TAX AMNESTY SCHEME

Nepal Finance Act, 2077/78

(2020/21)
Tax Amnesty
Tax amnesty is a limited-time opportunity for a specified group of
taxpayers to pay a defined amount, in exchange for forgiveness of a
tax liability (may include interest and penalties also) relating to a
previous tax period or periods, with no administrative sanctions and
without fear of criminal prosecution.

Tax Amnesty in Nepal through Finance Act, 2077

A new tax amnesty scheme has been introduced by the Government

of Nepal through Finance Act, 2077 on 28th May, 2020 for various
registered as well as unregistered taxpayers of Nepal. The main
objective of the Government is to expand the range of taxpayers in
Nepal and to increase the collection of previous unpaid direct as well
as indirect tax through tax amnesty.

In addition, certain tax reliefs were also announced to taxpayers

affected by the current COVID-19 crisis in the Finance Act, 2077 by
Government of Nepal.

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A. Amnesty to unregistered persons by submitting returns for two fiscal years

1. Eligibility criteria:
• Unregistered Taxpayer i.e. both natural person and entity.
2. Terms and conditions:
• Obtains Permanent Account Number (PAN),
• Submits the tax returns for FY 2074-75 & FY 2075-76, and
• Deposits the applicable tax for FY 2074-75 & FY 2075-76 by end of
Falgun, 2077.
3. Reliefs:
• The interest and fees of FY 2074-75 & FY 2075-76, and REGISTER NOW
• Filing tax returns prior to FY 2074-75.
• Taxes, interest and fees prior to FY 2074-75.
4. How to claim relief:
• Register and obtain PAN,
• File an application to concerned IRO for opting the amnesty,
• Prepare tax returns for FY 2074-75 & FY 2075-76,
• Compute applicable tax for the FY 2074-75 & FY 2075-76,
• Deposit tax amount, and
• Submit tax returns by the end of Falgun, 2077.

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B. Amnesty to registered natural persons with turnover
of upto NPR 5 Million
1. Eligibility criteria:
• Registered natural person i.e. individual or proprietorship firm.
• Having turnover of upto NPR 5 Million, and
• Not submitted tax returns up to FY 2075-76.
2. Terms and conditions:
• Submits the tax returns for FY 2073-74, FY 2074-75 & FY 2075-
76, and
• Deposits the applicable tax and 25% interest for FY 2073-74, FY
2074-75 & FY 2075-76 by end of Falgun, 2077.
3. Reliefs:
• Filing of tax returns, payment of tax, interest and fees prior to FY
2073-74, and
• Applicable fees and 75% of interest of FY 2073-74, FY 2074-75
& FY 2075-76.
4. How to claim relief:
• File an application to concerned IRO for opting the amnesty,
• Prepare tax returns for FY 2073-74, FY 2074-75 & FY 2075-76,
• Compute applicable tax and interest,
• Deposit tax and 25% of interest amount as computed, and
• Submit tax returns by the end of Falgun, 2077.
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 C. Amnesty to registered natural persons or entity with
turnover of more than NPR 5 Million

1. Eligibility criteria:
• Registered Taxpayer i.e. both natural person and entity.
• Having turnover of more than NPR 5 Million, and
• Not submitted tax returns for FY 2073-74 and earlier.
2. Terms and conditions:
• Submits the tax returns for FY 2073-74 and earlier, and
• Deposits the applicable tax and 25% interest for FY 2073-74
and earlier by end of Falgun, 2077.
3. Reliefs:
• Fees and 75% of interest of FY 2073-74 and earlier.
4. How to claim relief:
• File an application to concerned IRO for opting the amnesty,
• Prepare tax returns for FY 2073-74 and earlier,
• Compute applicable tax and interest,
• Deposit tax and 25% of interest amount as computed, and
• Submit tax returns by the end of Falgun, 2077.

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D. Amnesty to VAT registered persons
1. Eligibility criteria:
• VAT registered person (Both Natural Person and Entity).
• Not submitted tax returns up to Ashad, 2075.
2. Terms and conditions:
• Submits the VAT returns up to Ashad, 2075, and
• Deposits the applicable VAT and 50% of the applicable interest by end of
Falgun, 2077.
3. Reliefs:
• Applicable penalty, additional fees, and 50% of the applicable interest for
the returns not submitted up to Ashad, 2075.
4. How to claim relief:
• File an application to concerned IRO for opting the amnesty,
• Prepare VAT returns up to Ashad, 2075,
• Compute applicable tax and interest thereon,
• Deposit VAT amount and 50% of interest as computed, and
• Submit VAT returns by the end of Falgun, 2077.
Notes: Those taxpayers who have not filed their returns for the periods up to Ashad,
2073 within Falgun end, 2077 shall be automatically deregistered. On deregistration,
penalties applicable for late and/or non-filing of the returns shall be waived off.
However, the remaining due taxes, interest and fees shall be recovered.
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 E. Amnesty to Drinking Water & Sanitation Consumer Group
1. Eligibility criteria:
• Drinking Water & Sanitation Consumer Group registered under
Water Resources Act, 2049.

2. Terms and Condition:

• Completed Tax Assessment by IRO upto 2075-76 and having
pending dues; or
• Assessment not made by Inland Revenue Office in respect of income
earned up to FY 2076-77.

3. Reliefs:
• Assessment made by Inland Revenue Office: Tax, fee and interest
remaining unpaid as determined by Inland Revenue Office for the
income earned up to FY 2075-76, or
• Assessment not made by Inland Revenue Office: Tax, fee and
interest remaining unpaid on income earned up to FY 2076-77.

4. How to claim relief:

• File an application to concerned IRO for opting the amnesty, and
• Submit the tax return, in case the return has not been submitted.
Note: Such Incomes will be Expempted Income from 2077-78
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F. Amnesty on assessments under the repealed direct and
indirect tax laws
1. Eligibility criteria:
• Assessment made and amount determined up to Ashad, 2060:
Ø Income Tax as per Income Tax Act, 2031, or
Ø Sales tax, entertainment tax, contract tax and hotel tax
repealed and substituted by VAT Act, 2052.
• Determined tax amount remains unpaid till date.
• Each Assessment Order is upto 50,000

2. Reliefs:
• Assessed tax and remaining unpaid up to NPR 50,000 on each
assessment and interest thereon.

3. How to claim relief:

• File an application to concerned IRO for opting the amnesty

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 G. Amnesty on withdrawal of appeals on disputed taxes

1. Eligibility criteria:
• Taxpayers who have filed appeals against tax assessment made up to
Ashad, 2075, and
• Appeal is made to the Director General for Administrative Review or
Revenue Tribunal or in the appellate Courts on account of disputed taxes
(except cases relating to false and fake invoices) under the Income Tax Act,
2058, Value Added Tax Act, 2052 and Excise Act, 2058.
2. Terms and conditions:
• The taxpayer withdraws all appeals made as above, and
• Pays 100% applicable taxes and interest assessed by the tax officer as per
the final assessment order by the end of Falgun, 2077.
3. Reliefs:
• 100% applicable fees, additional charges and penalties.
4. How to claim relief:
• File an application to concerned IRO for opting the amnesty,
• Withdraw the pending cases,
• Deposit 100% tax and interest as per final assessment order,
• Furnish the evidence to the assessment officer in the respective tax office,
and
• Obtain assessment order evidencing final settlement.
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H. Rebates to COVID-19 affected businesses for the F.Y.
2076-77
1. Eligibility criteria:
• Businesses paying presumptive tax under section 4(4) i.e. individual or
proprietorship firm having turnover not exceeding NPR 2 Million, or
having income up to NPR 200,000, and not registered in VAT or
• Businesses paying taxes on turnover basis under section 4(4Ka) having
turnover exceeding NPR 2 Million and up to NPR 5 Million and not
registered in VAT.
Note: Natural persons involved in providing consultancy or expert
service including doctor, engineers, auditor, lawyer, sportsperson,
actors and consultants are not eligible to pay tax under section
4(4Ka).
• Any businesses having turnover not exceeding NPR 10 Million, or
• Hotel, travel, trekking, transport and airline industry having turnover
exceeding NPR 10 Million
2. Reliefs:
• Presumptive tax under section 4(4) 75% Rebate
Existing Tax Amount Tax Amount after
Particulars`
Rebate
a. Metropolitan or Sub Metropolitan Rs 7,500 Rs 1,875
b. Municipality Rs 4,000 Rs 1,000
c. Other than a and b Rs 2,500 Rs 625
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• Turnover based taxation under section 4(4Ka) : 50% Rebate
Particulars Tax Amount after
Existing Tax Amount Rebate
The person conducting transaction with up
to 3 % Value addition or commission 0.25 % of Turnover 0.125 % of Turnover
including gas, cigarette (a)
Other than (a) above 0.75 % of Turnover 0.375 % of Turnover

2% of Turnover 1% of Turnover
For person conducting service business
Applicable on Turnover between 2 Million to 5 Million.
• Turnover up to NPR 10 Million : 25% Rebate

Particulars Tax Rate after

Existing Tax Amount Rebate
Any businesses having turnover not 25% 18.75%
exceeding NPR 10 Million

• Turnover more than NPR 10 Million : 20% Rebate

Tax Rate after
Particulars
Existing Tax Amount Rebate
Following business having turnover
exceeding NPR 10 Million:
a. Hotel,
b. Travel, 25% 20.00%
c. Trekking,
d. Transport, and
e. Airline industry

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Disclaimer:
The information contained in this document is
compiled by NBSM and is exclusively for the
information of its clients and staffs. However the
detail study is recommended before taking any
decisions on the matters contained herein.

NBSM Consulting Private Limited

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