Online Amendment Class

INDUSTRIAL ENTERPRISES ACT, 2076

Applicable to – CAP-II, Cap-III & CA Membership

ORGANIZED BY:
Nepal Chartered Accountant Students’ Association
(NCASA)
Date: 1st Otcober, 2020

CA. Mahesh Gyawali

INDUSTRIAL ENTERPRISES ACT, 2076
(Unofficial Translation)

Date of Authentication and Publication: 28 Magh 2076

ACT NO. 19 OF THE YEAR 2076
WITH
INDUSTRIAL ENTERPRISES REGULATION, 2076
Total Sections in the new Act: 69

CA. Mahesh Gyawali

Preamble (Section 1):
# Foster industrial enterprises to increase national productivity & make job opportunities.
# Make environment of industrial investment more congenial, competitive, straightforward and encouraging.
# Make optimum utilization of natural, physical or human resources available in the country.
# Make progressive economy by encouraging more imports & exports.
# Make available effective protection to industries.
Some Important Definitions (Section 2):
Body for Registration of  Cottage Industries and Department of cottage and small industries
 Small Industries
Industries
 Medium Industries based on national investment, Department of Industries
(Industrial Enterprises  Large Industries based on national investment and
Regulation, 2076)  Industries based on Foreign Investment
 Industries with national investment established in Special Economic Zones Authority
special economic zones established as per SEZ Act, 2073

One Point Service center One point service center as referred in section 37.

Transactions Manufacturing or distribution of goods or services as per the objectives of the industry & other
transactions related to such manufacture or services.

Export Industry Any industry which exports more than 40% of its products , but does not include energy-based
industries.

Intellectual Property Any patents, trademarks. Designs, service marks, business secrecy, etc. and it also includes
Rights copyrights as defined in the prevailing laws.
Basic understanding of Registration of Industry (Section 3):
# No person by himself or cause to incorporate or operate any industries without registration under this act.
# Every Industry shall be registered but certain industries require permission before registration.
# Micro Industry may apply for registration within 1 year from date of operation.
# Any industry incorporated as section industry prior to commencement of this act, shall, within prescribed time, be
registered as a separate industry under this act.
# Any industry desirous to make their manufacture or locate any part in a place different than the place where the
industry was located or any section industry not desiring to register as separate industry may be incorporated & operated
as unit industry & such unit industry shall be treated as a separate industry.
# Industries producing atomic energy, radio-active materials and uranium shall be established and operated by the
Government of Nepal only.
Process to obtain Permission for Certain types of Industries (Section 8):
1. Make an application to the Industrial Investment and promotion Board through the body for registration of industries.
2. On examination of application, if the body for registration of industries is satisfied, it shall forward a report along
with its recommendations, if any, to the board within 7 days and the Board shall make a decision on whether to
provide permission or not, within 30 days & provide information accordingly to body for registration of industries.
3. The body for registration of industries shall issue permission letter or reasons of refusal, as decided & informed by
the board, to the applicant, within 5 days.
4. Application for registration of industries shall be made within the time specified in the permission letter and if
application is not made within specified time, the permission shall be ipso facto inactive.
Note:
The permission granted above shall not be transferred or sold before operation and commercial production or
transactions. However, if the applicant dies before operation and commercial production or transactions, remaining
acts may be completed by the legal heir of such applicant as per prevailing laws.
Arms, Ammunitions & Atomic Energy or Printing Securities, Radio Communication
Gunpowder Radioactive Materials Bank Notes and Equipment's
Minting Coins

Alcohol & Beer Extraction & Refining

of Gitti, Dhunga &
Baluwa

Cigarettes, Bidi, Cigar, Extraction of Mineral

Chewing Tobacco, Industries requiring & Petroleum
Khaini
permission
Refilling LPG Drones Other industries as
prescribed

Requiring permissions
under Foreign
Investment and
Technology Transfer
Act
Process to obtain Registration of Industry (Section 4):
Any person, firm or company desirous to
establish following industry: Department
• Industries requiring permission (Industrial Enterprises Regulation, 2076)
• Industries to be incorporated with Make an application in the prescribed form along with the
foreign investment following documents:
• Industries related with matters • Copy of Citizenship or Passport for foreign nationals,
specified in Schedule-5 of • Registration certificate of firm or company,
Constitution of Nepal (Defense, • Details of location with map of the place industry is to be set
military, citizenship, passport, etc.) up,
• Industries with work places in two or Power of attorney of authorized representative if elected for
more provinces application,
• Service relating to education • Copy of approval of foreign investment, if any,
consultancy in relation to diplomatic • Partnership deed, if industry is to be established under
mission partnership,
• Recommendation of VDC or municipality in which industry is
Other Industries to be established, Body for
• Other documents, as prescribed registration in
respective
province
Government
Note:
• On examination of application, if the submitted documents and information are inadequate, extra information and documents
may be demanded and it shall be the duty of the concerned applicant to submit them within 90 days.
• Certification of the documents relating to registration by electronic signature shall also be valid and such documents can also be
presented online in electronic form.
Accept i.e. Registration (Section 5): Refuse i.e. Non – Registration (Section 4):

After examination, on being satisfied that all the prescribed After examination, on being satisfied that all the prescribed
documents and information have been received and all the documents and information have not been received or all the
procedures for registration as specified in this act or bye laws procedures for registration as specified in this act or bye laws
under this act have been complied with, under this act have not been complied with,
Register such industry and Reject the application for registration and
Issue industry registration certificate to the applicant within 5 Provide information, along with reasons, about such rejection to
days. the applicant within 5 days.
The registration certificate shall inter alia contain the following
particulars:
• Date of registration
• Duration within which the industry need to commence its
operation or transactions
• Terms and conditions to be fulfilled
• Other conditions, if any as specific for specific type of
industries

Appeal against refusal within 30 days to (Section 6): Rejection done by

Ministry Department

Ministry looking after industries in the concerned province Body for registration of industries of a province
Mitigation of Negative Effect on environment (Section 7):

• If any industry registered is required to conduct Environment Impact Assessment (EIA) test or Initial Environment Examination
(IEE), it shall initiate incorporation, operation, commercial production and transactions only after approval of such reports.
• If as per prevailing laws, Environment Impact Assessment (EIA) test or Initial Environment Examination (IEE) is required to be
done before capital increment, efficiency increment, objectives addition, objectives change or relocation of such industries, it shall
be the duty of such concerned industries to conduct such tests.
• Responsibility of mitigation of negative effect on environment shall be on the industry itself.
• Body for registration of industries shall monitor about such EIA or IEE and may give direction or also recommend about
punishments, if any if not complied with, to the concerned department.
• Industries not requiring to conduct EIA or IEE, shall provide the basis and reason for not requiring to conduct such tests and also
make a self-declaration that they shall take all necessary measures for protection of environment and mitigation of all the negative
effects.
• Ramesh Kumar Singh Vs. Ramagya Shah Kalwar
कुनै पनन उद्योग वा व्यावसानिक प्रनिष्ठानले आफ्नो उद्योग कारखाना वा व्यावसानिक प्रनिष्ठान सञ्चालन गर्ाा वािावरणमा प्रनिकूल प्रभाव नहुने गरी उद्योग सञ्चालन गनुापने
। उद्योग सञ्चालनबाट वािावरणमा पने प्रनिकूल प्रभाव वा प्रर्ू षण न्यून गने उपािहरू वास्तनवक रुपमा अवलम्बन गनुापने र िसरी प्रर्ू षण ननिन्त्रण वा वािावरणमा पने
प्रनिकूल प्रभाव न्यूनीकरणको लानग उद्योगले अपनाएको पद्धनि वा उपकरणमा लागेको खर्ामा कर छूट पाउने समेिका व्यवस्था कानूनले गरे को स्स्थनिमा स्थानपि
उद्योगको कारणले उद्योग अवस्स्थि क्षेत्रमा वािावरण प्रर्ू षण हुन ननर्नु उद्योगको प्रमुख किाव्य िथा र्ानित्वमा पने ।
• Madhyamanchan Bone Industries Vs. Ministry of Industries
उद्योग र्िाा हुुँ र्ा पालना गने गरी स्वीकार गरे का सिा हरू उद्योग सञ्चालनका क्रममा पुरा नगरे कोमा सो सिा पुरा गना पटकपटक उद्योगलाई पत्रार्ार गरे को र्े स्खिो ।
उद्योगका िर्ाबाट नलस्खिरूपमा वािावरण संरक्षण गने भनी भएको सिा सम्झौिा पुरा गने भनी प्रनिबद्धिा जाहे र गरे पनन सो प्रनिबद्धिा कािाा न्विन भएको भने र्े स्खएन ।
स्वच्छ र स्वास्थ्य वािावरणमा जीवन नजउने हक प्रत्ये क व्यस्िको हुन्छ । ननवेर्कको उद्योग खोल्ने , व्यापार व्यवसाि गरी आनथाक उन्ननि गना पाउने हक ननरपेक्ष होइन ।
ननजको प्रगनिको मूल्य त्यस क्षेत्रमा बस्ने सबै जनिाले आफ्नो स्वास्थ्य नबगारी र्ुकाउनु पने होइन । ननवेर्कको काम कारवाहीबाट त्यस क्षेत्रका नागररकहरूको वािावरण
प्रर्ु नषि गरी स्वास्थ्य वािावरणको हकबाट वनञ्चि गना नमल्दै न । त्यसैले स्वास्थ्य वािावरण मानव जीवनको आधार हो । स्वच्छ वािावरण र मानव स्वास्थ्य भन्ने नवषि अनि
संवेर्नशील भएकोले नवकास कािाको नाममा मानव स्वास्थ्यमा प्रनिकूल असर पने गरी कसैले पनन कुनै उद्योग सञ्चालन गना छु ट नपाउने ।
Information about commercial production, operation or transactions (Section 9):
• By commencing commercial production, operation or transactions within the time period mentioned in Registration Certification,
information shall be provided to the body for registration of industries within 30 days of such commencement.
• In case of non-commencement of operation, application with reasons should be filed for extension, before 30 days of commencement
deadline. (Can apply till 6 months of deadline with late fee).
• On satisfaction, extension can be obtained for maximum 3 times. (For more than 3 times, approval from board ins required.)
• If time extension is not granted, then the registration permission of the concerned industry shall ipso facto be cancelled.

Inspection and supervision by the body for registration or board or ministry providing of necessary assistances
(Section 10): Whether the industry has complied with the directions, terms and conditions provided at the time of registering or not

Relocation of industries (Section 11):

Any industry (Industrial Enterprises Regulation, 2076) The body for
registered and in Make an application in the prescribed form with reasons and following documents: registration of
operation in one • Tax clearance certificate of previous year, industries
area, if desires itself • Audit report of previous year, (If relocation is from
to be relocated to • Recommendation of VDC or municipality in which industry is to be relocated, one province to
another area for any • IEE Report, another, permission
reason • If any facilities, concessions or rebates are availed, copy of recommendation from the of department is
authorities granting such facilities, concessions or rebates, required)
• Details of project.
Note:
• On receipt of application, the body for registration of industries may permit the relocation after considering recommendation from
concerned province level where the industry is being relocated.
• Ministry looking after industries of the concerned province as well as local level shall be informed about such permission.
Capital increment, efficiency increment, objectives addition or alteration of objectives (Section 12):
Any industry (Industrial Enterprises Regulation, 2076) The body for
desiring Make an application the prescribed format along with following documents: registration of
capital increment, • Copy of registration certificate, MoA & AoA if such industry is a company or copy of industries
efficiency increment, partnership deed if such industry is a partnership firm,
objectives addition • Tax clearance certificate of previous year,
or alteration of • Audit report of previous year,
objectives • Updated details of industry,
• Recommendations of any concerned departments, if required.
Notes:
• On examination, if satisfied, permission shall be granted within 90 days.
• If due to capital increment, efficiency increment, objectives addition or alteration of objectives, the classification of industry is
changed, the register shall be updated and such matter shall be mentioned in the registration certificate.
• Micro industries and cottage or small industries not requiring permission with fixed capital up to Rs. 1 crore, shall not require
permission for capital increment or efficiency increment.
• However, before such capital increment or efficiency increment, if as per prevailing laws, EIA test or IEE is required to be done, it
shall be the duty of such concerned industries to conduct such tests.
• Making production more than the projected production without changing the existing plant or machineries, but by increasing
capacity and efficiency of management, shall not be considered as efficiency increment.

Submission of returns (electronic form also allowed) within 6 months of end of FY (Section 13):
(Industrial Enterprises Regulation, 2076): Tax clearance certificate of previous year, Audit report of previous year, Approved and
installed load (Capacity), Others.
Note:
If any industry is closed for more than one fiscal year or due to any reasons no transactions or operation is done, it shall submit zero
return for such period. However, if the body for registration of industries had been informed about such closure and it had updated its
register, returns for such period of closure is not required.
Cancellation of registration (Section 15):
If any industry, (Industrial Enterprises Regulation, 2076) The body for
due to some Make an application in the prescribed format along with the following documents: registration of
reasons is unable • Assets Valuation report prepared by a licensed valuator. (However, in case of industry with industries
to carry on fixed assets up-to one crore, a report prepared by the industry itself shall be accepted.),
• Documents proving of settlement of all the liabilities pending relating to workmen
engaged in the industry,
• Documents proving settlement of all other liabilities,
• Report of liquidator, if any,
• Audit report of previous year,
• Original registration certificate,
• Self-declaration that no claims are pending in the court (if any such claims pending,
documents proving deposit of security up-to the amount of dispute).
Notes:
• On receipt of such application, the body for registration of industries shall order the concerned industry to publish a public notice in
national daily newspaper to make claims pending if any within 35 days.
• On examination and after confirming that all the liabilities of such industry are settled and if it deems fit, cancel the registration and
notify the applicant as well as all the concerned government departments.
• In case of industries within the company which had gone into liquidation proceedings as per prevailing laws, the prevailing laws
shall be applicable and the liquidator shall inform about the closure of industry to the concerned body for registration of industries.

Temporary closure of Industry (Section 14):

If any industry is to be closed due to some reasons or operation and transactions is halted for some time, then information about such
closure or halt must be provided to the body for registration of industries within 30 days of such closure or halt in the prescribed format.

Management of records and registers relating to industries by the body for registration of industries (Section 16)
Permanent Capital or Fixed Assets (Section 18):
• Land and physical infrastructures made on land, underground, in space, above water or under water,
• Physical infrastructures made above land (i.e. sewerage, internal roads, infrastructures of drinking water, system of water distribution)
• Office, factory building, go-down
• Residential buildings made for employees,
• Equipment related to electricity distribution,
• Machinery, equipment and tools and consumables,
• Means of transportation,
• Office equipment of capital nature,
• Furniture and fixture,
• Equipment related to communication system.
• Further, following pre-incorporation expenses and the expenses incurred during different stages of construction shall be treated as fixed
assets or permanent capital of the industry:
a) Capitalized technical consultancy and supervision expenses,
b) Pre-investment and pre-operation expenses,
c) The amount of interest during the construction period and
d) Expenses relating to study of environmental impact and research incurred prior to operation of the industry.
Amendment to permanent capital
(Industrial Enterprises Regulation, 2076):
The application for amendment of permanent capital shall be accompanied by following documents along with fees:
• Copy of registration certificate, memorandum of association and articles of association if such industry is a company or copy of
partnership deed if such industry is a partnership firm,
• Tax clearance certificate of previous year,
• Audit report of previous year,
• Updated details of industry,
• Recommendations of any concerned departments, if required.
Classification of industries as per permanent capital or fixed assets (Section 15):
Micro Industries Except the industries requiring permission following industries are classified as micro industries:
• Fixed assets investments (except land and building) ≤ Rs. 20 Lakhs
• Employees ≤ 9 (Entrepreneur self-involved in management)
• Yearly transaction < Rs. 1 crore
• If power is used ≤ 20 Kilo watt.
Cottage Industries • Traditional industries
• Industries utilizing specific skill or local raw materials and resources, and labor intensive and related with
national tradition, art and culture,
• If power is used ≤ 50 Kilo watt.
• Examples i.e. Industries specified in Annexure 2: Handloom, Pedal loom, Semiautomatic loom, Warping,
Dyeing and printing, Tailoring (Other than Readymade Garments), Knitting, Hand knitted Woolen Mat and
Blanket (Radi, Pakhi), Woolen Carpet, Pashmina, Woolen Garments, Carpentry, Wooden Artistic product,
Cane and Bamboo Works, Natural Fiber Products, Hand Made paper and Goods made up thereof, Gold,
Philigiree Products including Silver, Brass, Copper Precious and Semi-Precious Stones, Ornaments,
Sculptures and Pottery, Honey, chyuri, Cardamom Processing, Clay or Ceramic Pottery, Leather Cutting and
Tanning, Rural Tanning and Leather Goods producing Works, Jute, Sabai Grass, Babio, Choya, Cotton Thread
Products, Artistic Products made up of Bones and Horns, Stone Carving, Ceramic Fine Arts, Pauwa, Boutique,
Incense Stick (Dhup), Dolls and Toys industries.
Small Industries Permanent Capital: Up to 15 Crores (Except Micro and cottage Industries)
Medium Industries Permanent Capital: 15 - 50 Crores
Large Industries Permanent Capital: Above 50 Crores
Classification of industries as per nature of products or services (Section 15):
Energy Based Industries Water resources, wind, solar, coal, natural oil, gas, bio-gas or any other sources, electricity transmission lines, electricity distribution
(Annexure 3) systems, atomic energy, uranium energy, electricity energy produced as co-products to sugar industries, study or research on possibilities
of energy.
Manufacturing Industries Industries which produce goods by utilizing or processing raw materials, semi-processed materials, by products or waste products or any
other goods.
Agro and Forestry Based Sericulture and silk production, horticulture and fruit processing, animal husbandry, dairy industry, poultry farming, fishery, tea gardening
Industries and processing, vegetable seed farming, mushroom, vegetable farming or vegetable processing, tissue culture, green house, bee-keeping,
(Annexure 4) honey production, rubber farming, floriculture and production, and forestry related business such as leasehold forests, agro-forestry, saw-
mill, parqueting, plywoods, etc.
Mineral Industries Mineral excavation or processing thereof.
Construction Industries Road, bridge, ropeway, railway, trolley bus, tunnel, flying bridge and industrial, commercial and residential complex construction and
(Annexure 5) operation, stadiums, export processing zones, special economic zones, cargo complex, waste water treatment plants, telephone towers,
optical fiber networks, space satellites, film city, film studies, private ware house, pipe line for fuel or energy, vehicle parking, irrigation
infrastructures, airport or run ways, etc.
Tourism Industries Tourist lodging, motel, hotel, restaurant, resort, travel agency, skiing, gliding, water rafting, cable car complex, pony-trekking, hot air
(Annexure 6) ballooning, Para sailing, golf-course, polo, horse-riding, water parks, entertainment parks, wildlife reserves, casinos, massage, spa, travel
agencies, tour operators, hill stations, etc.
IT & communication Technology parks, I.T. Parks, Biotech parks, software development, computer or related services, data refining, cyber cafes, digital
technology Industries mapping, business process outsourcing, knowledge process outsourcing, data centers, data mining, cloud computing, digital signatures
(Annexure 7) certification agencies, internet service providers, telephone, mobile phone, mobile satellite phone operators, teleporting, satellites, V-Sat
Services, broadband, optical networks, satellite networks, F.M. radios, digital radios, television, online net televisions, cable, Direct to
home (DTH), DTV networks, recording studios, broadcasting studios, print medias, audio visual materials production and distribution,
advertisements, movies, etc.
Service Industries Workshop, printing press, consultancy service, cinematography, construction business, public transportation business, photography,
(Annexure 8) hospital, nursing home, educational and training institution, laboratory, air services, cold storage, yoga, libraries, sports, swimming pool,
courier, securities, publications, soil testing, health clubs, business incubation, foreign employment man-powers, commercial tissue paper
steeling, ball bearing assembly, etc.
Reclassification:
• Any industry which had increased capital or increased efficiency or made additions to objectives or altered objectives shall be ipso
facto classified to the class in which they are to be classified.
• Government of Nepal may, on recommendation of Board, by publishing a notice in Nepal gazette, make provisions to include any type
of industry in any classification or reclassification.
• Any cooperatives association incorporated under prevailing laws, desirous to register any industry under its ownership, may register
industries as per this act.

National Priority Industries (Annexure 9) (Section 19):

• Cottage Industries
• Energy based Industries
• Agro and Forestry-based industries.
• Infrastructures/ Construction based Industries
• Export Industries
• Adventure tourism industries with infrastructures, rural tourism, gulf course, polo, pony trekking, hiking trails, rafting, religious
tourism, cultural tourism, entertainment parks construction and operation, wildlife reserves
• Industries related to Mineral, petroleum and natural gas extraction and production
• Industries producing clinkers and cement using domestic raw materials, Pulp and paper, sugar, fertilizers, powder milk, shoes, slippers,
dhago, animal husbandry, pisciculture, floriculture, rubber, powder milk, medicines, processing of wastages, manufacturing Fuel
Saving equipment, manufacturing pollution control devices, manufacturing devices and vehicles to be used by differently abled
people, manufacturing agricultural machineries, manufacturing industrial machineries, manufacturing electrical vehicles, producing
medicines for snakebites, manufacturing artificial lens for eyes.
• Hospitals, nursing homes, veterinary hospitals and clinics, health checkup services, health laboratories, biological research labs and
medical colleges outside Kathmandu valley, metropolitan area and sub-metropolitan areas in Terai region,
• IT related industries,
• Industries located in industrial areas, special economic zones and industrial grams constructed and operated by private sectors,
• Industries producing high price/ low volume products as specified by the Government of Nepal by publishing notice in official gazette,
• Industries producing products or services specified in Nepal Trade Integration Strategy (NTIS) like cardamom, ginger, tea, all fabrics,
textile, yarn and rope, leather, footwear, chyangra pashmina, knotted carpets, fruits and vegetables, all fabricated steel and metals,
lentils, silver jewelry, instant noodles, paper products, wool products, honey, readymade garments, coffee, semi-precious stones, etc.
• Cinema film producing.
Industrial Investment Promotion Board (Section 20): To make decisions on policies regarding promotion and incorporation of
industries, encouragement of investments, protection and extension of industries and to foster the pace of industrialization
1 Chairman Minister or State Minister for Industries.
Functions, Duties and Power (Section 21): Commerce and supplies
To render necessary cooperation in formulating and implementing policies, laws and 1 Member Member of National Planning commission
regulations pertain to the industrialization of the country. looking after industries
1. To give guidelines in attaining the objectives of liberal, open and competitive economic 1 Member Governor, Nepal Rastra Bank
policies pursued by the country so as to make the industrial sector competitive. 1 Member Secretary, Ministry looking after industries
2. To make recommendation to Government of Nepal regarding to the foreign investment 1 Member Secretary, Ministry of Finance
and technology transfer. 1 Member Secretary, Ministry of Labor, employment and
3. To maintain coordination between the policy level and the implementation level of the social security
1 Member Secretary, Ministry of Land Management,
industrial policy.
Cooperatives and Poverty Alleviation
4. To cause to follow the ways and means for the prevention of the environmental pollution
1 Member Secretary, Ministry of Forest and Environment
by putting more emphasis on the avoidance of effects on the environment and the public
1 Member Chief Executive Officer, Office of the
health. Investment Board
5. To make recommendation to Government of Nepal for the inclusion of any industry in 1 Member Joint-Secretary, Industrial Investment and
the classification of industries or reclassification. Promotion Department (Mahasakha)
6. To make recommendation to Government of Nepal to introduce changes in the Areas by 1 Member President, Federation of Nepal Chamber of
making evaluation thereof from time to time. Commerce and Industry (Mahasangh)
7. To give directives to the concerned body after making enquiries into the application 1 Member President, Confederation of Nepalese Industries
submitted by any industry complaining that the industry has not received the facilities (Parisang)
and concessions to be made available by the committee. 1 Member President, Federation of Nepal Cottage and
Small Industries (Mahasangh)
8. To provide guidelines and make policies to create coordination between and provide
1 Member President, Federation of Women Entrepreneurs
recommendations to province governments and local levels.
Association
9. To entertain or cause to entertain the grievances relating to industry.
2 Members Two persons nominated by Government of
10. To operate One Window Committee or one point service centre. Nepal, from experts among industry sector (One
must be Female)
1 Member - Director General, Depart of Industries
Secretary
Secrecy (Section 22):
• No person shall himself or cause to supply or disclose any confidential information or notice obtained in the course of performing the
duties of office to another person in unauthorized manner or use such information or notice for benefits of any person.
• If chairperson, members, member-secretary or any person invited in meetings or employees performs the acts specified above he shall
be deemed to have acted against professional code of conduct and official responsibility

Industrial promotion board at province level (Section 23):

• To make decisions on policies regarding promotion and incorporation of industries in province level, encouragement of investments,
protection and extension of industries of province level and to foster the pace of industrialization in province level, an industrial
promotion board may be constituted in province level also.
• The functions, duties and power of this board shall be similar to the industrial promotion board formed under section 21 but it shall be
relating to province level only.

Annexure 10: Classification of Areas for facilities and concessions

Remote Darchula, Baitadi, Bajhang, Bajura, Achham, Doti, Mugu, Dolpa, Humla, Jumla, Kalikot, Jajarkot, Rolpa, East
Rukum, West Rukum, Mustang, Manang, Solukhumbu, Khotang, Okhaldhunga, Taplejung, bhojpur & Panchthar
Undeveloped Dadeldhura, Pyuthan, Myagdi, Dailekh, Parbat, Lamjung, Salyan, Gulmi, Baglung, Gorkha, Dolakha, Ramechhap,
Sindhuli, Sindhupalchowk, Rasuwa, Dhankuta, Sankhuwasabha & Terathum
Underdeveloped Kanchanpur, Kailali, Bardiya, Dang, Surkhet, Palpa, Arghakanchi, Shyangja, Kapilbastu, Tanahu, Nuwakot,
Dhading, Kavrepalachowk, Rautahat, Sarlahi, Mahottari, Siraha, Saptari, Udyapur & Illam
Facilities and Concessions related to Income Tax (Section 24)
Type/ Nature of industry Facilities and concessions
Manufacturing 20 % rebate on applicable tax rates
& if Manufacturing and exporting Additional 5 % rebate on applicable
Industries investing in and operating Road, Bridges, Tunnels, Rope-ways, Trams, Trolley Buses, 40 % rebate on applicable tax rates
Airports, Industrial infrastructures and complexes
Industries other than wine, cider or brandy industries based on fruits incorporated and operating in Rebate up to 10 years of commencement
areas specified: of commercial manufacturing or
operation:
Remote – 90%
Undeveloped – 80%
Underdeveloped – 70%
Industries relating to wine, cider or brandy production based on fruits incorporated and operating in Rebate up to 10 years of commencement
areas specified: of commercial manufacturing or
operation:
Remote – 40%
Undeveloped – 25%
Domestic tea production and processing industries, dairy industries with business of mil related 50 % rebate on applicable tax rates
products, garment industries producing clothes
Royalties on export of intellectual property rights 25 % rebate on applicable tax rates
Sale of intellectual property rights 50 % rebate on applicable tax rates
Manufacturing or service industries to be incorporated with fixed assets or permanent capital above 1 100 % Rebate up to 5 years of
arba and providing employment to more than 500 employees throughout the year, commencement of transactions and 50 %
And Rebate for next 3 years
Industries now in operation with increment of minimum 25% of its installed capacity and capital
maintained up to 2 arba and also providing employment to more than 300 employees throughout the
year.
Facilities and Concessions related to Income Tax (Contd…)
Type/ Nature of industry Facilities and concessions
Person or entity with permission for Production, transmission or distribution of hydroelectricity, 100 % Rebate up to 10 years of
projects producing electricity from solar energy, wind energy or biotechnology up to 2080 B.S. commencement of transactions and 50 %
Rebate for next 5 years
Industries engaged in extraction and refining of minerals (except lime stones), petroleum, natural gas 100 % Rebate up to 7 years of
or fuels commencing its financial transactions within 2080 B.S. commencement of transactions and 50 %
Rebate for next 3 years
Industries relating with tourism incorporated with more than 2 arba fixed assets or permanent capital 100 % Rebate up to 5 years of
commencement of transactions and 50 %
Rebate for next 3 years
Industries notified by the Government of Nepal by publishing a notice in Nepal Gazette, relating to 50 % rebate on applicable tax rates
zoological, geological, biotech, IT parks, software developers, data refining, cyber cafes, digital
mappings, etc.
Manufacturing or IT related industries providing employment to prescribed number of Nepalese No. of employees ≥ 300: 15% rebate
employees throughout a year: No. of employees ≥ 1200: 25% rebate
If the employees contains minimum 50 %
of female or dalits or differently abled
persons, additional 15 % rebate is
provided on the applicable tax rates of the
concerned year in addition to normal
rebates as provided above.
Expenditures made for equipment relating to pollution prevention or control or recycle and reuse of Expenditure allowed in the same year: 50
waste products or any other techniques or methods or products that helps in reducing or controlling % of Adjusted Taxable Income and
pollution Expenditure in excess of above are to be
capitalized in the beginning of next F.Y.
and depreciation can be claimed
Facilities and Concessions related to Income Tax (Contd…)
Type/ Nature of industry Facilities and concessions
Expenditures done by any industry relating to long term benefits of its employees or welfare activities Allowable
like life insurance, health and medical facilities, social security fund, education and trainings, child
care, physical fitness, etc.
Any manufacturing industry with trainees (minimum 10 % of its total employees) and making Allowable
expenditure in training of such trainees, daily allowances and expenditures made for increment and
development of efficiency of employees
Expenditure relating to techniques or methods or products that helps in reducing energy consumption Allowable
by increasing energy efficiency
Expenditures made for increasing production, efficiency of employees, research and development and Expenditure allowed in the same year: 50
new techniques formulation % of Adjusted Taxable Income and
Expenditure in excess of above are to be
capitalized in the beginning of next F.Y.
and depreciation can be claimed
Expenditures relating to market or business promotion, penetration and advertisement Allowable up to prescribed limit

Expenditures relating to security of physical assets of the industry and insurance premium Allowable

Preservation of Intellectual Property Rights registered in Nepal Allowable

Fees paid for registration of IPRs outside Nepal Allowable

Donation or gifts granted to tax exemption entities Allowable: Lower of

a) Rs. 1 lakhs or
b) 5 % of Adjusted Taxable Income
Facilities and Concessions related to Income Tax (Contd…)
Type/ Nature of industry Facilities and concessions
More than one facilities in relation to same income Only one facility as opted by the industry

Except tobacco or alcohol related industries or casinos, all industries which have used the retained No dividend tax on such capitalization
earnings in efficiency increment of the industry or manufacturing or energy based or agriculture based
industries which have converted such retained earnings into capital

Facilities and Concessions related to Custom Duties (Section 25)

Type/ Nature of industry Facilities and concessions
Industries exporting their products or services without availing facilities of bonded warehouse or cash Refund of amount of duty drawback
retention (pass book)
Industries exporting their products or services without permission of bonded ware house but through Can import the raw materials or other
LC or prevailing banking systems or sale within Nepal in convertible foreign currency necessary raw materials or packaging
items not produced in Nepal by depositing
guarantee
Import of industrial machineries or generator of 10 KW or more or other industrial equipment Lowest custom rates

Import of machineries relating to quality check or other scientific equipment or machineries or Lowest custom rates
equipment relating to research and development
Industries producing intermediate goods used in products that are exported Refund of custom duties on the basis of
quantity consumption, if application made
within a year of export
Other Facilities and Concessions to micro industries (Section 26)
Type/ Nature of industry Facilities and concessions
Micro Industries • No registration fees on registration of Micro Industries.
• 5-year Tax Holiday for any Micro Industries in operation before this act or any Micro Industries incorporated
under this act.
• Addition 2 years tax holiday if such micro industry is being operated by women entrepreneurs

Additional Facilities and Concessions to women entrepreneurs (Section 27)

Type/ Nature of industry
Industry with women
entrepreneurship
Facilities and concessions
• 35% concession on industry registration fees.
• 20% concession on registration fees for registration of industrial assets.
• If women entrepreneur wishes to establish industry in an industrial area, she shall be availed space inside the
industrial area with priority as prescribed.
• Industry registered with the sole ownership of women entrepreneur may be availed export credit as prescribed
for the purposes of export of its industrial production on the basis of financial position of the business.

Special provisions for industries located in industrial areas (Section 28)

Type/ Nature of industry Facilities and concessions
Industry located in Industrial Areas, Industrial Clusters, Industrial Corridors, or Industrial Grams As specified by Government of Nepal
Further facilities for special type of industries (Section 29)
Type/ Nature of industry Facilities and concessions
Forest based industry Forest-based industry may be made available any forest on a leasehold basis.
Generates electricity for its own use No royalty shall be imposed if any industry generates electricity for its use.
Sale of electricity generated for own use If electricity generated for its use is in excess then it can be sold as per the rate under contract.
Industries established in EPI and Government of Nepal may, by notification published in the Nepal Gazette, grant additional facilities to
Industrial estates the Export Promotion Industry and prescribed industries established in the Export Processing Zone and
in the government or non-government industrial estate.
National Priority Industries On the recommendation of and with the decision of the Council of Ministers, and by notification
published in the Nepal Gazette, additional facilities may be granted to any National Priority Industry or
any industry established in Nepal by the way of invention done in in Nepal itself.
Concessions during the period of lack of Concessions can be provided to the industries for the period when there is no electricity supply as per
electricity supply demand charge.
Grants for seed capital Grants can be provided to micro, cottage or small industries situated in remote areas for Seed capital:
aLp k"FhL -l;8 Soflk6n_.
Import permission for new products For industries operating under foreign investment, import permission can be provided for new product
manufacture and promotion if such import is done from parent company.
Facilities to production-oriented Except for tobacco and liquor industries, government of Nepal may provide incentives, exemptions,
industries benefits or concessions to the production-oriented industries, industries related to agriculture and forest-
based products and mineral industries.
Exemptions to micro, cottage and small Exemptions on custom duties to micro and cottage and small industries while importing new
industries technologies including machineries, tools and equipment as required for capacity enhancement of such
industries.
Industries located in Product specific Special arrangement to provide incentives, exemptions, benefits or concessions to industries operating in
zones industrial estate areas, product specific zones, and industrial grams.
Industries in underdeveloped, Incentives, exemptions, benefits or concessions to industries established in under-developed,
undeveloped & remote areas undeveloped and remote i.e. least developed areas.
Land to be purchased by industry itself (Section 30)
Land should be purchased by industry itself. Provided that, if the entrepreneur cannot purchase by himself then he may apply, with reasons, to the
department and department can assist in such purchase.
(Industrial Enterprises Regulation, 2076):
Following industries shall obtain such assistance from department:
• National Priority Industries,
• Export Industries,
• Medium and Large scale industries established in Under-developed areas,
• Industries providing employment to minimum 500 employees,
• Industries investing more than ten arba in Permanent Capital,
• Industries based on minimum 50% local national raw materials in its finished goods and in case of imported raw materials, medium and large scale
industries with minimum 50% value addition.

Land to be made available on lease (Section 31)

National Priority Industries can apply to the body for registration of industries for lease rental facility for land under ownership of GoN.
(Industrial Enterprises Regulation, 2076):
The application for such land lease shall be accompanied by following documents:
• Copy of registration certificate,
• Details of industry project,
• Details of area required and location of land,
• Recommendations to be obtained from any other authority, if any,
• Reasons for obtaining such lease,
• Recommendation from concerned local federal level.
Applications received from such NPIs shall be forwarded to ministry and facility may be provided by GoN as per prevailing laws. Terms and conditions
of lease rental shall be as per the agreement between GoN and applicant. If any industry in operation on lease rental land is unable to operate then, the
land shall revert to GoN and agreement shall be ipso facto suspended.
Possession of land in excess of threshold limit (Section 32)
• If any industries require land in excess of threshold limit, it shall make an application to the body for registration of industries to for
permission to own and possess such land in excess of the threshold limit prescribed.
• On receipt of such application, the body for registration of industries shall, after inquiry and investigation prepare and forward a report along
with its recommendation to the ministry.
• Government of Nepal may grant such permission to keep or possess such land in excess of the threshold limit prescribed on the basis of
necessity or scheme or project proposal presented by the industry.
• Body for registration of industries may monitor the use of such excess land and if any misuse is found Government of Nepal may revert back
such land without any conditions.
• Such land owned or possessed in excess of the threshold limit prescribed on permission of GoN shall not be sold or transferred or disposed off
otherwise or kept as collateral for bank loans.
• A project can acquire land as stated in the approved EIA and/or DPR. However, the maximum limit a person (including company) can hold
land is defined by The Lands Act 2021. For anything above the ceiling limit, the company needs to request the Ministry of Land Management,
Co-operatives and Poverty Alleviation for approval before acquiring land for the project. The current ceiling limits are:
 All Terai (Plain) Regions (including Inner Terai): 10 Bigha (68,820 m2),
 Kathmandu Valley: 25 Ropani (12,718.50 m2) &
 All Hilly Regions Except Kathmandu Valley: 70 Ropani (35,611.80 m2)

Guarantee of facilities (Section 33)

• An industry which is operated by obtaining permission or by getting registered under the Industrial Enterprises Act, 2073 shall continue to
enjoy the time bound facilities and concessions under the Act and with regard to the facilities and concessions for which no time has been
fixed; it shall enjoy the facilities and concessions under this Act.
• Kantipur television Network Ltd. Vs Ministry of communication
• सरकारले कुनै उद्योग व्यवसाि सन्चालनको लानग कसैलाई सहमिी प्रर्ान गरी आश्वासन नर्एपनछ त्यही नवश्वासमा परी अको पक्ष अगानि वढे कोमा सरकारले पनछ कुनै कारण जनाई
पनहला नर्एको अनु मिी नर्िाा नलन सक्दै न, त्यस्तो सहमिी र अनु मिी पुरा गनुा पने ।
Industries not to be nationalized (Section 34)
• No Industry registered under this act shall be nationalized.
• No industry shall be directly or indirectly acquired or taken over, except for the shake of public interest. For acquisition or take over for the
shake of public interest, applicable prevailing laws shall be complied with.

Industrial safety (Section 35)

• For the industries registered as per the prevailing laws, Government of Nepal shall provide the industrial safety as prescribed.

No misuse of facilities and concessions (Section 36)

• The facilities and concessions granted to industries shall be utilized for the same purpose for which it was granted.
• If any industry contravenes this act, or rules or regulations made hereunder such industries shall not be granted concessions and facilities
under this chapter.
One-window Committee (Section 37): For the purpose of making easy and on time availability of the services, facilities, exemptions,
rebates and concessions to be enjoyed by any industry under this Act or any other relevant acts or facilitating all activities to be performed by
different government authorities at one place and services of permission, registration, extension or cancellation of industries at one place
Government of Nepal constitute a One-window committee and operate. The location, facilities that may be provided to industries by such
committee, representatives of department in the committee shall be as prescribed.

Functions, Duties and Power (Section 38):

• To perform functions relating to, as per prevailing laws, registration of company, firm or industries, permission, renewal, approval for commencement of
transactions, efficiency increment, winding up (Except insolvency) and other administrative functions,
• To perform functions relating to approval of foreign investment as per prevailing laws,
• To perform functions relating to approval of labor or work agreements as per prevailing laws,
• To perform functions relating to visas as per prevailing laws,
• To perform functions relating to EIA or IEE as per prevailing laws,
• To make recommendations as may be required for making time bound provisions on making available infrastructural services such as electricity, water,
means of telecommunications, land, road and so on required for the industries,
• To implement and make necessary decisions for making available the facilities and concessions to be enjoyed by any industry under this Act or any other
prevailing laws,
• To perform functions relating to approval of foreign exchange as per prevailing laws,
• To provide PAN as per prevailing laws,
• To perform functions relating to department of export, commerce and consumer welfare, export relating services, EXIM code, bonded ware house
facilitations as per prevailing laws,
• To perform such functions as may be delegated by the Board under its functions, duties and powers,
• To coordinate to the concerned departments for mines and related permissions,
• To accept the documents regarding registration of industries in electronic form and to develop system of electronic process among inter departments,
• To facilitate then acquisition of land by industry, assist in obtaining land on lease and facilitate if land is required in excess of limit prescribed,
• To recommended export permission, if required, as per prevailing laws,
• To establish investment portal and disseminate information regarding investments,
• To perform all kinds of activities to facilitate industries,
• To cause to comply with directions provided by department or ministries,
• Other functions, duties and powers of the Committee shall be as prescribed by publishing in Nepal Gazette.
Identification of Sick Industries (Section 39):
Conditions:
 Minimum 5 years has elapsed since commencement of production or business
 Except on intentional or management weakness i.e. due to circumstances beyond control
 Running under 30% or less of its production capacity during previous 3 years (Continuous)
 Continuous loss for 3 years above

Industrial Enterprises Regulation, 2076:

Government of Nepal on recommendation from Ministry of Finance, declare any of the following industry as sick industry:

 Industries unable to repay loan and interest,

 Industries with exceptionally high loan in proportion to capital,
 In case of industries listed in Nepal Stock Exchange, industries with share’s market price lower than face value,
 Industries producing lower than break-even point for continuous previous 3 years,
 Industries unable to be operated due to natural calamities, force majure or other circumstances beyond control,
 Industries unable to compete in international markets, due to changes in international industrial or financial provisions.

For revival, reconstruction and management of industries closed on being sick industry, on examination of the scheme or project
analysis submitted by such industry, Government of Nepal may grant prescribed facilities or concessions for certain period.
Also Industries declared as sick industry may be revived by any cooperative associations with approval from investors.
Classification of Sick Industries (Section 40):
Industrial Enterprises Regulation, 2076
Classification Fully Sick Sick Partial Sick
Except for intentional or managerial weakness Y Y Y
Decrement in Equity 70% 50% 30%
Running under ___ % or less of its production capacity during previous 3 20% 25% 30%
years (Continuous)
Closed for previous ___ years (Continuous) 3 2 1
On providing any facilities, concessions and rebate as provided under this 5 3 2
act or regulation and expected to operate in profit within ___ years

Facilities and concessions to Sick Industries (Section 41)

Government of Nepal may provide full or partial rebate on duty, fees and taxes of any kind levied on machineries, equipment, tools or
devices imported for extension, reconstruction and diversification of such sick industry as per section 39 & 40.
Industrial Enterprises Regulation, 2076: Government of Nepal may make recommendations to the concerned authorities for the
following facilities, concessions and rebates:
• Restructuring the existing loans into soft loans,
• Rebate in interests and penalty on loans,
• Provide additional loans at lower discounted interest rates,
• Full or partial rebate on duty, fees and taxes of any kind levied on machineries, equipment, tools or devices or raw materials
imported,
• Full or partial rebate on duty, fees and taxes of any kind levied on export of products,
• Increase repayment period of loans,
• Provide full or partial rebate on applicable duty, fees and tax rates.
Revival of sick industries (Section 42):
For the purpose of providing recommendations on identification, classification, revival, reconstruction or management of Sick
industries, Government of Nepal may form a board constituting of experts of the related fields.

Industrial Enterprises Regulation, 2076

Such board shall have five members as constituted by Special class gazette or equivalent officer of GoN as convener and First class
gazette or equivalent officer of GoN, experts in the field of industries, commerce, banking and financial sectors as members.

Functions, powers and duties of such board shall be as prescribed.

Industrial Enterprises Regulation, 2076
Identify sick industries,
Analyze physical and financial state of sick industries,
On-site study of sick industries,
Recommend GoN about steps for revival of sick industries.
 Fines and Punishments (Section 43)
Punishment for the type of industries (Rs.)
Offence Micro Cottage & Small Medium Large
Non registration: Order to close down the 5,000.00 25,000.00 50,000.00 1,00,000.00
industry also
Acted against objectives 2,000.00 50,000.00 1,00,000.00 5,00,000.00

Not commenced its commercial production or 2,000.00 for every 10,000.00 for every 25,000.00 for every 25,000.00 for every
transactions as per section 9 or non- six months six months six months six months
submission of information regarding such
commencement
Relocated without permission as per section 5,000.00 25,000.00 to 50,000.00 1,00,000.00 to 1,00,000.00 to
11 or alteration of objectives or capital, etc. on 3,00,000.00 3,00,000.00
violation of section 12*
Non filing of returns on due date as per section 1,000.00 5,000.00 10,000.00 25,000.00
13
Violation of section 36 i.e. misuse of facilities Withdraw the facilities or concessions Or
if already utilized then recovery of amount so utilized or fine of same amount Or Both
Violation of section 54 i.e. CSR Provisions Monetary Fine: 1.5% of Annual Net profit for first year and
addition 0.5% of Annual Net Profit for each successive years of violation
Noncompliance of the act or rules or 5,000.00 50,000.00 to 1,00,000.00 1,50,000.00 to 3,00,000.00 2,50,000.00 to 3,00,000.00
regulations or directions
Other violations except mentioned above 15,000.00 15,000.00 to 30,000.00 30,000.00 to 50,000.00 50,000.00 to 1,00,000.00

Note:
• While imposing punishments under this section, if the industry is the industry requiring permission as per section 8, additional 50% of the prescribed
punishment as above shall be charged.
• * While imposing punishments under this sub-section, if the industry (except micro industry) is the industry requiring permission as per section 8,
additional 100% of the prescribed punishment as above shall be charged.
Recovery as government due (Section 44):
Any punishments imposed as per this act shall be recovered as if they were government dues.

Opportunity to submit clarification (Section 45):

Before imposing any punishments as per this act, a reasonable opportunity shall be granted to submit clarification and defend.

Appeal (Section 46):

Any person not satisfied with the punishment orders as per this act, may go for appeal to the concerned high court within 35
days of receipt of such information as follows:
Unsatisfied with decision of Appeal to
Body for registration of industries at local level Concerned District Court
Body for registration of industries at province level & Department Concerned High Court

Special economic zones or export processing zones or export promoting zones or international
economic zones (Section 47):
Government of Nepal shall by publishing in official gazette specify special economic zones or export processing zones or
export promoting zones or international economic zones, tourists or any other areas.

Nepal Entrepreneurs Forum (Section 48):

For the effective implementation of acts and policies relating to industries, for promotion and facilitation and increased
coordination between public and private sectors, for identification of problems while incorporating and operating industries
and recommending necessary suggestions and recommendations to Government of Nepal, for assisting in implementation of
such suggestions and recommendations, Government of Nepal shall form a Nepal Entrepreneurs Forum with the
representation form private sector also. Formation, members, functions, duties and powers of the Nepal Entrepreneurs Forum
shall be as prescribed.
Industrial Human Resource (Section 49):
• The human resource required for any industry shall have to be recruited from among Nepali citizens.
• If any industry cannot be operated without person living outside his/her own country expatriate (emigrant) human resource, foreign
nationals may be appointed in such industry with the prior approval of the Department of Labor for a maximum period of five years.
• For the purpose of obtaining approval, the concerned industry shall apply to Department of labor with particulars regarding the
concerned industry’s requirement, non-availability of such skills in Nepal, etc.
• If a person so appointed happens to be a technician of special category but not available within Nepal, such person may, with the
approval of the Department of Labor, be appointed for up to an additional period of two years.
• A foreign national who is working in any industry and who is from a country wherein convertible foreign currency is in circulation,
may repatriate (take home) his salaries, allowances, emoluments, etc., in convertible foreign currency in an amount not exceeding
seventy percent of such salaries, allowances and emoluments.
• The workers or employees in industries shall not be engaged in strikes, lockdowns, etc. that may cause obstruction in operation and
production.
• However the valid demand of workers or employees can be settled in peaceful manner and with consultation of both parties.
• Any disputes related to demand of workers or employees shall be settled by tribunals formed as per relevant act and such decision of
tribunals shall be final.
• Employees who do not perform their duties diligently may not be provided with the remuneration.

Contract or Sub-contracts (Section 50):

• Any industry registered and in operation as per prevailing laws may enter into contract or sub contract to manufacture goods, except
their major project, or any goods or services required for the industry.
• Any industry, by fulfilling prescribed criterions, manufactures or produces services on prescribed quantity, under contract or sub
contract, for export oriented industries, such industries may be provided with exemption and benefit.
Industrial Investment Promotion Fund (Section 51):
• For the promotion of industries and investment in Nepal, Government of Nepal shall form Industrial and Investment Promotion
Fund.
• The fund shall contain following amounts:
 Amount received from Government of Nepal,
 Amount received from National association, entities or persons,
 Amounts remaining in Micro, Cottage and Small Industries Development Fund, Venture Capital Fund, Technology
Development Fund, Industrial investment preservation and promotion fund, Sick Industries Revival Fund, Women
entrepreneurship Development Fund before the commencement of this act,
 Amounts received from Foreign Government, Foreign association, entities or persons under bilateral or multilateral
agreements. (However, before receiving such amounts permission form Finance Ministries shall be required.)
• The above fund maintained may be expended for following activities:
 Micro, Cottage and Small Industries Development
 Technology Development
 Industrial Promotion
 Sick Industries Revival
 Women entrepreneurship Development
• Expenditure of amounts of above such fund shall be as per approved annual budget.

Province level Industrial Investment Promotion Fund (Section 52):

• For the promotion of industries and investment in Province Level, Province Government shall form Province Level Industrial
and Investment Promotion Fund.
• Other provisions relating to operation and management of such fund shall be as prescribed in the province level laws.
Prohibition on double facilities (Section 53):
• Government of Nepal or province Government shall not provide double facilities, concessions or rebates as per this act or
other prevailing laws to any industry.
• Any facilities, concessions or rebates provided by Government of Nepal shall be informed to the Province level ministry
looking after industries and also any facilities, concessions or rebates provided by Province Government shall be informed to
the Department.

Corporate Social Responsibility (Section 54):

• Applicable to:
 Cottage industry having annual turnover more than NPR 15,00,00,000.00 (15 Crorers),
 Small industry having annual turnover more than NPR 15,00,00,000.00 (15 Crorers),
 Medium industry
 Large industry
• Allocation of: At least 1% of the annual profit
• Utilization: On the basis of annual plans and programs in the prescribed sectors.
• The progress report of the utilization of the fund collected for CSR shall be submitted to the relevant government authorities
within six months from expiry of the financial year.
• Amount allocated for CSR, shall be allowed to be deducted as expenditure for income tax purpose.
• Violation of this section: Monetary Fine: 1.5% of Annual Net profit for first year and addition 0.5% of Annual Net Profit for
each successive years of violation

Industrial corridor, Industrial gram or Industrial cluster (section 55): As prescribed

Prohibition on building residential house or other house in industrial areas (Section 56):
No residential houses or other types of houses as a creation of residential society can be built in the area notified by GoN as
Industrial Corridor, Industrial Gram or Industrial Cluster and vice versa. If any person sustains loss due to above provision, GoN
shall provide reasonable compensation for that.

Use of electronic medium (Section 57):

For the ease and simplicity of industrial registration and other all activities, the body for registration of industries may make
provisions of use of electronic medium as per prevailing laws.

Use of Automatic Route (Section 58):

For the ease, simplicity and effortlessness of activities relating to industries administration from industrial registration to
cancellation of registration, the Government of Nepal may implement automatic route by prescribing type of industry, nature of
industry or investment limits.

Delegation of power (Section 59):

• Any industry or owner of any industry may delegate any person by notarized power of attorney for the functions to be carried
out by them.
• A copy of such notarized power of attorney shall be submitted to the body for registration of industries and if deems
necessary the body for registration may sought for the original copy also
Special Provision for extension of time or re-registration (Section 60):
• On commencement of this act, if any industry registered as per prevailing laws, due to expiry of time period for
commencement of commercial production, operation or transactions or any industry which was not able to commence its
commercial production, operation or transactions even within extended time provided as per prevailing laws, may, only
once, under this act, make an application for extension of time, within 3 months of commencement of this act, to the
body for registration of industries.
• On inquiry and examination of application submitted above, if the board for registration is satisfied, it may grant
extension of time, by following the prescribed procedures after taking following delay fines:
Type of industry Delay Fine
Micro Rs. 5,000.00 for every year
Cottage Rs. 15,000.00 for every year
Small Rs. 15,000.00 for every year
Medium Rs. 50,000.00 for every year
Large Rs. 1,50,000.00 for every year

Best of luck for your exams!!