FEES, INTEREST &

PENALTIES UNDER VAT

ACT, 2052

Prepared by Saroj Thapa

Topics Covered in this Presentation
• We will cover the following in this Presentation
I. Fees for Failure to pay VAT on due date
II. Circumstances beyond control & its effect on Fees & Interest
III. Interest for Delay in Deposit of VAT
IV. Penalties
I. Fees for Failure to pay VAT on due date U/S 19(2)
Vat shall be deposited within 25 days from the end of the Tax Period.
In case of failure of registered person to deposit such payable VAT within 25 days
from the end of the Tax Period fee @ of 10% p.a. shall be levied on payable amount.
The fee shall be calculated from the date of expiry of due date of payment of such
VAT.
Further, the fee shall be calculated on per day basis. (i.e. VAT Payable
amount*10%*delay days/365)
Fee is not applicable if the Input Tax exceeds Output tax for any period.
 II. Waiver of Additional Fees in Circumstances Beyond Control
Conditions Due date for filing Period to which the due is Other
Waiver Application extended (i.e. tax Formalities if
payment due date) any
In case of incapacity of a person as a result of Within 7 days after the
illness person recovers from
illness

In case the person responsible to pay tax has Within 7 days of

to perform death ritual 30 days of expiry of due completion of ritual
date for payment of tax Recommendatio
n letter of
concerned local
level must be
In case the person responsible to pay tax Within 35 days of giving submitted
gives birth to a child birth to the child

In case of death, insanity or disappearance Within 7 days of receiving

of person responsible to pay tax Heir or guardian shall such application
make application within
35 days of happening of
such event
Conditions Due date for Period to which the Other Formalities if any
filing Waiver due is extended (i.e.
Application tax payment due
date)

In case of failure to reach tax office as Within 7 days after

a result of blockage of road due to the road is resumed
flood, landslide, snowfall or similar
other reason
Recommendation letter of concerned
In case of creation of circumstances Within 30 days of the local level must be submitted
beyond control as a result of fire, happening of such
earthquake or similar other natural 3o days of expiry event
disaster of due date for
payment of tax

In case of failure to reach tax office The next day when

due to complete blockage of means of the transportation is A recommendation letter of
transportation resumed concerned local level where the
complete blockage of road has
happened must be submitted.
Effect of circumstances beyond control on
Fees and Interest
In case the person files an application citing the reason that the VAT payable
couldn’t be paid on due date as a result of Circumstances beyond control, the DG
may waive additional fee of 10% p.a. in case the reason is found to be genuine.
DG can’t waive the interest applicable U/S 26 of 15% p.a.
III. Interest for delay in Deposit of VAT
In case a person fails to pay VAT payable within due date of making such payment,
interest @15% is applicable from the date of expiry of due date till the payment of
VAT is actually made.
This interest is applicable even if the matter is pending in the administrative review
of revenue tribunal.
Method of Calculation:
VAT Due * No. of Months VAT is due/12
(Part of the month is considered as a month for this)
For e.g. VAT payable for the month of shrawan is to be paid within 25 th Bhadra. If the
person makes payment on 2nd Ashwin 2 months interest is calculated as for Bhadra
and Ashwin (Part of the month is considered full month for this)
 IV. Penalties
Infringement Infringement of Penalty
Failure to complete registration as per the order of Sec. 5Ka
Tax officer Issued pursuant to Sec. 5Ka
Failure to register under compulsory Registration Sec. 10 (1) or (2) NRs. 20,000 per
requirement instance
In case a person fails to obtain temporary Sec. 10ka, 10kha
Registration & 10kha (1)
In case person fails to display its registration Sec. 10 (5)
certificate in conspicuous place or fails to display a
tax officer certified certificate in all other places of NRs. 1,000 per
business failure
(when inspection by
In case of failure of registered person to use VAT Sec. 10(6) tax officer)
number in all export, import and VAT related
documents and other documents as specified
 Criminal Offence
Offences:
a) In case of evasion of tax through fraud, or
b) In case unregistered person acts as registered, or
c) In case of issuance of invoice by under-invoicing, or
d) In case of conduct of transaction by violation Sec. 30,
In case a person commits above mentioned offences, the tax officer may
• Penalize the person with penalty equal to 100% of tax amount involved, or
• Imprison the person for a maximum period of 6 months, or
• Both

What is said in Section 30?

In case the person is penalized for at least 2 times against the offences mentioned in Section 29, the DG can
suspend the transaction of the person for a maximum period of 7 days and during the period of such
suspension, the person is not allowed to conduct business.