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CHANGES MADE BY FINANCE ACT, 2076 AND ITS

COMPARISION WITH FINANCE ACT, 2075

INCOME YEAR 2076-2077

COMPILED BY :

CA. PRABIN RAJ KAFLE


FCA, M Com, BBS
CHANGES MADE BY FINANCE ACT, 2076 AND ITS COMPARISION
TO FINANCE ACT, 2075

TABLE OF CONTENTS
1. INCOME TAX ACT, 2058 & INCOME TAX (9TH AMENDMENT) RULES,2076 ........................ 2
2. VALUE ADDED TAX ACT, 2052 & VAT (21ST AMENDMENTS) RULES, 2076 ..................... 17
3. EXCISE ACT, 2058 & EXCISE (19TH AMENDMENTS) RULES, 2076..................................... 23
4. CUSTOM ACT, 2064 .......................................................................................................................... 24
5. CUSTOM TARRIF, 2076.................................................................................................................... 30

LIMITS OF LIABILITY/DISCLAIMER OF WARRANTY:

Every effort has been made to avoid errors or omission. Any mistake, error or discrepancy if
any noted may be brought to my notice which shall be taken care of. No representation or
warranties with respect to the accuracy or completeness of the contents of this book, and
specifically disclaims any implied warranties of merchantability or fitness for any particular
purpose. There are no warranties with extend beyond the descriptions contained in this
paragraph. No warranty may be created or extended by sales representatives or written sales
materials. The accuracy and completeness of the information provided herein and the options
stated herein are not guaranteed or warranted to produce any particular result and the advice
and strategies contained herein may not be suitable for every individual. Author shall not be
liable for any loss of profit or any other commercial damages, including but not limited to
special, incidental, consequential or other damages. It is suggested that to avoid any doubt, the
reader should cross check all the facts, laws and contents of the publication with the original
publications or notifications.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

1. INCOME TAX ACT, 2058 & INCOME TAX (9TH AMENDMENT) RULES,2076

(Section 26 of Finance Act, 2076)


Section/Rules Old Provision New Provision
Incomes derived by cooperative Incomes derived by cooperative
societies, registered under societies, registered under
Cooperative Act, 2048 (1991) from Cooperative Act, 2048 (1991) from
business mainly based on business mainly based on agriculture
agriculture and forest products such and forest products such as
as sericulture and silk production, sericulture and silk production,
horticulture and fruit processing, horticulture and fruit processing,
animal husbandry, diary industries, animal husbandry, diary industries,
poultry farming, fishery, tea poultry farming, fishery, tea
gardening and processing, coffee gardening and processing, coffee
farming and processing, herbiculture farming and processing, herbiculture
and herb processing, vegetable seeds and herb processing, vegetable seeds
farming, bee-keeping, honey farming, bee-keeping, honey
production, rubber farming, production, rubber farming,
floriculture and production and floriculture and production and
forestry related business such as forestry related business such as
lease-hold forestry, agro-forestry, lease-hold forestry, agro-forestry, cold
cold storage established for the storage established for the storage of
storage of vegetables and business of vegetables and business of
Section 11(2)
agricultural seeds, insecticide, agricultural seeds, insecticide,
fertilizer and agricultural tools (other fertilizer and agricultural tools (other
than machine operated)and rural than machine operated)and rural
community based saving & credit community based saving & credit
cooperatives are exempt from tax. cooperatives Cooperative doing
Dividends distributed by such Financial Transactions are exempt
societies are also exempt from tax. from tax. Dividends distributed by
such societies are also exempt from
Clarifications: Rural Community for tax.
the purpose of this Sub Section
means the area except metropolitan
city, sub metro Politian city, and Clarifications: Rural Community for
municipality including the village the purpose of this Sub Section
development committee adjacent means the area except metropolitan
with the metropolitan city and sub city, sub metro Politian city, and
metro Politian city. municipality including the village
development committee adjacent with
the metropolitan city and sub metro
Politian city.
No Provision Following rebate will be allowed on
Income Tax for Special Industry
fully operated during any Income
Year :
Section
(Ka) 1/3 of Tax on income of
11(2Kha)
Resident Natural Person if
required to pay tax at 30%
(Kha) 20% of Income Tax on
income of an Entity

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

(Ga) Person availing benifit as per


Clause (Ka) and (Kha) is
also eligible if any for
another tax rebate as per
this section.
The rate of tax will be exempted by The rate of tax will be exempted by
25% on income earned from 25% on income earned from
exporting goods manufactured by a exporting goods manufactured by a
manufacturing industry. manufacturing industry.

Following tax rebate shall be


allowed on Income from export
having source in Nepal during any
Income Year:

(Ka) If resident natural person


required to pay tax at 20% on
Income then 25% of such tax
Section amount and if required to
11(3Nga) pay at 30% on Income then
50% of such tax amount

(Kha) 20% on applicable Income


Tax on Income of an Entity

(Ga) Additional 25% on tax amount


after availing rebate as per
clause (Ka) or (Kha) on
income received from Export
of Manufactured goods by
manufacturing based
industry

The rate of tax will be exempted by The rate of tax will be exempted by
40% on income earned from 40% on income earned from
construction and operation of road, construction and operation of road,
bridge, airport, tunnel and from bridge, airport, tunnel and from
operating through investment in operating through investment in
tram, trolleybus. tram, trolleybus.
Following tax rebate shall be
allowed to any Entity earning
income from following activity:
Section
11(3Cha) (Ka) Operated any trolley bus, or
tram then 20%
(Kha) Operated any rope way, cable
car, railway, tunnel or sky
bridge after construction
then 20% ; or
(Ga) Construction and Operation
of Airport then 40%
(Gha) Construction and operation
of Road, Bridge or Tunnel

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

Way then 52%


(Nga) Investing and operating
tram or trolley bus then
52%

No Provision Rebate of 20% shall be allowed on


Tax on taxable income in any
income year of an entity wholly
engaged in the projects conducted
Section by any entity so as to build public
11(3Tha) infrastructure, own, operate and
transfer it to the GON and in power
generation, transmission, or
distribution.

While calculating the income by a While calculating the income by a


person under subsections (1), (2), person operating transactions
Clauses (Ka) and (Kha) of (3), (3Ka), eligible for separate benefit under
(3Kha), (3Ga) and (3 Gha), Sub subsections (1), (2), Clauses (Ka)
Section (13), (14) and (15) of Section and (Kha) of (3), (3Ka), (3Kha),
1 of Schedule 1 and Sub Section (2), (3Ga) and (3 Gha), Sub Section (13)
(3), (3Ka) and (4) of Section 2 of , (14) and (15) of Section 1 of
Section 11(4)
Schedule -1 shall calculate the Schedule 1 and Sub Section (2), (3),
income assuming the only income (3Ka) and (4) of Section 2 of
derived by a separate person. Schedule -1 this section shall
calculate the such income assuming
the income derived by a separate
person.

No Provision Salary or Wages expenses


Section distributed to Employees or
21(1)(Gha1) Workers not having Permanent
Account Number (PAN).
No provision Expenses in excess of Rs. 1,000
Section
incurred on invoice not containing
21(1)(Gha2)
Permanent Account Number (PAN).
Entity willing to get merged under Entity willing to get merged under
Sub Section(1) should submit Sub Section(1) should submit
Section 47Ka(6) expression of interest to Inland expression of interest to Inland
Revenue Department Within 2076 Revenue Department Within 2076
Ashad end. 2077 Ashad end.
The entities submitting expression of The entities submitting expression of
interest under Sub section(6) to get interest under Sub section(6) to get
Section 47 merged under sub Section (1) should merged under sub Section (1) should
Ka(7) complete the merger process within complete the merger process within
2077 Ashad end. 2077 2078 Ashad end.

In case where a resident person files In case where a resident person files
an application with the Department an application with the Department
Section 63(1) intending to get approval for intending to get approval for
establishing a retirement fund, the establishing a retirement fund, the
Department shall pronounce the Department shall pronounce the

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

approval as prescribed. approval as prescribed.


Provided that, no approval shall be Provided that, no approval shall be
required for a retirement fund required for a retirement fund
established by Citizen Investment established by Citizen Investment
Fund established under Citizen Fund established under Citizen
Investment Trust Act, 2047 and by Investment Trust Act, 2047,
Provident Fund established under Retirement Fund operated by
Provident Fund Act, 2019. Social Secutiy Fund established
under Contribution Based Social
Security Fund Act 2074, by
Employees Provident Fund
established under Employees
Provident Fund Act, 2019 and
retirement fund operated by
Pension Fund established under
Pension Fund Act, 2075 (Page 225)

For reference purpose only As per Sub Section (3) of Section 78,
IRD may prescribe situations in
which a person is required to show or
Section 78(3)
quote their Permanent Account
and (4) Number.

As per Sub Section (4) of Section 78,


Notwithstanding Sub Section (1), a
person designated under Sub Section
(3), should have PAN before carrying
out transaction.

No Provision Person doing transaction after


obtaining Permanent Account
Section
Number as per Sub Section (4)
78(4Ka)
should update registration related
information in biometric procedure
as specified by the deparment
within the stipulated time.
A document to be served on a person A document to be served on a person
under this Act shall be considered as under this Act shall be considered as
sufficiently served in the following sufficiently served in the following
circumstances :- circumstances:-
Section
79(1)(Ka) (Ka) sent to the electronic mail (Ka) sent to the tele fax, telex,
address or transmitted on a fax electronic mail address or
of a person; related other electronic
medium of any person;

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

As per Sub Section (1) of Section 79,


A document to be served on a person
For reference purpose only under this Act shall be considered as
Section 79(1) sufficiently served in the following
and (2) circumstances:-
(Ka) sent to the tele fax, telex,
electronic mail address or
related other electronic
medium of any person;

(Kha) handed over to the


concerned person or, in the
case of an entity, a
manager of the entity; or
(Ga) left at or sent by post to the
usual or last known place
of abode, business, office,
or other address of the
person.

As per Sub Section (2) of Section 79,


A document issued, served, or given
by the Department under this Act
shall be treated as sufficiently
authenticated if the name or title of
an authorized officer of the
Department is signed, encrypted or
encoded by means of computer
technology, stamped, or written on
the document.

If any documents not served under


Sub Section (1) and (2) then
No Provision information related to such order
can be telecast or published at
radio, television or any national
Section 79(3) newspaper in the name of related
person. In this case related person
shall be deemed to have received
such information.
Provided that, the tax shall be Provided that, the tax shall be
withheld at the rate of 10% on withheld at the rate of 10% on
payment made by a resident person payment made by a resident person
for rent having source in Nepal. for rent having source in Nepal.

But, But,
Section
(Ka) Tax shall be withheld at the (Ka) Tax shall be withheld at the
88(1)(5)(Kha)
rate of 1.5% on payment rate of 1.5% on payment
made to person registered made to person registered in
in VAT and running VAT and running business of
business of giving vehicles giving vehicles on rent.
on rent.
(Kha) Withholding Tax shall not be

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

(Kha) Withholding Tax shall not deducted on amount received


be deducted on amount by Natural person for house
received by Natural person rent.
for house rent.

(Ga) No tax shall be deducted on


No Provision incentive provided as per
Section 25(1Kha) of VAT
Act,2052 to consumer on
purchased goods or
services by making
payment through
electronic medium as per
prevailing laws

Notwithstanding Sub Section (4), tax Notwithstanding Sub Section (4), tax
on house rent income of natural on house rent income of natural
person other than in conducting a person other than in conducting a
business shall be required to pay business shall be required to pay
within end of Ashad of current year within end of Ashad of current year
Section and person choosing to pay tax on and person choosing to pay tax on
90(4Ka) the basis of turnover as per Section the basis of turnover as per Section
4(4Ka) shall deposit tax withheld by 4(4Ka) shall deposit tax withheld by it
it under Chapter 17 at time of under Chapter 17 at time of making
making payment of tax in payment of tax in installment.
installment.

Section 94(1)
As per Sub Section (1) of Section 94,
a person who derives or expects to
For reference purpose only derive any assessable income during
an income-year from a business or
investment shall required to pay tax
for the year by three installments as
follows:

Date Payable Amount Payable


due tax amount
By the end of
out of 40% of the
Poush
estimated tax.
due tax amount
By the end of
out of 70% of the
Chaitra
estimated tax.
due tax amount
By the end of out of 100% of
Ashad the estimated
tax.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

Notwithstanding Subsection (1),


Section 94(2) where the amount of total
installments calculated under Notwithstanding Subsection (1),
Subsection (1) is less than Rs 5,000, where the amount of total
the amount of the installment shall installments calculated under
not be required to pay. Subsection (1) is less than Rs 5,000
Rs. 7,500, the amount of the
installment shall not be required to
pay.

Following advance tax will be Following advance tax will be


recovered on the gain calculated recovered on the gain calculated
under section 37 in case gain from under section 37 in case gain from
disposal of interest in resident entity disposal of interest in resident entity
by a person except by a resident by a person except by a resident
entity registered under prevailing law entity registered under prevailing law
for carrying out transactions of for carrying out transactions of
buying and selling of securities. buying and selling of securities.
Section
95Ka(2)(Ka) (Ka) In case of gain from disposal of (Ka) In case of gain from disposal of
interest of an entity listed in interest of an entity listed in
Securities Exchange Board of Nepal, Securities Exchange Board of Nepal,
by the entity of which deals in by the entity of which deals in
securities exchange Market- 7.5% on securities exchange Market- 7.5% 5%
the gain for a resident natural person on the gain for a resident natural
,10% on the gain from resident entity person ,10% on the gain from
and 25% on the gain from others. resident entity and 25% on the gain
from others.
No Provision At the time of computation of gain
on disposal of interest in an entity
Section as per Sub Section (2) (Ka) ,
95Ka(2Ka) weighted average cost of interest
held at that time of such entity
shall be taken.
In case of any persons other than In case of any persons other than
specified in Sec. 95Ka (5), Land specified in Sec. 95Ka (5), Land
Revenue Office shall collect advance Revenue Office shall collect advance
Section tax at 10% of gain on disposal of tax at 10% of gain on disposal of
95Ka(6) land or building. land or building 1.5% on amount
derived from disposal at the time
of registration.

Where he-buffalo, buffalo, he-goat, Where he-buffalo, buffalo, he-goat,


boka, sheep, chyangra falling in Part boka, sheep, chyangra falling in Part
1 of Harmonized Code System; live, 1 of Harmonized Code System; live,
fresh or frozen fish falling in Part 3 of fresh or frozen fish falling in Part 3 of
Section
HS System; fresh flowers falling in HS System; fresh flowers falling in
95Ka(7)
Part 6 of HS System; fresh Part 6 of HS System; fresh vegetables,
vegetables, potato, onion falling in potato, onion, dry vegetables, garlic,
Part 7 of HS System, and fresh fruits baby corn falling in Part 7 of HS
falling in Part 8 of HS system are System, and fresh fruits falling in

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

imported for business purpose, the Part 8 of HS system are imported for
customs office shall collect advance business purpose, the customs office
tax at the time of release of goods @ shall collect advance tax at the time
5% on customs value determined of release of goods @ 5% and meat
such products falling in Part 2, Milk Products,
Egg, Honey falling in Part 4, Finger
Millet (Kodo), Buckwheat (Fapar),
Proso Millet (Junelo), Rice, Small
Rice Grains (Kanika) falling in Part
10, Flour, ground cereal gains (Aata
and Pitho) falling in Part 11, Herbs,
Sugarcane falling in Part 12, Plant
related production falling in Part
14 @ 2.5% on customs value
determined such products
The advance tax amount collected or The advance tax amount collected or
the amount deemed to have collected the amount deemed to have collected
under sub-section (7) should be under sub-section (7) (8) should be
Section deposited in the Department within deposited in the Department within
95Ka(10) the time period under Sub-section (8) the time period under Sub-section (8)
along with the return in statement. (9) along with the return in
statement.

In the following conditions, both the In the following conditions, both the
person collecting advance tax and person collecting advance tax and the
the person from whom it is to be person from whom it is to be
recovered shall jointly and separately recovered shall jointly and separately
be liable, for the payment of the tax, be liable, for the payment of the tax,
to the Department: to the Department:

Section (Ka) If the advance tax not (Ka) If the advance tax not
95Ka(11)(Kha) collected by a person required collected by a person required
to collect; and to collect; and

(Kha) If the tax deemed to have (Kha) If the tax deemed to have
collected under sub section collected under sub section (7)
(7) not deposited in the (8) not deposited in the
Department under Sub- Department under Sub-
section (9), section (9) (10),

The person requiring depositing The person requiring depositing


advance tax under Sub-section (10) advance tax under Sub-section (10)
Section should deposit the tax within 25 (11) should deposit the tax within 25
95Ka(12) days from the elapse of the date days from the elapse of the date
mentioned in Sub -section (8). mentioned in Sub -section (8) (9).

The advance tax amount can be The advance tax amount can be
recovered from the person from recovered from the person from whom
Section whom it was required to be collected it was required to be collected in case
95Ka(13) in case the amount is deposited into the amount is deposited into the
the Department under Sub-section Department under Sub-section (9)
(9) by the person required to recover (10) by the person required to recover

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

the advance tax. the advance tax.

No Provision Any person desiring to revise


income tax return filed at
depsrtment within the due date
Section 96(6) may revise as per the procedure
prescribed by department within
30 days from the date of
submission of return.
No Provision If it is proved that person receiving
return from business is other than
those person on whose name
Section 110Ga
business is registered then real
person receiving return shall be
liable to pay tax of such business.
As per Sub Section (1) of Section 115,
For reference purpose only A person who is aggrieved by
administrative review decision as per
Section 115(1) Section 114 may file an objection to
the decision with the Department
within 30 days after the notice of
such decision is received.

Person submitting application as per Person submitting application as per


Section 115(6) Sub Section (1) shall deposit whole Sub Section (1) shall deposit whole
amount of undisputed tax and one- amount of undisputed tax and one-
third of disputed tax out of assessed third fourth of disputed tax out of
tax. assessed tax.
Where the Department fails to serve Where the Department fails to serve a
a person with notice of the decision person with notice of the decision on
on an objection within 60 days of an an objection within 60 days of an
objection being filed as per Sub objection being filed as per Sub
Section (1) , the person may, by Section (1) , the person may, by
notice in writing filed with the notice in writing filed with the
Section 115(8)
Department, treat the Department as Department, treat the Department
having made a decision to disallow as having made a decision to
the objection. disallow the objection then the
applicant may file an appeal at
Revenue Tribunal as per Section
116
A person shall be required to notify A person shall be required to notify
the Department in writing of the the Department in writing of the
matter of having treated the matter of having treated the
objection as disallowed under objection as disallowed under
Section 115(9)
subsection (8). subsection (8).

The Department shall be treated as The Department shall be treated as


having disallowed the objection and having disallowed the objection

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

served the person with notice to that and served the person with notice
effect on the day that the notification to that effect on the day that the
is filed with the Department. notification is filed with the
Department.

Person shall inform Department in


writing attaching a copy of appeal
filed as per Sub Section (8) within
15 Days of registration of appeal.

If a person does not file the returns, If a person does not file the returns,
the following charges are imposed on the following charges are imposed on
those persons: those persons:

Section 117 (1) (Ka) Per return 2,000 on not filing (Ka) Per return 2,000 5,000 or
(Ka) return as per Section 95(1) in 0.01 % of Assessable Income
an income year as per Income Tax Return
which ever is higher on not
filing return as per Section
95(1) in an income year
Subject to Sub Section (2) and (4), Subject to Sub Section (2) and (4), the
the taxable income of a resident taxable income of a resident natural
natural person for an income-year is person for an income-year is taxed at
taxed at the following rates: the following rates:

(Ka) taxable income from (Ka) taxable income from


employment upto Rs. employment upto Rs.
350,000 – 1%; 350,000 Rs. 400,000 – 1%;

(Kha) taxable income in excess of (Kha) taxable income in excess of


Rs. 350000 but not exceeding Rs. 350000 Rs. 400,000 but
Rs.45000-Rs.3500 as per not exceeding Rs. 450000 Rs.
Schedule 1 clause(Ka) for income upto 500,000 -Rs. 3500 Rs. 4,000
Section 1(1) Rs.350000 and 10% of as per clause(Ka) for income
taxable income in excess of upto Rs. 350000 Rs. 400000
Rs. 350000; and 10% of taxable income in
excess of Rs. 350000 Rs.
400000;

(Ga) taxable income in excess of (Ga) taxable income in excess of


Rs.450000- Rs13,500 as per Rs.450000 Rs. 500,000 and
clause (Kha) for income upto up to Rs. 700,000-
Rs.450,000 plus 20% taxable Rs13,500 Rs. 14,000 as per
income in excess of clause (Kha) for income upto
Rs.450000. Rs.450,000 Rs. 500,000 plus
20% taxable income in excess
of Rs.450000 Rs. 500,000.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

(Gha) if taxable income in excesss (Gha) if taxable income in excesss of


of Rs.650,000-Rs.53,500 as Rs.650,000 Rs. 700,000 but
per clause(Ga) for income up to Rs. 2,000,000-
upto 650,000 plus 30% Rs.53,500 Rs. 54,000 as per
taxable income in excess of clause(Ga) for income upto
Rs. 650,000. 650,000 Rs. 700,000 plus
30% taxable income in excess
of Rs. 650,000 Rs. 700,000.

(Nga) If taxable income in excess of


(Nga) If taxable income in excess of
2 million , additional tax at
2 million , additional tax at
20% shall be charged on the
20% shall be charged on the
tax rate as per clause (Gha)
tax rate as per clause (Gha)

For a taxpayer having registered sole


For a taxpayer having registered sole
proprietorship firm and having
proprietorship firm and having
income from pension and amount
income from pension and amount
contributed by natural person on
contributed by natural person on
contribution based pension fund
contribution based pension fund, 1%
pension fund and income of natural
tax under Clause (Ka) is not applied.
person contributing at contribution
based social security fund 1% tax
under Clause (Ka) is not applied.

Subject to Sub Section (4), the Subject to Sub Section (4), the
taxable income of a couple making taxable income of a couple making an
an election under section 50 for an election under section 50 for an
income-year shall be taxed at the income-year shall be taxed at the
following rates: following rates:
(Ka) taxable income from (Ka) taxable income from
employment upto Rs. employment upto Rs.
400,000 – 1%; 400,000 Rs. 450,000 – 1%;
Schedule 1 (Kha) taxable income in excess of (Kha) taxable income in excess of
Section 1(2)
Rs.400000 but not exceeding Rs.400000 Rs.450,000 but
Rs.500000-Rs.4000 as per not exceeding Rs.500000
clause(Ka) for income upto Rs.5,50,000 - Rs.4000
Rs.400000 and 10% of Rs.4,500 as per clause(Ka) for
taxable income in excess of income upto Rs.400000
Rs. 400000; Rs.450,000 and 10% of
taxable income in excess of
Rs. 400000 Rs. 4,50,000 ;

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

(Ga) taxable income in excess of (Ga) taxable income in excess of


Rs.500000-Rs.14000 as per Rs.500000 Rs.550,000- but
clause (kha) for income upto not exceeding Rs. 750,000
Rs.500000 plus 20% taxable Rs.14000 Rs.14,500 as per
income in excess of clause (kha) for income upto
Rs.500,000. Rs.500000 Rs.550,000 plus
20% taxable income in excess
of Rs.500000 Rs.550,000.

(Gha) if taxable income in excess of


(Gha) if taxable income in excess of
Rs.700,000 Rs.750,000 but
Rs.700,000-Rs.54,000 as per
not exceeding Rs. 2,000,000
clause(Ga) for income upto
- Rs.54,000 Rs.54,500 as per
700,000 plus 30% taxable
clause(Ga) for income upto
income in excess of Rs.
Rs.700,000 Rs.750,000 plus
700,000.
30% taxable income in excess
of Rs.700,000 Rs.750,000.

(Nga) If taxable income in excess of (Nga) If taxable income in excess of


2 million , additional tax at 2 million , additional tax at
20% shall be charged on the 20% shall be charged on the
tax rate as per clause (Gha) tax rate as per clause (Gha)

For a taxpayer having registered sole For a taxpayer having registered sole
proprietorship firm and having proprietorship firm and having
income from pension and amount income from pension and and income
contributed by natural person on of natural person contributing at
contribution based pension fund, 1% contribution based pension fund 1%
tax under Clause (Ka) is not applied. tax under Clause (Ka) is not applied.
As per Sub section (4) od Section 1 of As per Sub section (4) od Section 1 of
Schedule 1, Subject to Sub section(3) Schedule 1, Subject to Sub section(3)
the following Natural Person Shall be the following Natural Person Shall be
taxed as fallows: taxed as fallows:

(Ka) the greater of the following (Ka) the greater of the following
Schedule 1 amounts shall be taxed at the amounts shall be taxed at the
Section1 (4) rates specified in Sub section(1) rates specified in Sub
or(2) as though it were the only section(1) or(2) as though it
taxable income of the Natural were the only taxable income
Person or couple, as the case of the Natural Person or
requires ;and couple, as the case requires
;and

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

(1) the total of Natural person or (1) the total of Natural person or
couples taxable income less the couples taxable income less the
gains; or gains; or
(2) Rs.350000, in the case of an (2) Rs.350000 Rs. 400,000 , in the
Natural person, or Rs.400000 in case of an Natural person, or
the case of a couple, Rs.4,00,000 Rs.4,50,000 in
the case of a couple,
(Kha) the balance of the taxable (Kha) the balance of the taxable
income is taxed at the rate of income is taxed at the rate of
10%.But, 10%.But,
(1) Tax shall be levied at 2.5% if the (1) Tax shall be levied at 2.5% if the
ownership is more than 5 years ownership is more than 5 years
of the NBCA( land and house of the NBCA( land and house
and land) disposed off. and land) disposed off.
(2) Tax shall be levied at 5% if the (2) Tax shall be levied at 5% if the
ownership is less than 5years of ownership is less than 5years of
the NBCA( land and House and the NBCA( land and House and
land) dispossed off. land) dispossed off.
(3) Tax shall be levied at 5% 7. 5% (3) Tax shall be levied at 5% 7. 5%
on the gain from disposal of an on the gain from disposal of an
interest in any entity listed in interest in any entity listed in
Securities Exchange Board of Securities Exchange Board of
Nepal. Nepal.
The amount of tax referred to in The amount of tax referred to in
section 4(4) shall be- section 4(4) shall be-

(Ka) for Natural Persons (Ka) for Natural Persons


conducting business in the conducting business in the
Metropolitan or Sub- Metropolitan or Sub-
Metropolitan Cities - Rs Metropolitan Cities - Rs
5000; 5000 Rs. 7,500;

Schedule 1 (Kha) for Natural Persons (Kha) for Natural Persons


Section 1(7) conducting business in conducting business in
Municipalities - Rs 2,500; Municipalities - Rs 2,500 Rs.
and 4,000; and

(Ga) for Natural Persons (Ga) for Natural Persons


conducting business conducting business other
anywhere else in Nepal – Rs than mentioned in Clause
1,500. (Ka) and (Kha) – Rs 1,500
Rs. 2,500.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

Notwithstanding this section, tax Deleted


shall be calculated at the rate of 20%
on the taxable income instead of the
Schedule 1 30% tax rate applicable under this
Section 1(14) section, if a natural person is wholly
engaged in operating a special
industry referred to in Section 11 for
an income year.
While calculating tax on the taxable Deleted
income from export of a natural
person in an income year, 25%
Schedule1 exemption will be availed for income
Section 1 (15)
taxed at 20% and 50% exemption
will be availed for income taxed at
30%
The amount of tax referred to in The amount of tax referred to in
section 4(4Ka) shall be- section 4(4Ka) shall be For the
purpose of computation of tax as
per Section 4(4Ka) on the basis of
turnover, transaction up to Rs.
2,000,000 shall be taxed as per
Section 4(4) of the Act and
transaction in excess of it shall be
taxed at the following rate -

(Ka) for person conducting (Ka) for person conducting


business of gas and cigarette business of gas and cigarette
with upto 3% commission or with upto 3% commission or
Schedule1 value addition: 0.25% of value addition: 0.25% of
Section 1 (17) transaction; transaction;

(Kha) for person conducting (Kha) for person conducting


business other than business other than
mentioned in Clause (Ka): mentioned in Clause (Ka):
0.75% of transaction; 0.75% of transaction;

(Ga) for person engaged in service (Ga) for person engaged in service
sector business: 2% of sector business: 2% of
transaction. transaction.

However, if tax calculated under However, if tax calculated under


clause (Ka), (Kha) and (Ga) is less clause (Ka), (Kha) and (Ga) is less
than Rs. 5,000 then, Rs. 5,000 than Rs. 5,000 then, Rs. 5,000
Subject to sub Section (2), (3), (4), (5) Subject to sub Section (2), (3), (4), (5)
and (7), the taxable income of an and (7), the taxable income of an
Schedule1 entity for an income-year is taxed at entity for an income-year is taxed at
Section2(1) the rate of 25 percent. the rate of 25 percent.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

Income having a source in Nepal Income having a source in Nepal


derived as follows during an income- derived as follows during an
year by an entity shall be taxed at income-year by an entity shall be
the rate of 20 percent. taxed at the rate of 20 percent.
(Ka) an entity wholly engaged in (Ka) an entity wholly engaged in
operating a special industry operating a special industry
as referred to in section 11 for as referred to in section 11
the year; or for the year; or

(Kha) the entity has- (Kha) the entity has-


(1) Operated any road, bridge, (1) Operated any road, bridge,
tunnel, rope-way, or flying tunnel, rope-way, or flying
bridge constructed by the bridge constructed by the
entity; or entity; or
(2) Operated any trolley bus, or (2) Operated any trolley bus, or
tram, or tram, or
(3) Co-Operatives registered and (3) Co-Operatives registered
carrying out transaction and carrying out transaction
under Cooperative Act, 2048 under Cooperative Act, 2048
Schedule1 except those carrying out except those carrying out
Section2(3) transaction with tax transaction with tax
exemption. exemption.

Co-Operatives registered and


carrying out transaction under
Cooperative Act, 2048 except those
carrying out transaction with tax
exemption shall be taxed at the
rate of 20%.
But,
Following rebate shall be provided
to Cooperative as mentioned below
doing financial transaction:

(Ka) 75% of applicable tax rate if


operated in Municipality area

(Kha) 50% of applicable tax rate if


operated in Metropilitan or
sub metropolitan area
Tax will be levied at 20% on the DELETED
Schedule1 taxable income of an entity from
Section2(3Ka) export of having source in Nepal.

The taxable income of an entity DELETED


wholly engaged in the projects
conducted by any entity so as to
build public infrastructure, own,
Schedule1
operate and transfer it to the GON
Section2(4)
and in power generation,
transmission, or distribution for an
income-year shall be taxed at the
rate of 20 percent.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

A person shall pay tax in accordance A person shall pay tax in accordance
with sub-Rule (1) in the following with sub-Rule (1) in the following
forms: forms:
(Ka) if the payment is made to the (Ka) if the payment is made to the
Department where the Department where the
payment does not exceed the payment does not exceed the
limits for cash payment limits for cash payment
prescribed by the Department, prescribed by the Department,
in cash; or where the payment in cash; or where the payment
exceeds the limits, by bank exceeds the limits, by bank
cheques or bank draft; or cheques or bank draft; or
Rule 29(3)
(Kha) If the payment is made to a (Kha) If the payment is made to a
bank empowered to conduct bank empowered to conduct
Government transactions, in Government transactions, in
cash, bank cheques or bank cash, bank cheques or bank
draft. draft.
But for doing government
transaction if payment is to
be made through authorized
bank in excess of Rs. 10
Lakh then payment should
be made via cheque, draft or
electronic medium.

2. VALUE ADDED TAX ACT, 2052 & VAT (21ST AMENDMENTS) RULES, 2076
(Section 24 of Finance Act, 2076)

Section/Rule Old Provision Amended Provision


Section 10(2) Any person engaged in transaction of Any person engaged in transaction
taxable goods and services shall apply of taxable goods and services shall
in the prescribed format within 30 apply in the prescribed format
days to a tax officer from date of such within 30 days to a tax officer from
taxability or commencement of date of such taxability or
transaction:- commencement of transaction:-

(Ka) Transaction by bricks (Ka) Transaction by bricks


production, liquor distributor, production, liquor
wine shop, software, trekking, distributor, wine shop,
rafting, ultra light flight, software, Liquor, Wine,
paragliding, tourist vehicle, Health Club, Disco theque,
crusher, sand mines, business Massage therapy, Motor
operations related to slate and Parts, Electronic Software,
stone industry, Custom Agent, Toy
Business, Junk or Scrap
Business, trekking, rafting,
ultra light flight, paragliding,
tourist vehicle, crusher, sand
mines, business operations
related to slate and stone
industry,

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(kha) Where any person operates a (kha) Where any person operates a
business of hardware, sanitary, business of hardware,
furniture, fixture, furnishing, sanitary, furniture, fixture,
automobiles, motor parts, furnishing, automobiles,
electronics, marbles, education motor parts, electronics,
consultancy, disco theque, marbles, education
health club, massage therapy, consultancy, disco theque,
beauty parlour, catering health club, massage
services, party palace business, therapy, beauty parlour,
parking service, dry cleaners Educational and Legal
operated with machinery, Consultancy services,
retaurant with bar, ice-cream Accounting and Auditing
industry, colour lab, boutique, related services catering
tailoring business with services, party palace
materials of suiting shirting, business, parking service,
supplying uniform to dry cleaners operated with
educational institutions or machinery, retaurant with
health institutions or other bar, ice-cream industry,
entities within metropolitan, colour lab, boutique, tailoring
sub-metropolitan,municipality business with materials of
or areas as designated by the suiting shirting, supplying
department. uniform to educational
institutions or health
institutions or other entities
within metropolitan, sub-
metropolitan,municipality or
areas as designated by the
department.
Section 10Ga(1) No provision Person registered as per this Act,
should update registration related
information and documents in
biometric registration procedure
as specified by the deparment
within the stipulated time.
Section 14(6) A provision will be made to recover the A provision will be made to recover
tax at consumer’s level on the the tax at consumer’s level on the
published price by issuing invoice in published price by issuing invoice in
prescribed format while selling those prescribed format while selling those
goods by the person under Sub goods by the person under Sub
Section (7) to non registrants. Section (7) (5) to non registrants.
Provided that the person not specified Provided that the person not
under Sub Section (7) may voluntary specified under Sub Section (7) (5)
issue the invoice in the prescribed may voluntary issue the invoice in
format under this Sub Section. the prescribed format under this
Sub Section.
Section 19(7Ka) No provision Notwithstanding Sub Section (7),
tax in excess of Rs. 1,000,000
shall only be paid through cheque,
draft or electronic medium.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

Section 24(3) A registered person may file a claim to A registered person may file a claim
a tax officer for a lump sum refund, as to a tax officer for a lump sum
prescribed, of the amount of the refund, as prescribed, of the amount
remaining excess after offsetting for a of the remaining excess after
continuous period of six months offsetting for a continuous period of
under this section. six four months under this section.

Section As per Sub Section (1) of Section 25,


25(1)(Ka1) the following amounts collected as
tax shall be refunded immediately, if
the application for refund is
submitted within 3 years from the
date of the transaction on which the
claim for refund is based:

No provision (Ka1) Tax paid by mission


availing diplomatic facility
on purchase of taxable
goods or services within
Nepal on the
recommendation of Nepal
Government, Foreign
Ministry.
Section 25(1Ka) Notwithstanding Sub Section (1), no
Notwithstanding Sub Section (1), no
refund of the tax paid will be made
refund of the tax paid will be made on
on purchase of taxable goods or
purchase of taxable goods or service
service for less than Rs.5000
for less than Rs.5000 at a time by a
Rs.10,000 at a time by a diplomat
diplomat or diplomatic mission.
or diplomatic mission.
Section No provision Any consumer at the time of
25(1Kha) purchasing goods or services
makes payment through
electronic medium as per
prevailing laws then 10% of tax
payment shall be refunded as cash
incentive at bank account of
consumer as per the procedure
specified by department.
Section On infringement of Sub Section (5), (6) On infringement of Sub Section (5)
29(1)(Kha) or (7) of Section 10, Rs.1,000 for each or (6) or (7) of Section 10, Rs.1,000
time of offence, for each time of offence,

Note:
For reference purpose only As per Sub Section (5) of Section 10,
the registered person shall display
the registration certificate in a
conspicuous place at his principal
place of transactions. If there is
more than one place of transaction,
he shall display in a conspicuous
place at each place, other than the
principal one, a copy of the

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

registration certificate attested by a


tax officer.

As per Subsection (6) of Section 10,


a registered person shall have to use
registration number for all the
transactions related to Value Added
Tax, Excise Duty and Customs and
to other transactions as prescribed
as well.
Section No provision On infringement of Sub Section
29(1)(Kha2) (7) of Section 10, Rs.10,000 for
each time of offence

Note:
As per Sub Section (7) of Section 10,
every registered person shall inform
For reference purpose only the tax officer within 15 days of any
changes in the information
pertaining to the application for
registration as required under sub-
section 1 and 2 of Section 10.

Section On Infringement of Sub Sections (1) On Infringement of Sub Sections


29(1)(Ga) and (4) of Section 14, Rs.5,000 for (1) and (4) of Section 14, Rs.5,000
each time and the chargeable tax, for each time and the chargeable
tax,

On infringement of Section 14(1),


not issuing invoice Rs. 10,000
each time and not receiving
invoice Rs. 1,000 each time.

For reference purpose only As per Sub Section (1) of Section 14,
every registered person is required
to issue an invoice to the recipient,
in supplying any goods and services.

Section No provision On infringement of Section 14(4),


29(1)(Ga1) Rs. 10,000 each time

As per Sub Section (4) of Section 14,


For reference purpose only tax invoice should be accompanied
for transporting taxable goods for
more than Rs.10,000 outside the
area designated by the Department.

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Section 29(1Ga) Fifty per cent of the bill amount shall Fifty per cent of the bill amount
be levied to selling persons issuing penalty or imprisionment up to 6
bills without transferring goods. month or both shall be levied to
selling persons issuing bills without
transferring goods.

Section 31Ka(6) The taxpayer applying under Sub The taxpayer applying under Sub
Section (1) should pay undisuted tax Section (1) should pay undisuted tax
amount and deposit cash in 1/3 of the amount and deposit cash in 1/3
disputed tax amount out of the 1/4 of the disputed tax amount out
assessed tax amount. of the assessed tax amount.
As per Sub Section (1) of Section
31Ka, A person discontent with the
For reference purpose only decision of tax assessment made by
a tax officer, may apply to the
department against the decision
within 30 days of getting
information of the decision.

Schedule 1 Tax Wheat or meslin flour (1103.11.00) Deleted


exempted goods
and services:
Group 1 Basic
Agricultural
Products 11.03
Schedule 1 Tax Soyabadi Maseora Deleted
exempted goods
and services:
Group 1 Basic
Agricultural
Products
Schedule 1 Tax Air transport, service from mechanical Air transport, service from
exempted goods bridge, public passenger transport mechanical bridge, public passenger
and services: (except cable car), transport services transport (except cable car),
Group 9 (except transport related to supply) transport services (except
Passenger and cargo service for the purpose of transport related to supply) and
Carrying export. cargo service for the purpose of
Transport And export.
Freight Services
Schedule 1 Tax Three Wheeler vehicles (Auto Deleted
exempted goods Rickshaws Bat_ tery opreated only
and services: Like SAFA Tampoo (8703.80.10)
GROUP 11 :
OTHER GOODS
AND SERVICES
87.03
Rule 6Ka(2) No Provision Government body, public
institution or registered person
should acquire tender or
consultancy service for more than
Rs. 5,00,000 in a year only from

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

reigistered person.

Rule 6Ga No Provision Government body, public


institution or registered person at
the time of making payment
against tender agreement or
contract or goods or service, to
respective contractor or supplier,
should deposit 50% of tax payable
amount, in the name of
contractor or supplier at
respective revenue code and pay
only balance amount of tax to
them. Amount such deposited can
be setoff with tax payable by
related contractor or supplier.
Rule 7Kha No Provision Registered person shall update its
information within 2077 Ashad
end as per Section 10Ga of the
Act on Biometric Procedure.

Rule 41(1) For the purpose of Section 17 of the For the purpose of Section 17 of the
Act, tax may not be deducted in Act, tax may not be deducted in
respect of the following goods or respect of the following goods or
services: services:
(Ka) Beverages, (Ka) Beverages,
(Kha) Alcohol or alcohol mixed (Kha) Alcohol or alcohol mixed
beverages such as liquor and beverages such as liquor and beers;
beers; (Ga) Light Petroleum Product
(Ga) Light petroleum (Petrol) fuel for (Petrol) fuel for vehicles (Petrol,
vehicles, Diesel and L.P. Gas),
(Gha) Entertainment expenses. (Gha) Entertainment expenses.
Rule 45(1) When refunding the amount of tax for When refunding the amount of tax
the purpose of Sub-sec.(3) and (4) of for the purpose of Sub-sec.(3) and
Section 24 or Section 25 of the Act, (4) of Section 24 or Section 25 of the
the TO shall immediately investigate Act, the TO shall immediately
the evidence submitted by the investigate the evidence submitted
Taxpayer for the refund of tax and by the Taxpayer for the refund of tax
refund the tax within 30-days of the and refund the tax within 30 60
date of registration of the claim. days with respect to Section 24(3)
– and within 30 days with respect
to Section 24(4) and Section 25 of
the date of registration of the claim.
Rule 45(2Ka) No Provision For the purpose of refund, tax paid
on goods or services purchased from
listed firm or company (refund shop)
by Diplomatic mission or diplomats
as per Section 25(1)(Ka) and (Ka1)
can be refunded within 30 days as

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

per the procedure prescribed by


department.
Rule 58Ka The tax payer may take the service of Deleted
the tax facilitator for required
information and help in relation to
tax.

3. EXCISE ACT, 2058 & EXCISE (19TH AMENDMENTS) RULES, 2076


(Section 25 of Finance Act, 2076)

Section/Rules Old Provision Amended Provision


Section If any diplomatic body (mission), If any diplomatic body (mission),
4Ga(2)(Kha) project or other body (governmental project person or other body
as well as non-governmental (governmental as well as non-
organization) intends to scrap and governmental organization) intends
cancel the registration of any motor to scrap and cancel the registration
vehicle that it has imported with of any motor vehicle that it has
the enjoyment of the tariff facility imported with the enjoyment of the
and that is more than Fifteen years tariff facility and that is more than
old after the year of initial Fifteen years old after the year of
production, with the approval of the initial production, with the approval
Ministry of Finance, the excise duty of the Ministry of Finance, the excise
shall not be levied on such a motor duty shall not be levied on such a
vehicle. motor vehicle.
Section 9(6Ka) No provision Licensed manufacturer or importer if
fails to renew within the time limit
mentioned in Sub Section (5) can
renew within first 3 month from the
date of such expiry by paying 50% of
renewal fee and within three months
after that shall pay 100 % penalty.

But, Licensed manufacturer or


importer who had obtained licensed
as per Section 9(3) and not renewed
its license as per Sub Section (5) if
desires to renew then by paying
renewal fee applicable for every year
including 100% of such fee as
penalty can renew within 2076
poush end.
Section 19(5) The taxpayer who makes an The taxpayer who makes an
application pursuant to Sub- application pursuant to Sub-section
section (1) has to pay undisputed (1) has to pay undisputed amount of
amount of excise duty and amount excise duty and amount of fine, out
of fine, out of the amount of excise of the amount of excise duty
duty assessed, and furnish a cash assessed, and furnish a cash deposit
deposit of One Third of the amount of One Third Fourth of the amount
of excise duty in controversy and of excise duty in controversy and
amount of fine. amount of fine.
Rule 34 Any licensee who produces rectified Any licensee who produces rectified

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

spirit or ENA has to so set the spirit or ENA has to so set the
recovery rate that at least 20 liter recovery rate that at least 20 liter
rectified spirit or 19 liter ENA of a rectified spirit or 19 liter ENA of a
minimum 65 OP, 19 literanyhdorus minimum 65 OP, 19 literanyhdorus
ethanol of a minimum 72 OP has to ethanol of a minimum 72 OP has to
be produced from a quintal of be produced from a quintal of
molasses at the end of each month. molasses at the end of each month.
Minimum recovery rate of ENA is Minimum recovery rate of ENA is 95
95 liter from rectified spirit per 100 liter from rectified spirit per 100
liters. Recovery level of 30.57 liters liters. Recovery level of 30.57 42
of ENA from food grains per quintal liters of ENA from food grains per
of minimum 68.8 OP is fixed. In quintal of minimum 68.8 OP is fixed.
case of production from others, it Organisations producing wine
has to be as prescribed by the from fruits shall produce from per
Department. kg of fruits wine of 2liter
contaning 12% portion of alcohol
or on basis of same percentage of
alcohol produce proportionate
wine. In case of production from
others, it has to be as prescribed by
the Department.

Any licensee who has set the Any licensee who has set the
recovery rate below this rate has to recovery rate below this rate has to
submit reasonable and adequate submit reasonable and adequate
reasons therefor to the Department reasons therefor to the Department
and obtain approval. In cases and obtain approval. In cases where
where approval is not given by the approval is not given by the
Department, the Office shall Department, the Office shall recover
recover from the licensee all the from the licensee all the revenues
revenues chargeable on the margin chargeable on the margin of quantity
of quantity as per the maximum as per the maximum rate on the
rate on the liquors. liquors.

4. CUSTOM ACT, 2064


(Section 27 of Finance Act, 2076)

Section/Rules Old Provision Amended Provision


11(2) The Government of Nepal may The Government of Nepal may
accord the facility, as prescribed, to accord the facility, as prescribed, to
import under the bank guarantee import under the bank guarantee
facility, in accordance with the facility, in accordance with the
prescribed terms, such raw prescribed terms, such raw
materials or subsidiary raw materials or subsidiary raw
materials as to be imported by any materials as to be imported by any
industry for the purpose of industry for the purpose of
manufacturing goods and export manufacturing goods and export

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them or such goods as are them or such goods as are imported


imported for the operation of a duty for the operation of a duty free shop.
free shop.
However, the industry which However, the industry which
exports liquor, cigarette or other exports liquor, cigarette or other
tobacco substance shall not get tobacco substance shall not get
such facility. such facility.
12(1) The Government of Nepal shall Special Economic Zone Authority
accord customs duty exemption on its recommendation can
and other facility against bank provide following benefits on
guarantee to the following goods to goods imported by the industry
be exported and imported by any established in Special Economic
industry situated in the Special Zone :
Economic Zone:

(Ka) Such raw materials, (Ka) Provide custom duty


subsidiary raw materials as exemption by levying 1%
required to manufacture custom duty for one time on
finished goods to be 1 bus imported by the
exported, packing materials industry for pickup and drop
and other materials to be of its employees , labour and
used in manufacturing, 2 transport vehicle for the
purpose of transportation of
goods.

But, if such bus or transport


vehicle imported on custom
duty exemption is transferred
or sold or through any other
way transfer of ownership
then full duty shall be payable
as per the prevailing laws.

(Kha) Equivalent bank guarantee


(Kha)Plants, machineries,
instead of custom duty or
machines, equipment, tools
other duty to be paid on
and spare parts as required
import of required raw
for the industry, and up to
materials, subsidiary raw
three motor vehicles based
materials (including packing
on the size and nature of
material) as required to
industry
manufacture goods to be
exported or to be sold at
exchangeable foreign
currency within country.

(Ga) Equivalent bank guarantee

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instead of custom duty or


other duty to be paid on
import of plants,
machineries, machines,
equipment, tools and spare
parts

Explanation: Explanation:
For the purposes of this Section, For the purposes of this Section,
"Special Economic Zone" means a "Special Economic Zone" means a
zone specified as a special zone specified by Nepal
economic zone by the Government Government as per the prevailing
of Nepal through notification in the laws.
Nepal Gazette.
12(1Ka) No Provision Custom office shall release Bank
Gurantee on the written
recommendation of Special
Economic Zone Authority after
completion of purpose for which
bank guarantee has been taken as
per Sub Section 1(Kha) or (Ga).
12(2) If any importer sells, as prescribed, If any importer sells, as prescribed,
any goods which that importer has any goods which that importer has
imported to any industry situated imported to any industry situated
in the special economic zone and established in the special economic
that importer has paid the customs zone and that importer has paid the
duty for importing such goods, the customs duty for importing such
Customs Office shall refund, as goods, the Customs Office shall
prescribed, such customs duty to refund, as prescribed, such customs
that importer. duty to that importer.

12(3) If any industry situated outside the If any industry situated established
special economic zone sells any outside the special economic zone
finished goods manufactured by sells any finished goods
that industry to any industry manufactured by that industry to
situated within the special any industry situated established
economic zone, such customs duty within the special economic zone,
and other facility as is accorded in such customs duty and other facility
the event of export shall be as is accorded in the event of export
accorded as if that sale were an shall be accorded as if that sale were
export. an export.

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12(4) If an industry situated within the If an industry situated established


special economic zone so sells any within the special economic zone so
goods manufactured from the raw sells any goods manufactured from
materials imported under the the raw materials imported under
customs duty exemption that such the customs duty exemption that
goods are consumed in Nepal, such such goods are consumed in Nepal,
goods shall be allowed to be taken such goods shall be allowed to be
out of the special economic zone taken out of the special economic
only after payment of duty zone only after payment of duty
chargeable on the raw materials chargeable on the raw materials
used in such goods. used in such goods.

12(6) No Provision Industry if wants to shift from


special economic zone to other than
such zone then respective authority
shall provide approval of shifting
only if industry pays an amount of
exemption other than Value Added
Tax availed as per this section to the
respective Custom Office.

13(14) Notwithstanding anything Notwithstanding anything contained


contained elsewhere in this Section, elsewhere in this Section, if the
if the owner of the goods imported owner of the goods imported under
the Baggage Order for personal
under the Baggage Order for
purposes notice related to goods
personal purposes or the goods that pessanger can bring or take
received as a gift or specimen and for personal purpose or the goods
imported from a foreign country or received as a gift or specimen and
relief materials makes an imported from a foreign country or
application for the valuation of relief materials makes an application
such goods, showing the reason for for the valuation of such goods,
showing the reason for failure to
failure to indicate the transaction
indicate the transaction value
value thereof and if the Customs thereof and if the Customs Officer
Officer considers the matter to be considers the matter to be
appropriate or submitted without appropriate or submitted without
indication of value, he or she may indication of value, he or she may
determine a reasonable customs determine a reasonable customs
value of such goods. value of such goods.

32 After the clearance of goods by the After the clearance of goods by the
Customs Office, such goods may be Customs Office, such goods may be
kept in the means of transport kept in the means of transport
which is to be used for transporting closed container which is to be
them, and the Customs Office may used for transporting them, and the
seal such means of transport. Customs Office may seal such
means of transport container.

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

34(3) If, upon audit made pursuant to If, upon audit made pursuant to
sub-section (1), it appears that less sub-section (1), it appears that less
duty has been recovered by the duty has been recovered by the
reason of difference in sub-heading reason of difference in sub-heading
of commodity classification, the of commodity classification or due to
concerned Customs Office shall exemption of applicable duty, the
recover such shortfall amount of concerned Customs Office shall
duty and fine equivalent to that of recover such shortfall amount of
shortfall amount from the importer. duty and fine equivalent to that of
shortfall amount from the importer.

41(5) For reference purpose only If any person produced pursuant to


sub-section (3) of Section 40 is
found to be an offender based on the
evidence available for the time being,
the Customs Officer may release
such person on bail which includes
the amount for imprisonment and
fine that can be imposed on such
person pursuant to this Act and the
amount equal to the amount in
controversy where such amount is
also to be recovered on the condition
that such person shall make
presence at the prescribed place and
time.

While taking bail for punishment


While taking bail for punishment pursuant to sub-section (1), it shall
pursuant to sub-section (1), it shall be taken by fifty three hundred
be taken by fifty rupees for one day rupees for one day of imprisonment.
of imprisonment.

57(18) Notwithstanding anything Notwithstanding anything contained


contained in this Act, the goods in this Act, the goods cleared under
cleared under Section 20(20(Ka), Section 20(20(Ka), (Kha) or (Ga), if
during re-checking by any
(Kha) or (Ga), if during re-checking
authorized officer under this Act,
by any authorized officer under this whether before taking the goods by
Act, whether before taking the the importer or after taking out of
goods by the importer or after the Customs area, it is found that
taking out of the Customs area, it the goods are different in name,
is found that the goods are different nature, physical specialty,
in name, nature, physical specialty, qualitative characteristics,
measurement, and quality and
qualitative characteristics,
quantity than in the declaration,
measurement and quality than in amount equivalent to three hundred
the declaration, amount equivalent percentage of the value of goods in
to three hundred percentage of the addition to the amount of fine and

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

value of goods in addition to the duty under this section shall be


amount of fine and duty under this collected and goods can be released,
section shall be collected and goods or charge two hundred percentage of
the value of the goods and confiscate
can be released, or charge two
the goods.
hundred percentage of the value of
the goods and confiscate the goods.

89Kha(6) No Provision Administration of export or


import identification number
under this section shall be done
by prescribed entity published in
Nepal Gazette by Nepal
Government and unitl the
publication of such notice custom
department shall perform
administrative work related to
such identification number.
89Gha No Provision (1) Notwithstanding anything
contained in applicable laws,
custom officer if after using
its authorized password
takes print out of documents
related to clearance from the
records maintained at
computer system shall be
deemed equivalent to as if it
is signed even if it is not
signed by the employee.
(2) By using authorized
password provided by the
Custom Department if takes
print out of documents from
the records done through
electronic medium related to
declaration of goods,
communication of
information or clearance
maintained at computer
system shall be deemed
equivalent to as if it is
signed even if it is not
signed by the related person.

91 If any person arrests any other (1) If any person arrests any
person while bringing goods other person while bringing
through elsewhere than the goods through elsewhere than
customs area by evading the the customs area by evading
customs duty and produces such the customs duty and
other person for action under this produces such other person
Act, the Director General or the for action under this Act, the
official deputed by him or her, and Director General or the official
if such goods produced to any deputed by him or her, and if

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FINANCE ACT, 2076 INCOME YEAR 2076-2077

customs office customs officer such goods produced to any


concerned, shall have the power to customs office customs officer
take action against such person. concerned, shall have the
power to take action against
such person.

(2) Notwithstanding anything


contained in this Act, Director
General if received any
information or on suspicion
related any goods cleared
from custom office can order
any officer to hold those goods
and submit report after
essential investigation.

(3) On the basis of report


received as per Sub Section
(2), Director General may take
required action by using the
equivalent right under this
act for Custom Officer.

5. CUSTOM TARRIF, 2076


(SCHEDULE 1)
(Related To Section 2(1) OF Finance Act, 2076)
SOURCE : (Page 242)
https://www.customs.gov.np/upload/documents/Arthik%20Bidhyak%207677_20190
530070037_2019-05-30-13-47-14.pdf

REFERENCES:
1. Finance Act, 2076
https://www.customs.gov.np/upload/documents/Arthik%20Bidhyak%207677_201905
30070037_2019-05-30-13-47-14.pdf
2. Amendments published by IRD
https://ird.gov.np/Uploads/cf7b0209-9ed8-41f3-83ff-
08f847b12c99%E0%A4%86%E0%A4%B0%E0%A5%8D%E0%A4%A5%E0%A4%BF%E0
%A4%95%20%E0%A4%90%E0%A4%A8%E0%A4%95%E0%A5%8B%20%E0%A4%B8%
E0%A4%82%E0%A4%B6%E0%A5%8B%E0%A4%A7%E0%A4%A8%202076.77%20%E0
%A4%B8%E0%A5%82%E0%A4%9A%E0%A4%A8%E0%A4%BE.pdf
3. Income Tax Act, 2058
4. Value Added Tax, 2052
5. Excise Act, 2058

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