1 Income Tax & VAT Amendment 2080/81

S.N. Section New Amendment Existing Provisions

1. 2(KaNa1) "Adjusted Taxable Income" means "Adjusted Taxable Income"

an amount of taxable income of a means an amount of taxable income

person for an income year as of a person for an income year as

calculated by ignoring reductions calculated by ignoring reductions

referred to in Section 12, 12Ka, referred to in Section 12 and

12Kha, 12Ga and deductions deductions referred to in Section

referred to in Section 14(2), Section 14(2), Section 17, or 18.

17, or 18.

2. 10(da) The following amounts shall be The following amounts shall be

exempt from tax: exempt from tax:

Amount earned as per its objectives Amount earned as per its objectives

by Educational Institute established by Educational Institute established

with the objective of not for earning with the objective of not for earning

and distributing profit on the basis of and distributing profit on the basis of

an agreement with the Government an agreement with the Government

of Nepal or concerned entity of of Nepal or concerned entity of

Government of Nepal. Government of Nepal.

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3. 11(1) No tax shall be levied on an income No tax shall be levied on an income

earned by carrying on agricultural earned by carrying on agricultural

business other than income earned by business other than income earned

carrying on an agricultural business by carrying on an agricultural

by getting registered as a firm, business by getting registered as a

company, partnership, and corporate firm, company, partnership, and

body and other than on agricultural corporate body and other than on

income earned from an agricultural agricultural income earned from an

business in the land as referred to in agricultural business in the land as

clauses (gha) and (nga) of Section 12 referred to in clauses (gha) and (nga)

of the Act Relating to Land, of Section 12 of the Act Relating to

2021(1964). Land, 2021(1964).

Provided, if any income is earned by Provided, if any income is earned by

carrying on agricultural business, carrying on agricultural business,

business of dehydrating vegetables, business of dehydrating vegetables,

and cold storage business by any and cold storage business by any

firm, company, partnership firm, and firm, company, partnership firm, and

other corporate body, 50 percent tax other corporate body, 100 percent

on applicable income tax shall be tax on applicable income tax shall

exempted. be exempted.

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4. 11(2Kha) Exemption shall be provided as Exemption shall be provided as

(Ga) below on the tax to be imposed on below on the tax to be imposed on

income of special industry that income of special industry that

operates fully throughout the year in operates fully throughout the year in

any income year. any income year.

(Ka) By one third of tax if tax had (Ka) By one third of tax if tax had

been imposed at the rate of 30% on been imposed at the rate of 30% on

income of resident natural person income of resident natural person

(Kha) By 20% on tax applicable on (Kha) By 20% on tax applicable on

income of the entity income of the entity

(Ga) If a person who has availed (Ga) If a person who has availed

facility pursuant to clause (ka) or facility pursuant to clause (ka) or

(kha) is also found to have any (kha) is also found to have any

other tax exemption facility under other tax exemption facility under

this section, the person shall get this section, the person shall get

such additional tax exemption such additional tax exemption

facility as well. facility as well.

5. 11 (3Gha) Tax exemption shall be provided as Tax exemption shall be provided as

below to a person engaged in below to a person engaged in

commercial transactions of commercial transactions of

electricity: electricity:

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(Ka) 100 % tax exemption for the Ka) 100 % tax exemption for the

first 10 years from the date of starting first 10 years from the date of

of commercial transaction and 50 % starting of commercial transaction

tax exemption for next 5 years shall and 50 % tax exemption for next 5

be provided to the licensed person years shall be provided to the

starting commercial production and licensed person starting commercial

distribution of hydroelectricity, production and distribution of

electricity from solar, electricity from hydroelectricity, electricity from

wind, and bioelectricity within solar, electricity from wind, and

Chaitra 2084. bioelectricity within Chaitra 2083.

Provided, 100 % tax exemption for Provided, 100 % tax exemption for

the first 15 years and 50 % tax the first 15 years and 50 % tax

exemption for the next 6 years shall exemption for the next 6 years shall

be provided to reservoir-based and be provided to reservoir-based and

semi reservoir-based hydropower semi reservoir-based hydropower

projects with a capacity higher than projects with a capacity higher than

40 MW, and hydropower projects 40 MW completing financial closure

operated in lower belts as tandem within Chaitra end, 2085.

operation with such projects,

completing financial closure within

Chaitra end, 2085.

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6. 11(3Nga) Tax exemption on income earned Tax exemption on income earned

(Ga) from export in any income year from from export in any income year from

a source in Nepal shall be as follows: a source in Nepal shall be as

(Ka) if tax is chargeable at the rate of follows:

twenty percent on an income of a (Ka) if tax is chargeable at the rate

resident natural person, twenty-five of twenty percent on an income of a

percent of that tax, and if thirty resident natural person, twenty-five

percent is taxable, fifty percent of percent of that tax, and if thirty

that tax, percent is taxable, fifty percent of

(Kha) twenty percent of tax leviable that tax,

on the income of an entity, (Kha) twenty percent of tax leviable

(Ga) 50% of tax on income earned on the income of an entity,

in foreign currency by exporting (Ga) additional fifty percent of the

services based on information tax on income earned from the

technology such as business export of goods produced in Nepal

process outsourcing, software after deduction of the exemption

programming, cloud computing up under clause (ka) or (Kha).

to FY 2084/85.

7. 11(5) In case a person is entitled to more In case a person is entitled to more

than one concession on a single than one concession on a single

income under this section, such income under this section, such

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person shall get only one concession person shall get only one concession

chosen by him in addition to the chosen by him.

concession available under sub

section 2kha.

8. 22 (2) While calculating the income from While calculating the income from

employment or investment of a employment or investment of a

natural person accounts shall be kept natural person accounts shall be kept

in cash basis for the purpose of tax. in cash basis for the purpose of tax.

However, accounts shall be

maintained in accrual basis in

concerned income year if the

natural person receives a lump

sum amount as income from

employment related to previous

years after the court's final

decision of the case.

88(4) (Kha2)
9. Notwithstanding anything contained

in sub-sections (1), (2) and (3), this

Removed section shall not be applicable while

making following payments:

Payment of interest on loan taken on

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foreign currency from a foreign bank

or other foreign financial institutions

by reservoir-based and

semi-reservoir-based hydropower

projects with a capacity higher than

200 MW completing

financial closure within Chaitra end,

2082 (B.S).

10. 89(3) Notwithstanding anything contained Notwithstanding anything contained

in sub-section (1), tax shall be in sub-section (1), tax shall be

deducted as follows from any deducted as follows from any

payment to be made to a non-resident payment to be made to a

person by a resident person under a non-resident person by a resident

contract or agreement. person under a contract or

Ka) 5 % on agreement or contract. agreement.

Kha) 1.5 % on payment of premium Ka) 5 % on agreement or contract.

to non-resident insurance company or Kha) 1.5 % on payment of premium

on commission given against to non-resident insurance company

reinsurance premium received from or on commission given against

the non-resident insurance company. reinsurance premium received from

Ga) Except written in clause (ka) or the non-resident insurance company.

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(Kha), if the Department has issued a Ga) Except written in clause (ka) or

written notice to the resident person, (Kha), if the Department has issued

at the rate specified in the notice. a written notice to the resident

Provided that, this subsection shall person, at the rate specified in the

not be applicable while making notice.

payment for the purchase of Provided that, this subsection

weapons, ammunition and shall not be applicable while

communication equipment for making payment for the purchase

their own purpose by Nepal Army, of weapons, ammunition, and

Nepal Police, and Nepal Armed communication equipment for

Force. their own purpose by Nepal Army,

Nepal Police, and Nepal Armed

Force.
Schedule 1
11. Sec (1)(4Ka)
Notwithstanding anything contained Notwithstanding anything contained

elsewhere in this section, tax shall be elsewhere in this section, tax shall be

levied at the rate of 5% on income levied at the rate of 1% on income

pursuant to subsection (6Kha), (6Ga), pursuant to sub-section (6Kha),

(6Gha) of section 95Ka of a resident (6Ga), (6Gha) of section 95Ka of a

natural person not engaged in resident natural person not engaged

business. in business.
Schedule 1
12. Sec (1)(13)
Notwithstanding anything contained Notwithstanding anything contained

in this section, an annual tax shall be in this section, an annual tax shall be

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collected as follows from the owners collected as follows from the owners

of vehicles on hire at the time of of vehicles on hire at the time of

registration or renewal of vehicles registration or renewal of vehicles

through Office of Transport through Office of Transport

Management. Management.

Type of Vehicle Annual Tax Type of Vehicle Annual Tax

Per Vehicle Per Vehicle

(1) Car, Jeep, (1) Car, Jeep,

Van, Micro Bus Van, Micro Bus

(Ka) Up to 1300 NPR.5,500 (Ka) Up to 1300 NPR.4,000

cc cc

(Kha) From NPR.6,000 (Kha) From 1301 NPR.4,500

1301 cc to 2000 cc to 2000 cc

cc (Ga) From 2001 NPR.5,000

(Ga) From 2001 NPR.6,500 cc to 2900 cc

cc to 2900 cc (Gha) From 2901 NPR.6,000

(Gha) From NPR.8,000 cc to 4000 cc

2901 cc to 4000 (Nga) From 4001 NPR.7,000

cc cc above-all

(Nga) From NPR.9,000 (2) Mini-Truck, NPR.6,000

4001 cc Mini-bus, Water

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above-all Tanker

(2) Mini-Truck, NPR.8,000 (3) Mini Tipper NPR.7,000

Mini-bus, (4) Truck, Bus NPR.8,000

Water (5) Dozer, NPR.12,000

Tanker Excavator,

(3) Mini Tipper NPR.9,000 Loader, Roller,

(4) Truck, Bus NPR.10,500 Machinery

(5) Dozer, NPR.15,500 Equipment like

Excavator, Crane

Loader, Roller, (6) Oil Tanker, NPR.12,000

Machinery Gas Bullet,

Equipment like Tripper

Crane (7) Tractor NPR.2,000

(6) Oil Tanker, NPR.12,000 (8) Power Tiller NPR.1,500

Gas Bullet, (9) Auto NPR.2,000

Tripper rickshaw,

(7) Tractor NPR.2,500 Three-wheeler,

(8) Power Tiller NPR.2,000 Temp

(9) Auto NPR.2,500

rickshaw,

Three-wheeler,

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Temp

(10) Electronic

Vehicle

(ka) Up to 50 NPR. 3,000

kw

(Kha) 50 kw to NPR. 4,000

125 kw

(Ga) 125 kw to NPR. 6,000

200 kw

(Gha) Above NPR. 7,500

200 kw
Schedule 1
13. Sec (2)(2)
Tax shall be imposed at the rate of 30 Tax shall be imposed at the rate of

percent on the taxable income of a 30 percent on the taxable income of

bank, financial institution, an entity a bank, financial institution, an

engaged in the general insurance entity engaged in the general

business, entity engaged in financial insurance business or

transaction or telecommunication telecommunication and internet

and internet service, money transfer, service, money transfer, capital

capital market business, securities market business, securities business,

business, merchant banking, merchant banking, commodity

commodity future market, stock and future market, stock and commodity

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commodity broker business, or in the broker business, or in the business of

business of cigaratee, biddi, cigar, cigaratee, biddi, cigar, chewing

chewing tobacco khaini, gutkha, tobacco khaini, gutkha, panmasala,

panmasala, liquor, beer or an entity liquor, beer or an entity engaged in

engaged in petroleum operations petroleum operations under Nepal

under Nepal Petroleum Petroleum Act, 2040.

Act, 2040.
Schedule 1
14. Sec (3)
Co-operative societies registered Co-operative societies registered

pursuant to Co-operatives Act, 2074 pursuant to Co-operatives Act, 2074

to carry out transactions except tax to carry out transactions except tax

exempt transaction shall be taxed as exempt transaction shall be taxed as

follows: follows:

Operating Area Tax Rate Operating Area Tax Rate

Municipality 5% Municipality 5%

Sub-metropolitan City 7% Sub-metropolitan City 7%

Metropolitan City 10% Metropolitan City 10%

However, tax shall be levied as

below to co-operatives engaged in

savings and credit related

transactions:

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Operating Area Tax Rate

Municipality 10%

Sub-metropolitan 15%

City

Metropolitan City 20%

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Section as
Nature of Payment 2079/80 2080/81

per 2080/81

Employment Income 87(1) Slab Rate Slab Rate

Payment of Interest to any entity having source in Nepal 88(1) 15% 15%

Payment relating to Natural Resources, Royalty, Service, 88(1) 15% 15%

Commission, Sales Bonus, Retirement Payment, etc.

Payment relating to Meeting Allowance, Occasional Lecture 88(1) 15% 15%

Fee & Setting Question and checking Answer Sheets

Payment made by GON relating Retirement Payment OR

Payment made by Contributory Approved Retirement Fund 88(1)(1) 5% 5%

after deducting Rs. 5,00,000 or 50% of Payment whichever is

Higher [Section 65(1)(kha)]

Payment made by Resident Manpower Company to 88(1)(2) 5% 5%

Non-Resident Person in relation to COMMISSION

Payment relating to Lease RENT of Aircraft 88(1)(3) 10% 10%

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Payment made to: any Resident Person registered in VAT in

relation to SERVICE fee OR Resident Entity carrying on VAT 88(1)(4) 1.5% 1.5%

Exempt SERVICE

Payment made by Resident Person in relation to RENT having 88(1)(5) 10% 10%

source in Nepal

Payment made to any person registered in VAT doing 88(1)(5)(ka) 1.5% 1.5%

business of providing vehicle in RENT

Payment made by Mutual Fund to: Natural Person 88(1)(6) 5% 5%

Others 15% 15%

Payment made in relation to use of satellite, radio, optical

fiber, telecommunication equipment or electricity 88(1)(7) 10% 10%

transmission line

Payment made in relation to transportation service OR giving 88(1)(8) 2.5% 2.5%

transportation vehicle in RENT

Payment of INTEREST made by resident BFIs to Foreign BFIs in

relation to loan taken in foreign currency in order to made 88(1)(9) 10% 10%

investment as prescribed by NRB

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Payment made to Foreign School, College or University in 88(1)(11) 5% 5%

relation to Registration fee, Education fee & Examination fee

Payment made by Resident BFIs to Life Insurance Company in 88(1)(12) 5% 5%

relation to Fixed Deposit

Payment in relation to literature art or architecture 88(1)(13) 1.5% 1.5%

Payment made by Resident Person in relation to Dividend 88(2)(ka) 5% 5%

Payment in relation to Gain on Investment Insurance 88(2)(kha) 5% 5%

Payment in relation to Gain from Unapproved Retirement 88(2)(ga) 5% 5%

Fund

Payment in relation to Windfall Gain 88ka(1) 25% 25%

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Payment in relation to Contract or Deed Exceeding Rs. 50,000 89(1) 1.5% 1.5%

Payment in relation to Contract or Deed made to any 89(3)(ka) 5% 5%

Non-Resident Person

Payment of Commission in the Payment of Premium Amount

to a Non-Resident Insurance Company OR Premium amount 89(3)(kha) 1.5% 1.5%

received for Reinsurance from Non-Resident Company

As As

Payment to Non-Resident Person 89(3)(ga) notified notified

by IRD by IRD

Payment of amount exceeding Rs.50,00,00 for a work to be 89(3ka) 1.5% 1.5%

done by Consumers Committee

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Slab Rate for Natural Person and Couple having 60,00,000 total income

Rate Amount Natural Person Amount Couple

1%/0% Up to 5,00,000 5,000 Up to 6,00,000 6,000

10% Next 2,00,000 20,000 Next 2,00,000 20,000

20% Next 3,00,000 60,000 Next 3,00,000 60,000

30% Next 10,00,000 3,00,000 Next 9,00,000 2,70,000

36% Next 30,00,000 10,80,000 Next 30,00,000 10,80,000

(30%+20%)

39% Balance 3,90,000 Balance 3,90,000

(30%+30%) (10,00,000) (10,00,000)

60,00,000 60,00,000

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Section as
Nature of Payment 2079/80 2080/81

per 2080/81

Entity operating commodity future market shall collect

advance tax on the GAIN acquired by any person doing trade 95ka(1) 10% 10%

on such business

Payment on GAIN made by an entity listed in NEPSE in relation

with disposal of any securities;

-of Natural Person - ownership; more than 365 days 5% 5%

-of Natural Person - ownership; less than or equal to 365 days 95ka(2)(ka) 7.5% 7.5%

-Entity 10% 10%

-Others 25% 25%

Payment on GAIN made by an entity listed in NEPSE in relation

with disposal of any securities;

-Natural Person 95ka(2)(kha) 10% 10%

-Entity 15% 15%

-Others 25% 25%

Payment in relation to GAIN on disposal of land & building of

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any natural person having ownership more than or equal 5 95ka(5)(ka) 5% 5%

years

Payment in relation to GAIN on disposal of land & building of 95ka(5)(kha) 7.5% 7.5%

any natural person having ownership less 5 years

Payment in relation to GAIN on disposal of land & building in 95ka(6) 1.5% 1.5%

others cases

The Resident BFIs providing facility of foreign currency

exchange to the students going abroad for study for fees of

language examination or aptitude examination at the time of 95ka(6ka) 15% 15%

providing such service of exchange for fee of such

examinations

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Custom office shall withhold on:

any such ox, buffalo, goat, sheep, mountain goat live, fresh and

frozen fish, such fresh flowers, such fresh vegetables, potato, 5% 5%

onion, dry vegetables, garlic, baby corn and such fresh fruits if

imported for business purpose

and 95ka(7)

any such meat, such milk products, eggs,

honey, such barley, millet, sorghum (Junelo), rice,

beaten rice, such refined wheat flour, wheat flour, such herbal 2.5% 2.5%

medicines, sugarcane and such vegetation products if

imported for business purpose.

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Ka. Dividend paid by a resident company or partnership firm,

Kha. Rent paid for the land or building and fixtures and equipment

appurtenant (attached) thereto having source in Nepal to other Natural

Person except one who is carrying on business,

Ga. Profit paid by a resident person for investment insurance,

Gha. Profit paid by a resident person for the interest of an unapproved

retirement fund,

Nga. Following interest paid by a bank, financial institution or other entity

issuing bonds (debentures) or company enlisted under prevailing law or

cooperative organization:

(1) Payment made to an individual having source in Nepal and

not related to operation of business,

(2) Payment made to the organization entitled to enjoy tax

exemption.

Cha. Payment subject to tax withholding made to a non-resident person

pursuant to Section 87, 88, 88ka or 89.

Chha. All kinds of retirement payment, including that paid by the

Government of Nepal or approved retirement fund or unapproved

retirement fund (except regularly paid pension),

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Ja. Meeting allowance up to twenty thousand rupees per meeting,

payment for teaching every time (Occasional Lecture Fee), making question

paper or examining answer sheets,

Jha. Payment for a windfall gain,

Yna. Amount of consideration to be distributed to Natural Person from a

mutual fund,

Ta. Payment for rent of a motor vehicle or carrier vehicle or carriage

service of an individual except a private firm.

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S.N. Nature of Payment Section

1. Payment received by any Natural Person in Relation to House Rent 88(1)(5)(kha)

2. On payment as a incentive to Consumer on while payment through 88(1)(10)

Payment Card, E-Money, Mobile Banking or through any other electronic

payment method for the purchase of goods or service

3. Payment by Natural person in relation to other than operation on 88(4)(ka)

business

4. Payment in relation to article written in Newspaper 88(4)(ka1)

5. Payment made to any Resident BFIs 88(4)(kha)

6. Payment of INTEREST by any Cooperative Banks OR Cooperatives ltd to 88(4)(kha1)

each other on loan transactions

7. Payment in relation to tax exempt 88(4)(ga)

8. Payment in relation to inter-regional interchange fee made to any bank 88(4)(gha)

issuing credit card

9. Payment on National and International award of up to Rs. 50,00,000 for 88ka(2)

contribution made to Literature, Art, Culture, Sports, Journalism, Science,

Technology and Public Administration.

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S.N. Section New Amendment Existing Provisions

1.
8 (2Ka) Any registered or un-registered person
obtaining vehicle on rent or transport No Provision
service from an un-registered person shall
assess and deduct tax on the taxable
amount in accordance with this act or
rules framed under this act at the time of
payment or acquisition of service,
whichever occurs earlier.
17 (5Kha) The concerned taxpayer shall be allowed to The concerned taxpayer shall be
2.
deduct the tax paid pursuant to Subsection allowed to deduct tax paid pursuant to
(2) and 2ka of Sec. 8, Sec.12Ka and Subsection (2) of Section 8, Section
sub-section 3 of Sec. 15 12Ka. And Sub-section (3) of Section
15
25 (1Kha) If a consumer makes payment of the goods If a consumer makes payment of the
3.
or services assessed by department by goods or services purchased via
publishing the notice purchased via electronic medium in accordance to the
electronic medium in accordance to the prevailing laws, then the ten percent of
prevailing laws, then the ten percent of the the tax amount paid shall be refunded as
tax amount paid shall be refunded as cash cash incentive and deposited in their
incentive and deposited in their bank bank account as per the procedure
account as per the prescribed by the
procedure prescribed by the Department Department

29 (1Nga) Tax officer may impose a fine of 25% of

4. No Provision
claimed tax amount pursuant to clause
ka, ka1 and ka2 of sub-section 1 of Sec.25
in case tax refund is obtained through
automated electronic medium for the
amount that is ineligible for claiming the
refund amount

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