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(Chartered Accountants) 4th Floor, Radha Bhawan P.O. Box No.: 858 Tripureshwor, Kathmandu Ph: +977-1-4245408 Fax: +977-1-4260525 e-mail: gopal@gkagco.com.np gkagco@gmail.com
[SYNOPSISOFNEPALBUDGET2068]
HIGHLIGHTS OF KEY TAX PROPOSALS FOR F/Y 2068-69
The Fourth Budget of the Federal Democratic Republic of Nepal was presented by Honorable Finance Minister Mr. Bharat Mohan Adhikari by way of Finance Ordinance on Ashadh 31, 2068 (July 15, 2011) for the F/Y 2068/69 i.e. 2011/12. The Direct Tax provisions contained in the Finance Bill shall generally apply to F/Y ending Ashadh 31, 2069 (July 16, 2012) unless specifically stated otherwise. Further, other provisions shall be applicable w.e.f. from Ashadh 31, 2068 or Shrawan 01, 2068 as the case may be
This document is intended for private circulation for the use of our clients only to provide general outline on the topics covered. Professional Advice to be sought before acting on any information contained herein. Sincere Efforts have been made to avoid mistake or error or omission; however, G.K. Agrawal &5Co. does not assume any responsibility for errors or omissions, if any.
HIGHLIGHTS OF KEY TAX PROPOSALS FOR F/Y 2068-69 ARE GIVEN IN PAGES 3-33
Remarks: Major Amendments for F/Y 2068/69 have been shown in Bold, Italics & Highlighted Font.
B. DIRECT TAXATION:
Rate of Taxation: Tax Rate for Natural Persons:
Particulars Resident Individuals - Remuneration Income: -Married (including widow & widower): Up to Rs. 200,000 -Unmarried : Up to Rs. 160,000 On Next Rs. 100,000 On Balance* * On Income in excess of Rs. 25 Lacs: Additional Tax @ 40% on Tax calculated as above. On Income in excess of Rs. 2,500,000 Resident Woman, having only Remuneration Income, shall be entitled to a Rebate of 10% on Total Tax calculated as above. Resident Individuals - Proprietorship Firm: -Married (including widow & widower): Up to Rs. 200,000 -Unmarried : Up to Rs. 160,000 On Next Rs. 100,000 On Balance (for Normal Income) # On Balance (for Export Income) # On Balance (for Income from Special Industry) # # On Income in excess of Rs. 25 Lacs: Additional Tax @ 40% on Tax calculated as above. Resident Individuals-Presumptive Tax: Natural Person having only Business Income with Annual Turnover up to Rs. 20 Lacs and Annual Income up to Rs. 2 Lacs, may choose to pay Tax as below (However, such person cannot claim medical tax credit or advance tax for TDS deposited): - In the Metropolitan or Sub Metropolitan Cities - In the Municipalities - In the rest of Nepal Owner of Public Vehicles (Per Vehicle Per Annum): - Minibus / Mini Truck / Truck / Bus - Car / Jeep / Van / Micro Bus - 3 Wheeler / Auto Rickshaw / Tempo - Tractor / Power Tiller Gain from Disposal of Non Business Chargeable Assets: [After taking into consideration exemption limit (i.e. Rs. 160,000 for individual and Rs. 200,000 for couples]: - From Disposal of Land & Building for Rs. 3,000,000 or more (owned for 5 Years or more) - From Disposal of Land & Building for Rs. 3,000,000 or more, (owned for less than 5 Years) - From Disposal of Listed Securities
4 G. K. Agrawal & Co. (Chartered Accountants)
35%
35%
Rs. 3,500 Rs. 2,000 Rs. 1,250 Rs. 1,500 Rs. 1,200 Rs. 850 Rs. 750
Rs. 3,500 Rs. 2,000 Rs. 1,250 Rs. 1,500 Rs. 1,200 Rs. 850 Rs. 750
2.50 % 5% 5%
5% 10 % 10 %
Only For Private Circulation Tax Rate 2068/69 2067/68 10 % 25% 10 % 25%
^ 1% Tax on Remuneration Income needs to be deposited in separate Revenue Account in IRO designated as Social Security Fund. Note: Husband and Wife, having separate income source, are given option either to get assessed separately as individual or jointly as couple. Gain from disposal of Personal Building, if the building is owned for more than 10 Years and occupied by the owner for more than 10 Years, is exempted from income tax. Gain from disposal of Land, Building or Personal Building for a price below Rs. 30 Lacs, is exempted from income tax.
Further Deductions / Facilities for Resident Natural Persons: Resident Disabled/Incapacitated Individual shall get an additional 50% of Exemption Limit (i.e. 50% of Rs. 200,000 in case of couple & 50% of Rs. 160,000 in case of single). Individual having Life Insurance Policy shall get an additional exemption from the Taxable Income to the extent of Rs. 20,000 or Premium Amount, whichever is lower. Annual Remote Area Allowance up to Rs. 50,000 (depending upon Remote Area Category) is exempted from tax. Employees working in Nepalese Diplomatic Mission abroad are allowed 75% exemption on Foreign Allowances. Contribution in Approved Retirement Fund is deductible to the limit of 1/3 of Assessable Income or Rs. 300,000 whichever is lower. Tax Credit for Resident Natural Persons: In case of Approved Medical Expenses, Medical Tax Credit for Rs.750 or 15% of Approved Medical Expenses or Actual Approved Medical Expenses incurred whichever is lower is available to resident natural persons as deduction from tax liabilities. Unutilized Expenses, if any, can be carried forward to Next Financial Year. Where Foreign Income is included in Taxable Income of a Resident Natural Person, Foreign Tax paid in Foreign Country can be (at the option of the Tax Payer): i. Deducted as Expense or ii. Tax Liability in Nepal be reduced by such tax paid up to the Average Rate of Tax applicable in Nepal.
rd
2067/68 30% of Applicable 30% of Applicable Tax for 10 Yrs Tax for 10 Yrs from from the year of the year of operation operation Industries established in Special Economic Zone (SEZ) of A Rebate of 100% A Rebate of 100% Himalayan Districts and other prescribed Hilly District. for 10 Years & 50 % for 10 Years & 50 thereafter on % thereafter on Applicable Tax Applicable Tax Industries established in Special Economic Zone (SEZ) of Other A Rebate of 100% A Rebate of 100% Areas. for 5 Years & 50 % for 5 Years & 50 % thereafter on thereafter on Applicable Tax Applicable Tax Dividend distributed by Industries established in Special A Rebate of 100% A Rebate of 100% for first 5 Years & for first 5 Years & Economic Zone (SEZ). Special Industries operating in Under-Developed Area.
50% for next 3 Years on Dividend Tax 50% for next 3 Years on Dividend Tax
Income from Foreign Technology, Management Fee and A Rebate of 50% on Royalty earned by Foreign Investors from industries established Applicable Tax in Special Economic Zone (SEZ) Industry related to Software Development, Data Processing, A Rebate of 50% on Cyber Cafe, Digital Mapping established at prescribed Applicable Tax Technology Park, Biotech Park & Information Technology Park. Entity licensed to generate, transmit and distribute electricity, if starts construction by Bhadra 07, 2071 & commercially starts generation, generation & distribution, distribution of A Rebate of 100% hydropower by end of Chaitra 2075. for first 10 Years & The facility is available also for Solar, Bio-gas and Wind 50 % for next 5 Energy. Years on Applicable [However, entities already having started commercial Tax production of electricity before Shrawan 01, 2068 shall be eligible for facility as prevalent at the time of obtaining license.] Entity licensed to generate, transmit and distribute electricity, if commercially starts generation, generation & distribution, A Rebate of 100% distribution of hydropower by end of Chaitra 2075. for first 7 Years & The facility is available also for Solar, Bio-gas and Wind 50 % for next 3 Energy. Years on Applicable [However, entities already having started commercial production Tax of electricity before Shrawan 01, 2068 shall be eligible for facility as prevalent at the time of obtaining license.] Person engaged in Research & Extraction of Petroleum and A Rebate of 100% Natural Gas, if commercially starts the transaction within for first 7 Years & Chaitra End 2075. 50 % for next 3 Years on Applicable Tax 40% Rebate on Income from Construction and Operation of Roads, Bridges, Airports, Applicable Tax Tunnels or Investment & Operation of Tram, Trolley Bus
7 G. K. Agrawal & Co. (Chartered Accountants)
A Rebate of 100% for first 7 Years & 50 % for next 3 Years on Applicable Tax
A Rebate of 100% for first 7 Years & 50 % for next 3 Years on Applicable Tax A Rebate of 100% for first 7 Years & 50 % for next 3 Years on Applicable Tax 40% Rebate on Applicable Tax
Only For Private Circulation Tax Rate 2068/69 2067/68 10% Rebate on Applicable Tax 40% Rebate on Applicable Tax for 10 Years from operation date. 50% Rebate on Applicable Tax 25% Rebate on Applicable Tax N.A. 100% Tax Exemption 10% Rebate on Applicable Tax 40% Rebate on Applicable Tax for 10 Years from operation date. 50% Rebate on Applicable Tax 25% Rebate on Applicable Tax N.A. 100% Tax Exemption
Listed entity engaged in Manufacturing, Tourism, Hydropower generation, distribution & transmission and specified Industry established in special economic Zone u/s 11 (3C) Industries manufacturing Brandy, Wine, Cider from fruits in very Undeveloped Area
Income from Sale of Intellectual Property Royalty Income from the Export of Intellectual Property Industries established in Remote Areas Income of Specified operation of Co-operative Society established in Remote Area under Co-operative Act, 2048 Note:
In case a person is eligible for above tax concession / rebate under more than one category; it shall have the option to choose only one type of tax concession / rebate.
15% 10% * 10% 15% 5% * 5% * 15% 1.50% 15% * 15% 5% 15% 10% 5% * 15% *
15% 10% * 10% 15% 5% * 5% * 15% 1.50% 15% * 15% 5% 15% 10% 5% * 15% *
5% * 15% 1.50% 5% 5% 1.50% Rate as prescribed by IRD (otherwise, as per above) * 25%* 10%
5% * 15% 1.50% 5% 5% 1.50% Rate as prescribed by IRD (otherwise, as per above) * 25%* 10%
5% 10%
10% 15%
10% 15%
10% 15%
5% 2.50%
10% 5%
Notes:
Rs. 50,000 referred to in Sec. 89 shall be determined by aggregating a payment under a contract with any other payment made by the person or an associate of the person during the previous 10 days under the same contract to the same payee or an associate of the payee.
9 G. K. Agrawal & Co. (Chartered Accountants)
Contract has been defined as agreement entered into for supply of goods or labour or construction/erection/establishment of tangible assets or structure or any work prescribed as contract by the Inland Revenue Department.
Payment for Services to Non-Resident shall attract TDS @ 1.50 % for VAT Registered Party & 15% for Non VAT Registered Party.
Where an instalment of tax paid by a person is less than 90% of Tax Payable, interest shall be levied @ 15% for each month and part of month from the date of first installment on the amount to the excess of 90% of the instalment that would have paid over the installment paid. The presumptive tax-payers need not require paying any advance tax as above. Further if the Tax Amount for the F/Y is less than Rs 5000, installment is not required to be paid. For failure to pay Tax; Interest at 15% per annum shall be levied for the period of failure to pay tax, considering part of a month as a complete month.
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General Rate of Interest levied by the IRD to the assesses continues to be 15%.
However, amount deducted as expenses above in a year should be included in the Income of next year for calculating such business income or loss for next year.
Sundries:
Compensation received by a resident natural person on account of physical injuries due to personal accident shall not be included in his income; likewise, Medical Expenses incurred in the treatment for such accident cannot be claimed for Tax Adjustment.
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Special Provisions related to Merger of Banks & Financial Institutions and between Insurance Companies (Sec. 47 A) - Change in Control Provision of Sec. 57 shall not apply. - Loss till the date of Merger can be carried forward and set off in pro-rata basis in next 7 years post Merger (However, in case of demerger later on, Tax on such Set Off amount has to be repaid) - 50% Reduction in applicable tax rate to employees for lump sum payment (other than Retirement Fund Payments & Payments mentioned in the Employees Service Contract in case of group retirement of employees due to merger. - No Capital Gain Tax shall be levied on disposal of shares by shareholders of merged entity till 2 years from the date of merger. - No tax on dividend till two years which is paid to shareholders of the time of merger. - Notification to IRD should be given within Kartik end, 2069 and merger should be done within Kartik end, 2070 for the purpose of this section.
Additional Deductions - Manufacturing Industries may deduct 50% of capital amount for Power Generating Assets in the year of acquisition as Additional Depreciation. - Capital Expenditure incurred for purchasing Fiscal Printer and Cash Machine can be claimed as depreciation in the year of purchase.
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C. INDIRECT TAXATION:
C.1 Value Added Tax (VAT): Rate of VAT:
Rate of VAT continues to be 13%.
Mandatory VAT Registration for Operation of Business of Certain Goods in Stipulated Area:
Mandatory VAT Registration for Educational Consultancy, Discotheque, Health Club, Catering, Party Palace Business, Parking Service, Mechanically operated Dry Cleaning Service and Restaurant with Bar operating in Municipality Areas and other areas specified by Inland Revenue Department within 30 days from operation of such business. Taxpayers operating Motor-parts Business, Hardware, Sanitary Fittings, Furniture, Fixtures, Furnishing, Automobiles, Electronics, Marbles, Colour-Lab Business in Metropolitan, SubMetropolitan, Municipality, or area specified by the IRD have to be registered under VAT within 30 days from operation of such business.
Continuity to Exclusion from the List of VAT Exemption Goods/Services availed by Finance Act, 2066 - Few Instances:
Kerosene Oil. Business/Professional Training & Refreshment Training Courses provided by entities other than Nepal Government
Continuity to VAT Exemption availed by Finance Act, 2066 on Goods/Services - Few Instances:
Scooter used by handicapped people. Raw Material for Feed Supplement under H.C. 23, 28 & 29. Limestone Powder under H.C. 25. Raw Materials & Packing Materials for manufacture of IOL (Intra Ocular Lens) Gear Box of aero plane and helicopter. All Hydro Power Projects. Prescribed Goods to be imported in the name of Head Office of Nepal Army, Armed Police Force and Janpath Police under recommendation of respective ministries.
Continuity to Exclusion of VAT Exemption availed by Finance Act, 2065 on following Goods/Services - Few Instances:
Certified Orthodox Tea from Organic Fertilizer. Batteries for Battery-operated-tempo. Solar Photo-voltic Flat Plate used for Bio-gas, solar power and
VAT Refund Facility Continued to Mustard Oil & Vegetable Ghee & Oil Industry:
50% Refund of VAT collected on sale of own manufactured Mustard Oil by Domestic Mustard Oil Industry and 50% Refund of VAT collected on sale of locally manufactured vegetable Ghee by Domestic Ghee Industry & other Refined Edible Oil Industry, if sold to VAT Registered Person shall be refunded as prescribed by IRD. However such refund facility is not availed to Packaging Industries engaged in import of Refined Oil in bulk quantity and selling it by refilling in consumer package.
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Bank Guarantee:
Industries having an export over 60% of Total Sales during last 12 months, may import Raw Material to the extent of manufacture of export quantity against Bank Guarantee of VAT Amount at related custom point. 10% Value Addition in Raw Materials continues to be required on such exports. Likewise, import for Duty Free Shops through Bonded Warehouse can be done against Bank Guarantee of VAT Amount at related custom point. Such Bank Guarantee shall be released from the related custom point.
Compulsory Collection of VAT on Construction for Commercial Purposes exceeding Rs. 5 Million:
Compulsory collection of VAT on the construction of buildings, apartments or shopping complexes (or such structures, as prescribed by the IRD) for commercial purposes exceeding the value of Rs. 5 million, from the owners (though such construction be done by Non-registered person).
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VAT Collection on Services Acquired from Person Outside Nepal Not Registered in Nepal:
While acquiring services from person outside Nepal not registered in Nepal, VAT on such services shall be determined and collected by the Service Recipient (whether registered in VAT or not).
VAT Refund Facility for Manufacturers (not having Bonded Warehouse or Pass Book facility):
Manufacturers (not having Bonded Warehouse or Pass Book facility) shall continue to get refund of VAT at Flat Rate at custom point against export of finished goods; 10% Value
Addition in Raw Materials continues to be required on such exports.
Self Attested Purchase & Sales Register for Non-Vat Registered Parties:
Non-Vat Registered persons dealing in Taxable goods and services should maintain Purchase and Sales Register duly self-attested. Fine of Rs. 1,000 shall be levied for each contravention.
Sundries:
Rate of Interest continues to be 15% for delay in payment of VAT. The practice of Advance Ruling is available for clarification of any VAT matters. A person who knowingly or recklessly aids or abets another person to commit an offence or counsels or induces another person to commit such an offence shall be liable for a penalty equal to 50% of the underpayment of tax.
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Special Provision relating to Computerized Billing A Fine of Rs. 5 Lacs shall be levied if Tax Payer is found using software having elimination & modification option. Special Provision relating to Voluntary VAT Registration for Health Institutions Health institutions liable to collect and pay Health Service Tax may opt to collect and pay value added tax instead by voluntarily registering with the Value Added Tax. Such institutions shall not collect Health Service Tax. Such institutions shall collect VAT for 5 Years from the date of Registration.
Remarks:
For Exhaustive List of VAT Exempted Goods and Zero Rated Goods, please refer to Revised Schedule 1 & Schedule 2 of Vat Act, 2052 given in Finance Ordinance, 2068.
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Maintenance of Records:
Purchase, Production, Removal, Sales and Stock Register, duly attested by the Excise Officer needs to be maintained. Excise Records need to be safely kept for 6 Years.
19
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Cement AllTypesof(Ceramics)Bricks(exceptDomesticProduction) AlltypesofPaints Car,Jeep&Van(CustomCode8702&8703) MicroBus1114Seater(CustomCode8702) DoubleCabPickUp(CustomCode8704) 3Wheeler(AutoRickshaw)(CustomCode8703)&Chassis SingleCabPickUp(CustomCode8704)&Chassis DeliveryVan(H.C.8704) MiniBus1525Seater(CustomCode8702.10.20) MiniBus1525Seater(CustomCode8702.90.20) 1525SeaterVehicle(CustomCode8702)&Chassis Bus&Truck(H.C.8702&8704) Motorcycle(CustomCode8711) Marble/GlazedTiles(6908) Kattha KatthaJuice Molasses Rs.40/Quintal Rs.40/Quintal DenaturedSpirit(8099%Alcohol) Rs.10/Litre Rs.10/Litre Thinner,Solvent Rs.22/Litre Rs.22/Litre IronRod[7213,7214,7215(including7214.99.10)] Rs.1000/MT Rs.1000/MT 10% 10% Equipmentwithatleast2functionsoutofPrinter,Copier&Fax Microphone 5% 5% SmartCard 5% 5% TelevisionCamera,DigitalCamera&VideoCameraRecorder 5% 5% Plates,Cylinders&EquipmentforPrintingPress(H.C.84.43) 10% 10% Microphone,LoudSpeaker(H.C.85.18) 5% 5% Television,Video,Digitalcamera(85.25) 5% 5% OpticalFibreCables(H.C.85.44.70) 10% 10% InsulatedWire,Cables,Conductors 15% 15% PlasticPackingGoods(H.C.3926) 5% 5% PlasticOtherGoods(H.C.3926.90.90) 5% 5% ColouredTelevision 5% 5% PictureTubeofColouredTelevision 5% 5% TelevisionReceiverParts(H.C.85.29) 10% 15% JunkFood(Kurkure,Kurmure,CheeseBall,Lays,Pastryetc. underH.C.2106.90.10) Noodles,Macroni&Pasta Rs7.50/Kg Rs7.50/Kg Rs7.50/Kg Rs7.50/Kg
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Sundries:
50 % Exemption on Excise Duty on domestic production of Motorcycle & 25 % Exemption on Excise Duty on domestic production of other vehicles. 80 % Exemption on Excise Duty on domestic production of Brandy from local fruits/vegetables by industries established in Highly Undeveloped Area as defined by Schedule 9 of Industrial Policy, 2067. Following Vehicles are exempted from Excise Duty: Ambulance, Dead-Body Carrying Vehicle, Chassis of Battery Operated Tempo and Scooter meant for disabled/incapacitated person.. Collection of Excise Duty on Vehicles Stocks purchased up to F/Y 2065-66 shall be as per Finance Act, 2065 (i.e. Excise @ 15% shall be levied). Electrical Vehicles continues to be exempted from Excise Duty. MS Wire Rod in Coil (H.C. 7213.91.10) imported as raw material by industries continues to be subject to Excise Duty Exemption on the recommendation of Department of Industries. Excise Duty continues to be exempted on domestic production of Marbles. System of Public Notification of MRP for liquor, beer & cigarette at the beginning of F/Y and at the time of changes in price has been introduced.
Remarks:
For Exhaustive List of Excise Duty, please refer to Revised Schedule of Excise Tariff of Excise Act, 2058 given in Finance Ordinance, 2068.
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9504.40.00
3808.91.10
Playing Cards
Anti Mosquito Products
71.08
71.06 1704.10.00 1704.90.00 1806.10.00 / 1806.20.00 / 1806.31.00 / 1806.32.00 / 1806.90.00 40.11 / 40/.12 / 40.13
Gold
Silver Chewing Gum, whether or not sugar coated Other Sugar Confectionery Chocolate & other food preparation containing cocoa Tyre & Tube Crude Soybean Oil, Crude Sunflower Oil & Crude Palmoline Oil imported by Vegetable Ghee & Mustard Oil Industries for Domestic Production. Cigars, cheroots, cigarillos & cigarettes containing tobacco Cigarettes containing tobacco Other
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Custom Duty Rate - 10% Custom Duty. - 1% Custom Duty. - 15% Custom Duty. - 1% Custom Duty. - 50% Rebate on Custom Duty. - 68% Rebate on Agriculture Reform Fee 1% Custom Duty 1% Custom Duty 1% Custom Duty 1% Custom Duty 1% Custom Duty 1% Custom Duty 1% Custom Duty 1% Custom Duty 10% Custom Duty 1% Custom Duty 1% Custom Duty 1% Custom Duty 90% Rebate 1% Custom Duty 4% Custom Duty 5% Custom Duty 80% Rebate 80% Rebate 5% Custom Duty 10% Custom Duty 10% Custom Duty
Only For Private Circulation Custom Duty Rate 5% Custom Duty 50% Rebate 50% Rebate 10% Custom Duty 15% Custom Duty 1% Custom Duty 1% Custom Duty 50% Rebate 1% Custom Duty 10% Custom Duty
Particulars Sari, Lungi, Cotton Towel and Cotton Dhoti under Custom Code 62.11. Vehicles under Heading 87 operated on Electricity / Battery Tallow Oil (H.C. 15.03), Sodium Silicate (H.C. 2839) & Palm Acid Oil, Palm Fatty Acid & Acid Oil (H.C. 3823) imported by Industries manufacturing Distilled Fatty Acid/ Steric Acid / Glycerin / Soap having Splitting & Distillation Plant. Vehicles under Custom Code 87.04 installed with full refrigeration system for purpose of transport of goods in refrigerated condition UPVC Corrugated Roofing Sheet (Tiles) under Custom Code 3918 Machinery, Equipment and its parts used for production of organic fuel Equipment imported by industries for Pollution Control Tin box (under 80.07) with its printed name imported by the Dairy Industry. Raw Material, Auxiliary Materials, Chemicals & Packing Materials of Pharmaceutical Industry on recommendation of DDA Iron Pipe (for production of leg-guard) imported by Leg-guard Manufacturing Industry on recommendation of Department of Industries. Cable, Battery & Telecommunication Equipment (other than Tower Structure & Shelter) imported for establishment of Exchange and network expansion in rural areas by government / private sector telecommunication operator upon recommendation of Information & Communication Ministry, having Custom Duty more than 5%
7% Custom Duty
Various Goods (viz. Wheel Chair, Tricycle, Artificial Organs, Hearing Aid, Shoes etc.) used by handicapped people. Spare Parts imported by Jute Industries for operation of industry under recommendation of Department of Industries. Bath Concentrate (Solid or Liquid) used for Dialysis under H.C. 38.24 for Kidney Patients. Powder & Remnants of Bone (05.06) used in poultry feed imported by Poultry Feed Industries or Hatchery Firm. Machinery, tools and spare parts (not manufactured in Nepal) and raw material (Steel Sheet required to manufacture such equipment to be imported for generation / transmission / distribution / operation / maintenance by Hydro-power, on recommendation of Electricity Development Department. Zatropa (Sajiwan) grain and seed for manufacture of Organic Fuel.
Sundries:
The rate of custom duty on import shall be levied as per Annex 1 of the Finance Ordinance, 2068 for F/Y 2068/69 w.e.f. July 15, 2011. Arrangement has been made for declaring Maximum Retail Price of the imported goods at the customs point in order to make the customs valuation realistic and discourage under-invoicing. Rebate in Custom duty on goods of Indian Origin imported from India (other than the goods on which custom duty is levied on quantitative rate) continues to be as follows:
For goods falling under Duty Rate up to 30% For goods falling under Duty Rate Above 30%
: :
7% Rebate 5% Rebate
4% Rebate in Custom duty on goods of Chinese Origin imported from China through Letter of Credit (other than the goods on which custom duty is levied on quantitative rate) is continued. Concessional Custom duty on goods imported from SAARC Countries other than goods listed under Section 20 of Annex 1 of the Finance Ordinance, 2068 through Letter of Credit has further been reduced:
CustomDutyRateason Poush17,2062 5% 10% 15% 25% 35% 40% 80% NewCustomDuty RateApplicable 5% 7% 9.25% 13.75% 17.50% 17.50% 17.50% EarlierCustom DutyRate 5% 7.50% 10.50% 16% 21% 21% 21%
(Note: In case the Custom Duty Rate above is higher than the rate prescribed under Annex 1 of the Finance Ordinance, 2068; the lower rate shall be applicable.) For goods imported under DRP facility from India; Excise Duty paid in India shall be set off against Custom Duty (to the extent of Excise Duty or Custom Duty whichever is lower). However,
26 G. K. Agrawal & Co. (Chartered Accountants)
such excise duty shall not be adjusted against freight, insurance, valuation difference and other expenses. Raw Materials and Auxiliary Materials (including Packing Materials not manufactured in Nepal) can be imported by industries not having facility of Bonded Warehouse upon deposit of Custom Duty (on Dharauti), for manufacture of its finished products for the purpose of exported through L/C or Banking Channels or Local Sale in Convertible Foreign Currency within 12 months from the date of import. At least 10% Value Addition is required for the same. However, in case of strike, natural disaster or circumstances beyond control, extension up to 6 months may be given by the Customs Chief, if applied for. Likewise, 10% penalty shall be imposed if such finished products are not exported / sold in convertible foreign currency within the stipulated period i.e. 12 months. However, such imports have to be made from one custom point only. Arrangement has been continued for refunding the customs duty paid by the importer on the scooter used by handicapped people at the time of the registration of such vehicle in his name at Transport Management Office on the recommendation of the concerned agency. 100% penalty on Custom Duty shall be imposed if transaction value is under declared by the importer. Flat Rate custom duty on L.C.D., Plasma or L.E.D. brought in by the Nepalese passengers returning has been reduced.
Export Duty:
Export Duty of most of the items has remained same. Export Duty of certain items are given below:
Sub Heading
1404.90.10 1404.90.20 1404.90.30 2505.10.00 2505.90.00 2516.20.10 2517.10.10 2517.20.10 2516.20.20 2517.10.20 2517.20.20 2516.20.30 2517.10.30 2517.49.10 2517.49.90 3203.00.10 3203.00.90
Item
Semi Finished Khayar Kattha (Kattha Juice) Khayar Kattha Rudraksha Seed Silica Sand and Quartz Sand Other Sand
Gravel, Broken or Crushed Stone, Concrete, Rs. 200/m3 Pebbles up to 2.5 inch Gravel, Broken or Crushed Stone, Concrete, Rs. 400/m3 Pebbles above 2.5 inch Broken or Crushed Stone and Mixture of Sand and Crushed Stone Dust of Stone produced in Crusher Industry Other produced in Crusher Industry Khayar Kutchh Other Rs. 400/m3 Rs. 200/m3 Rs. 200/m3 Rs. 3/kg Rs. 3/kg
Rs. 400/m3 Rs. 400/m3 Rs. 200/m3 Rs. 200/m3 Rs. 3/kg Rs. 3/kg
Remarks:
For Exhaustive List of Import Custom Duty, please refer to Schedule 1 given in Finance Ordinance, 2068. For Exhaustive List of Export Custom Duty, please refer to Schedule 2 given in Finance Ordinance, 2068.
27 G. K. Agrawal & Co. (Chartered Accountants)
D. Miscellaneous:
Special Provision relating to Vehicles - Arrangements have been continued for the vehicles importers to publish mandatorily the MRP of the vehicles in the national-level daily newspaper in every 4 months. In case of non compliance of the same, the department of customs may stop import and sale of such importer and pursue investigation. - Mandatory Requirement continues for the buyers of Vehicle in excess of Rs. 2 Million, to make payment through Account Payee Cheque to the supplier of the vehicle. - Passenger Vehicle & Vehicle for Transportation Means can be imported into Nepal by Authorized dealers only.
SpecialProvisionrelatingtoEducationServiceTax
-1 % Education Service Tax shall be collected on the Admission Fee and Monthly Fees charged by charged
by Private Sector Educational Institutions providing education higher than Higher Secondary Level all over the country & Private Sector Educational Institutions providing education up to Higher Secondary Level in Kathmandu Valley, Sub-Metropolitan City, Municipality & District Head Quarters & places prescribed by IRD.
-Such Service Tax should be collected by raising Invoices. -Education Service Tax, so collected, and 4-Monthly Return for the same needs to be deposited at the IRO within 25 days from the end of the 4-Month period. -Fine Rs. 1000 per Return shall be levied upon Non submission of Return. -Interest @ 15% p.a. shall be levied in case of non-deposit of Service Tax on time. The Tax Officer may order the closure of such institution upon non-deposit of due Service Tax for a period of 3 months, -1 % Education Service Tax shall be collected from students pursuing abroad for studies, out of foreign exchange allowed. The onus to deduct such Tax and to deposit the same within 15 days from the month end at the Inland Revenue Office shall be on banks providing foreign exchange.
Agriculture Reform Fee -Agriculture Reform Fee continues to be 5%. -No such fee shall be charged, if custom duty is levied Special Provision relating to Waiver of Fee & Penalty of Khandsari Industries Annual Renewal Fee up to F/Y 2067/68 payable by Khandsari Industries utilizing Vertical Roller & Horizontal Roller (up to 10 HP), if paid as per rate prescribed for F/Y 2068/69 within F/Y 2068/69; balance late fee and penalty shall be waived.
Casino Royalty:
Annual Casino Royalty continues to be Rs. 20 Million. The royalty has to be paid within 2 months from the start of the Financial Year. Compulsory Renewal of Casino License before the start of the Financial Year has to be made. Casino License shall not be renewed if there is non-payment of Royalty, Fine etc.
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Petrol Diesel
Car, Jeep, Van, Microbus, Bus, Truck, Tripper, Truck Mixture, Mini Bus & Mini Truck. Motorcycle
However, the above shall not be applicable to diplomatic mission, person with diplomatic facility, ambulance and Dead-Body Carrying Vehicle. Electrical / Solar / Battery operated Vehicles shall be eligible for 50% exemption on above mentioned Road Construction & Maintenance Fee. Scooter up to 150 C.C. designed for disabled shall be fully exempt from Road Construction & Maintenance Fee.
Vehicle Tax:
Vehicle Tax for Private Vehicles continues to be as follows:
Private Vehicles Car, Jeep, Van, Micro Bus: Up to 1000 CC 1001-1500 CC 1501-2000 CC 2001-2900 CC Above 2900 CC Dozer, Excavator, Loader, Roller, Tripper, Crane Mini Tipper Auto, 3 Wheeler, Tempo, Tractor, Power Tiller: Auto Rickshaw, 3 Wheeler & Tempo Tractor Power Tiller Mini Truck / Mini Bus Truck / Bus Motor Cycle: Up to 125 CC 126 CC 250 CC Above 251 CC 2068/69 16,500 18,000 20,000 27,500 44,000 26,000 16,900 4,400 2,800 2,300 14,300 22,000 2,000 3,500 5,000 2,000 3,500 5,000 4,400 2,800 2,300 14,300 22,000 Earlier 16,500 16,500 16,500 27,500 44,000 26,000 26,000
Scooter up to 150 C.C. designed for disabled shall be fully exempt from Vehicle Tax. Government Vehicle shall be subject to Vehicle Tax for Public Vehicles. Electric Vehicles shall be subject to 100% Tax Exemption. Vehicles other than Petrol Vehicles shall be subject to 20% Tax Exemption.
30 G. K. Agrawal & Co. (Chartered Accountants)
Annual Vehicle Tax shall be levied on Pro-rata Basis for vehicles in the year of import; however, trading stock shall not be subject to such tax. Bus, Mini Bus & Micro Bus meant for rental shall be subject to 60% Rebate on account of availing discount of fare to the students. Renewal of blue book on a lump sum payment of vehicle tax at existing rates for 5 years can be done, if the owner of any type of vehicle so desires. Vehicle Tax on Sabbahan, Ambulance & Fire Brigades are exempted.
Service Charges for Mortgage Registration against loan from Financial Institution & Co-operative Society:
Mortgage Registration Fee remains same as follows:
Loan Amount Up to 1 Lac Above 1 Lac - 5 Lacs Above 5 Lacs - 10 Lacs Above 10 Lacs - 20 Lacs Above 20 Lacs - 50 Lacs Above 50 Lacs - 100 Lacs Above 100 Lacs - 200 Lacs Above 200 Lacs 31 G. K. Agrawal & Co. (Chartered Accountants) Amount 500 700 1,200 1,800 3,000 10,000 15,000 30,000
** These Key Budget Announcements have not been addressed in the Finance Ordinance, 2068. For the implementation of these announcements, notification through Official Gazette would be required.
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