicly disclosed.- Vat credit of such assesee shall be suspended.- Registration shall be suspended.

1.2 VAT Facility to Hydropower Projects

a) VAT Exemption

Equipment, Machinery Tools & their Spare parts, Penstock pipe or iron plate used to make Penstock Pipe (which are not produced in Nepal) on the recommendation of Alternative Energy Promotion Centre or Department of Electricity Development as the case may be.

b) Zero Rate of VAT

Zero rates shall be applicable on the supply of equipments, spares & parts thereof, penstock pipe or iron plate used for making penstock pipe by the Domestic Industries manufacturing and directly supplying equipments to the Hydropower Projects on the recommendation of Alternative Energy Promotion Center or Department of Electricity Development and as process prescribed by IRD.

1.3 Goods or Services levied zero percent VAT

Zero rated Goods & Services

o Raw Material and Manufactured Goods sold to Industries established on Special Economic Zone as per current law.

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o Industries manufacturing Batteries

Zero rates shall be applicable on Batteries supplied by the Domestic Industry manufacturing and directly supplying Battery usable to apparatus or equipment generating Solar Energy on the recommendation of Alternative Energy Promotion Center and as process prescribed by IRD.

1.4 a. Exempted goods/Services

i) Cargo Service for Export

ii) Reinsurance Service

iii) Equipment imported by bee keeping industry for its use

iv) Import of spare parts by Jute Industry for operation of own industry on recommendation of Department of Industry.

b. Taxable

i) Rent service provided by Apartment (as provided by hotel & guest house)

1.5 Others

i) VAT on construction of Commercial Building/Apartment/Shopping Complex

VAT shall be collected from the owner of the Commercial Building/Apartment/Shopping Complex or similar other structure as prescribed by IRD having value more than 50 lacs, though the construction is not built by Registered Person.

ii) VAT should be collected by Local Authority or International Agencies in Nepal or Nepal Government on sell of Taxable Goods or Services.

2. CUSTOM DUTIES

2.1 Custom Service Fee Custom Service ChargeEach Export Pragyapanpatra Rs. 600.00Each Import Pragyapanpatra Rs. 500.00

Except:

i. Duty Paid Exports

ii. Diplomatic or Duty free Imports or Exports (Temporarily Import)

iii. Imports or Exports Valued up to Rs. 5000.00

iv. Goods taken out by Passenger of Airways.

a) Post Clearance Audit

The Director General can order The Post Clearance Audit of Firm or Goods after the goods are cleared from custom and if he finds that the goods are valued at lower value, then custom duty on such short amount along with penalty will be imposed.

2.2 Duty Draw Back 12


a) Industry not having bonded warehouse license if export their goods through letter of credit or proper banking channel or sell their goods in convertible foreign currency in domestic market, then such industry can import raw materials, subsidiary raw materials, packing materials (not produced in Nepal) keeping deposit against custom duty. This deposit will be refunded after export takes place. Record will be kept in passbook system, which will be issued to eligible exporters for the purpose of duty draw back.

b) To avail this facility there must be a value addition of 10% and the export/sale must have taken place within 12 months.

c) Such facility on import can be availed only through any one Custom Office.

2.3 Duty Refund Procedure (DRP)

Excise duty paid in India shall be duly deductible on the goods imported under DRP from applicable custom duty except for the difference in Value, Freight, Insurance and other expenses on which Indian excise shall not be deductible.

2.4 Import Duty on Clinker

Current Year Previous Year

Clinker (25.23.10.00) 2200/MT 1800/MT

Other (25.23.29.00) 3550/MT 3150/MT

3. EXCISE DUTY

a) Excise Duty will be charged on Sale/Transfer of goods manufactured or imports of prescribed goods or sale of prescribed services.

The excise paid on Raw Material consumed in production of excisable goods shall be deductible from excise to be paid on issuance (sale/transfer) of such Finished Goods.

b) Rebate on Excise Duty

Duty Rebate on Import of M.S. Wire Rod in Coil (C.C. 7213.91.10) shall be provided to Industry under the recommendation of Department of Industry.

c) Excise duty will not be levied on the goods being exported and sold to duty free shops except liquor and cigarettes.

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d) Excise Duty Tariff (Short Amended list only)S.N. Particulars Excise Rate

Current Year Previous Year

Item:i.ii.

Alcohol free Soft DrinksFruit Juice

Rs. 4.5./ LtrRs. 3.5/Ltr

Rs. 2.5./ LtrRs. 2.0/Ltr.

iii. Molasses (Khudo) Rs. 40/quintal Rs. 40/quintaliv. Cement Rs. 180/M.T. Rs. 180/M.T.v. Bricks (except locally produced) Rs. 600/1000 Pcs Rs. 600/1000 Pcsvi. Bus, Truck (Custom code 8702, 8704) &

chassisCar, Jeep, Van (8702,8703)Micro BusDouble Cab Pick upSingle Cab Pick upDelivery VanMini BusMotorcycles (Custom Code 8711)

5%

60%55%60%50%30%35%40%

5%

50%50%50%45%25%30%30%

vii. Thinner, Solvent (CC 3814) Rs. 22/Ltr. Rs. 22/Ltr.viii. Iron Rod 1000/M.T 1000/M.Tix. Marble/Glaze Tiles (6908) 5% 5%x. Noodles/Makaroni/Pasta Rs. 7.50/Kg Rs. 7.50/Kgxi. Plastics Goods for Packaging. 5% 5%xii. Other Plastic Product 5% 5%xiii. Colour Television 5% 5%xiv. Spare Parts of Colour Television, Picture Tube

of Colour TV5% 5%

xv. All types of Paints 5% 5%xvi. Kattha Rs. 115/Kg Rs. 115/Kgxvii. Katha (Liquid) Rs. 10/Kg Rs. 10/Kgxviii Beer (2203.00.00) Rs. 80/Ltr Rs. 72/LtrXix Black Sakhar 72/Qtl 72/Qtlxx. Junk foods (Kurkure, Kurmure, Cheese balls,

lays, etc.)7.5/kg 7.5/kg

xxi. Telephone set, Cellular network or other cordless network telephone, custom code heading (85.17)

5% 5%

xxii. Photocopy, Fax machine 10% 10%

xxiii. Insulator (including enameled or anodized) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not

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S.N. Particulars Excise Rate

Current Year Previous Yearfitted with conductors, optical fiber cables, wire, made up of individually sheathed fiber, whether or not assembled with electric conductors or fitted with conductors.

Fitted with connection Optical fibro cable Others

15%10%15%

15%10%15%

xiv. Television Camera, Video camera and other Video camera records, Digital camera

5% 5%

e) Excise duty shall not be levied on Ambulance & Dead Body Carrier (zj jfxg) & Electric Passenger Vehicle.

f) Excise Duty shall not be levied on Domestic Production of Marble.

g) Excise duty shall be exempt @ 50% on Local Production of Motorcycle & @ 25% on Local production of other passenger vehicle.

h) Excise duty shall be exempt if any Industry produced its product by using 90% or more domestic scrap.

i) Payment of Excise Duty on Installment

Permission may be granted to pay arrears of Excise Duty on Installments for One Year if written application is filed by any Tax Payer.

j) Filing of Excise Return:

Excise return should be filed with in 25 days of next month (Including zero Return, if any)

k) Payment of Excise Duty a) Physical Control system:

At the time of issue of goods.b) Self issue system:

Excise Duty shall be paid within 25 days of next month. Otherwise penalty shall be attracted @ 0.05% per day.

l) Register for Purchase, Production, Issue, Sales & Stock should get approved/ certified by excise officer and used for maintaining the Accounts.

m) Accounts to be maintained

Accounts should be updated for the excise goods or service including prescribed particulars regarding the followings:

i) Production & Sales of Excisable goods and services.

ii) Information about raw materials, subsidiary raw materials, etc. required to produce the goods or services i.e.

- Purchase

- Consumption

- Closing Stock

- Quantity & value both.

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n) Appeal

Appeal can be filed against Assessment Order to Appellate Tribunal within 35 days.

o) Review by Director General (D.G.)

Application of Appeal to review against the assessment of excess collection of excise by Excise Officer by irregularities or recklessly or by disobeying the act, can be filed by depositing 1/3 amount of disputed excise duty & penalty in Cash and paying all undisputed amount.

p) Provision of Excise/VAT Deposit (Dharauti) and Refund on Import

In case of non-acceptance of goods by Importer by any other reason, if the goods once exported to outside Nepal, which were produced or made in Nepal can be re-imported,

Excise/Vat payable at Custom for such import shall be on deposit (Dharauti) and such deposit will be refunded by Custom Office if such imported goods are re-exported within 3 months of such import.

q) Retail price of liquor, beer & cigarette to be published by importer or seller at the beginning of the fiscal year or which price is changed.

r) Provision of Gift & Cash discount

i. Liquor, beer or cigarette industry & their traders can't run any gift program or

ii. Such industry can't give any discount on sale except to the VAT registered traders.

s) License shall not be renewed for the industry under Self Removal System.

t) License can be renewed for 3 Fiscal year by paying the fee at a time.

4. ROAD CONSTRUCTION & MAINTENANCE FEE

Following Fee shall be levied on Registration of following Vehicles:

S.N. Particulars Fee

1 Car, Jeep, Van, Microbus, Bus, Truck, Tripper, Truck Mixture, Mini Bus , Mini Truck & Mini Tipper

5% on Value

2 Motorcycle 6000

However, it shall not be levied on Fire bridge, Ambulance, Dead Body Carrier (zj jfxg{ and Diplomatic Privileged Person.

5. Provisions for Vehicle Traders/Importers

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i. Passenger Vehicle & Vehicle for transportation means can be imported into Nepal by Manufacturing Company or its Authorized dealers only.

ii. Maximum Retail Price (M.R.P.) of the vehicles imported for sale should be published in National level daily newspaper in every four months by the importer.

iii. Payment for the purchase of vehicle for more than 20 lakh is to be paid through Account Payee Cheque only.

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C. Major Changes By Finance Act 2068.

i. VAT- VAT shall be levied on rent services provided by apartments (as service provided by

Hotel & Guest House).- VAT refund to sugar Industries.

70% of VAT collected on sale of its production shall be refunded as prescribed by IRD if sugar sold to VAT Register Party.

ii. Withholding TaxSN Particulars Current Year Previous Year

i. Gain on Disposal of Interest/Securities of Resident Entity (Other than Resident Entity dealing in Security Trade registered under Current Law)

- Interest/Securities listed in Security Board Gain on Disposal to Entity Gain on Disposal to Natural Person

10%5%

15%10%

ii. Capital Gain Tax on Land & Building (Non Business Chargeable Assets) to Natural Person- Ownership more than 5 years 2.5% 5%

iii.- Ownership less than 5 YearsDividend distributed by partnership firm.

5%5%

10%-

iii. Payment more than Rs. 50000 should be made through A/C Payee Cheque.

iv. Rebate on Income Tax rate/amount.

i) Tax Exemption on Hydro Power/ petroleum and natural gas Any body corporate commercially starts generation, generation & distribution, distribution of hydropower and any person engaged in research & extraction of petroleum and natural gas commercially start the transaction within Chaitra End 2075 shall enjoy the following tax exemptions:


First 7 Years 100%

Next 3 Years 50%

However, any body corporate start to construct with in 2071, Bhadra 7 and start commercial production of hydro power within Chaitra end 2075 shall enjoy the following tax exemptions.


First 10 Years 100%

Next 5 Years 50%

However, the terms of the license time shall be applicable if commercial production is prior to 068.04.01. for hydropower.

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Documents

Important Highlights of Finance Bill F.Y.68.69