Income Tax Act, 2058 (2002)



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Explanation: For purposes of this Sub-section,-

(a) "Estimated tax" means the estimated tax in installment computed by any person liable to pay tax in installment pursuant to Section 95 at the time when the installment tax is to be paid in any year.

(b) "Already paid tax" means the following total sum:-

(1) The amount of tax paid in that income year by a prior installment before the date on which the installment in question is to be paid,

(2) The amount of tax deducted from the payments to be included in computing the income of any person in any income year pursuant to Chapter-17 before the date on which the installment in question is to be paid in that year,

(3) In cases where the agent withholding tax or the person subject to tax withholding pays to the Department the amount of tax deemed to be withheld from the payment referred to in clause (2) pursuant to Sub-section (3) of Section 90 in that year before the date on which the installment is to be paid, such amount of tax, and

(4) The amount of tax adjustment for medical treatment expenses which that person may claim pursuant to Section 51 in respect of the accepted medical treatment expenses incurred by that person before the date on which the installment is to be paid.

(2) Notwithstanding anything contained in Sub-section (1), in cases where the amount of installment to be paid pursuant to that Sub-section is less than Two Thousand Rupees, amount of such installment need not to be paid.

(3) The person paying installment shall be allowed to deduct the amount of tax paid by way of installment in any year pursuant to this Section for the tax chargeable in that year.

95. Return of estimated tax to be paid: (1) Every person who has to pay installment in any income year has to submit to the Department a return, in such format and manner as may be prescribed, setting out the estimates of the following amounts of that person for that year within the date on which the first installment of tax is to be paid in that year pursuant to Section 94:-

(a) Assessable income that could be earned by that person from each source of employment, business and investment in that year and source of such income,

(b) Taxable income of that person that could be earned in that year and the amount of tax to be paid by the person referred to in clause (a) of Section 3, which is computed pursuant to Section 4 without subtracting the amount of tax adjustment for medical treatment expenses,

(c) In respect of a non-resident person's foreign permanent establishment situated in Nepal, the amount of income sent abroad by such foreign establishment in that year and the amount of tax to be paid by the person referred to in clause (b) of Section 3, which has been computed in that income pursuant to Sub-section (5) of Section 4, and

(d) Any other details specified by the Department.

(2) The sum total of the amount of tax mentioned in clauses (b) and (c) shall be the estimated tax payable by the person referred to in Sub-section (1) in that income year.

(3) In computing the foreign tax adjustment amount to be claimed pursuant to Section 71 in order to make an estimation of the tax to be paid in any income year pursuant to clause (b) of Sub-section (1), only the foreign tax paid by any person in that year or the foreign income tax estimated by him as payable in that year has to be computed.

(4) Unless and until any person paying installment of tax submits to the department the amended estimate setting out the necessary information and the reasons for amendment in the format referred to in Sub-section (1), the estimate made by him pursuant to that subsection shall remain valid throughout the income year.

(5) Notwithstanding anything contained in subsection (2), the amended estimate submitted by any person pursuant to Sub-section (4) shall be applicable only in computing the installment of tax to be paid pursuant to Section 94 in that income year after the date of its submission to the Department.

(6) Notwithstanding anything contained in Sub-sections (1) and (5), the Department may so specify that any person or class who has to pay installment of tax is not required to submit an estimate pursuant to Sub-section (1).

(7) Notwithstanding anything contained in Sub-section (2), in cases where any person who has to pay installment of tax does not submit an estimate in any income year pursuant to Sub-section (1) or where the Department is not satisfied with the submitted estimate or amended estimate or where it is so specified pursuant to Sub-section (6) that any person is not required to submit an estimate to pay installment of tax, the Department may do as follows:-

(a) The person referred to in clause (a) or (b) of Section 3 may make an estimate of the estimated tax to be paid by him/her in that year on the basis of the tax required to be paid by him/her in the last income year, and

(b) In cases where the Department is not satisfied with the estimate prepared pursuant to clause (a), the method used to prepare the estimate and the estimate submitted by the person, the Department shall give a notice in writing setting out the reasons therefor to the person who has to pay installment.

(8) In cases where the Department gives a notice to the person who has to pay installment pursuant to Sub-section (7), the amount of estimated tax to be paid by that person in that year shall be the amount estimated by the Department.

Chapter-19

Income Return and Assessment of Tax


96. Income return: (1) Each person shall, within three months of expiration of an income year, and subject to Sections 97, 98 and 100, submit an income return of that year in the place as specified by the Department.

(2) The income return referred to in Sub-section (1) shall be as follows:

(a) It has to be prepared in the manner and format as specified by the Department, setting out the following matters:

(1) Assessable income earned by that person from each employment, business or investment in that year and source of such income,

(2) Taxable income of that person in that year and the tax to be imposed on the person referred to in clause (a) of Section 3 in respect of that income,

(3) The income sent abroad in that income year by a non-resident person's foreign permanent establishment situated in Nepal, and the tax imposable in that income,

(4) Tax deduction, installment or amount of any assessed tax paid in that year by any person in a manner to have tax adjustment pursuant to Sections 93, 94 or 100,

(5) Amount of tax due and payable to be set by subtracting the tax paid by that person in that year pursuant to sub-clause (4) from the amount of tax mentioned in sub-clauses (2) and (3), and

(6) Any other information and details as specified by the Department.

(b) The income return has to be signed by that person or manager, covenanting that it is true and complete, and

(c) The income return has to be accompanied by the followings:

(1) The certificate of withholding of tax pursuant to Section 91 for the payment received by any person in the year of submission of the income return,

(2) Any details made available to that person pursuant to Sub-section (4),

(3) Evidence of choice, if any, made pursuant to Sub-section (4) of Section 4, and

(4) Any other information and details as specified by the Department.

(3) In cases where any person, except in capacity of an employee, prepares or assists in preparing the income return of any other person or the documents or details to be accompanied with the income return in lieu of any payment, such a person has to certify the following matters:-

(a) Having examined the documents maintained by other person pursuant to Section 81, and

(b) Having the circumstances in question been actually reflected from the details or information.

(4) If the person required to certify the return pursuant to Sub-section (3) refuses to certify, information, setting out the reasons for such refusal, has to be given to the person whose income return is to be certified.

(5) The Department may, in the following circumstances, require any person to submit the income return of an income year or any part of the income year within the time-limit mentioned in the written notice given by it to such person subject to Section 100 prior to the due time-limit for submission of the income return of the income year pursuant to Sub-section (1):-

(a) In cases where that person becomes bankrupt, insolvent or is dissolved,

(b) In cases where that person is to leave Nepal for an uncertain period of time,

(c) In cases where that person is leaving the act being carried out by him/her in Nepal, or

(d) In cases where the Department otherwise thinks it proper.

97. Submission of income return not required: Except where the Department issues a written order, the following person shall not be required to submit the income return for any income year pursuant to Section 96:

(a) Out of the persons mentioned in clause (a) of Section 3, any person who is not required to pay tax in that income year,

(b) The person mentioned in clause (c) of Section 3 in that income year, or

(c) Any resident natural person in whose respect Sub-section (3) of Section 4 applies in that income year.

98. Extension of time-limit for submission of income return: (1) In cases where any person who has to submit an income return pursuant to Section 96 makes an application in writing, within the time limit for submission of such return, to the Department for the extension of time limit, the Department may extend the time-limit for submission of the income return if the reasons are reasonable. Information of the decision made by the Department on the application so made for the extension of time limit has to be given in writing to the applicant.

(2) The department may extend, at one time or several times, the time limit for a period not exceeding three months to submit the income return pursuant to Sub-section (1).

99. Assessment of tax: (1) In cases where any person has submitted the income return of any income year, setting out the following amounts, on the date of submission of the return, the tax of the income return shall be deemed as if it were assessed:-

(a) The amount of tax mentioned in the income return and payable by the person mentioned in Clauses (a) and (b) of Section 3 in that income year, and

(b) The amount of tax mentioned in the income rerun and due and payable in that year.

(2) In cases where any person does not submit the income return of any income year, tax shall be deemed to have been assessed as follows on the due date for submission of the tax return until the tax return is submitted:-

(a) The amount of tax payable by that person in that year shall be equal to the sum of the amount of tax deducted from the amount received pursuant to Chapter-17 and the amount paid in installment for that year pursuant to Chapter-18, and

(b) Tax shall not be deemed due and payable as per tax assessment.

100. Self-assessment of tax: (1) Section 99 shall be applicable in cases where the income return of any income year or any part of any income year has to be submitted pursuant to Sub-section (5) of Section 96.

(2) Notwithstanding anything contained in Sub-section (1), in the circumstances mentioned in Sub-section (5) of Section 96, the Department may, based on the following amounts, assess the tax of that person in a justifiable manner:-

(a) The amounts mentioned in sub-clauses (1), (2), (3) and (4) of clause (a) of Sub-section (2) of Section 96, for any income year or any part of that year,

(b) The amounts due and payable under sub-clause (5) of clause (a) of Sub-section (2) of Section 96, for any income year or any part of that year.

(3) The following provision shall be applicable in cases where tax is assessed pursuant to Sub-section (1) or (2):-

(a) A person whose tax is assessed for the whole income year is not required to submit the income return referred to in Sub-section (1) of Section 96 for that income year, or

(b) A person whose tax is assessed for a portion of any income year is required to submit the income return referred to in Sub-section (1) of Section 96 for that income year.

(4) The amount of tax paid as per the assessment of tax for a portion of any income year may be adjusted to the tax chargeable as per the assessment of tax for the whole year.

(5) In assessing the tax pursuant to this Section, the Department has to give a time limit of Seven days for the submission of proof and evidence for defense.

101. Amended tax assessment: (1) The Department may have amended tax assessment in order to adjust the tax liability of a person whose tax has been assessed pursuant to Section 99 or 100 on reasonable grounds.

(2) In cases where the Department thinks it proper to re-amend the amended tax assessment made pursuant to Sub-section (1), it may amend it, for as many times as it deems appropriate on reasonable grounds.

(3) The Department shall, in assessing the tax pursuant to Sub-section (1) or (2), complete assessment within Four months from the following date:-

(a) In cases where tax is assessed pursuant to Section 99, the due date for the submission of income returns,

(b) In cases where tax is assessed pursuant to Sub-section (2) of Section 100, the date on which the tax assessment notice is given to the person whose tax is assessed,

(c) In cases where tax is assessed pursuant to Sub-section (1) or (2), the date mentioned in clause (a) or (b) related with the previous tax assessment that has been amended pursuant to Sub-section (1).

(4) Notwithstanding anything contained in Sub-section (3), in cases where the tax of any person has been assessed in a wrong manner due to fraud, the Department may amend such tax assessment at any time. Such amendment has to be made no later than one year of receipt of information that details have been given or tax assessed fraudulently.

(5) Notwithstanding anything contained in Sub-section (3), in cases where the tax assessment is amended or the assessed tax is lessened by the Revenue Tribunal or other competent courts, the Department shall not be able to amend such tax assessment to that extent.

Provided that, in cases where an order has been issued to reexamine it, it shall not be deemed to bar the making of amendment.

(6) In making amendment to tax assessment pursuant to this Section, the Department has to give that person a notice in writing clearly setting out the grounds for such amendment and a time limit of Seven days for the submission of proof and evidence for defense on such assessment of tax.

102. Tax assessment notice: The Department has to give the person, whose tax is assessed, a written notice of tax assessment made pursuant to Sub-section (2) of Section 100 or Section 101 setting out the following matters:-

(a) The assessed tax to be paid and due and payable by the person mentioned in clauses (a) and (b) of Section 3 for the income year or period related with assessment of tax,

(b) The method of computation of tax in the tax assessment as mentioned in clause (a),

(c) The reasons why the Department has to assess the tax,

(d) The time for payment of the assessed tax due and payable, and

(e) The time, place and mode for making a petition in cases where one is not satisfied with the assessment of tax.

Chapter-20


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