Tuesday, Jestha 15, 2075 (May 29, 2018) for the financial year … · 2018-06-04 · anywhere else...

B.R.S.S. & ASSOCIATESChartered Accountants

www.brsa.com.np

NEPAL FISCAL BUDGET SYNOPSIS FY 2075/2076 (FY 2018/2019)

The Hon’ble Finance Minister, Dr. Yubaraj Khatiwada presented annual fiscal budget of NRs. 1,315.16 billion (PY 1,278.99 billion) on

Tuesday, Jestha 15, 2075 (May 29, 2018) for the financial year 2075/76 (2018-19) through Finance Bill, 2075.

Recent Labor Act

Amendments Included

FOR USE OF BRSSA TEAM AND ITS CLIENTS

We have taken all steps to ensure that the information contained herein has been obtained from reliable sources and this publication is accurate. However, this

publication is not intended to give legal, tax, accounting or other professional advice. We recommend appropriate advice to be taken prior to initiating action on

specific issues.

2

www.brsa.com.np

CONTENTS

• Rupees Movement & Deficit Management

• In Brief- Budget Summary

• Commerce & Trade Focus And Allocation

• Tax Rates Applicable For FY 2075/ 2076 (FY 2018/19)

• Direct Tax

• Individual Tax Slab Rates

• Corporate Tax Rates & Rebates

• Tds Rate Chart

• Indirect Tax

• Amendments In Vat

• Amendments In Excise Duty

• Amendments In Custom Duty, Road Tax & Yearly Vehicles Tax

• Health Service Tax, Education Tax & Tax On Movie Tickets

• New Provision Inserted By Finance Bill, 2075

• Due Dates (Tax & Returns)

• Labour Act Amendments

BUDGET SYNOPSIS FY 75/76 (FY 18/19) 3

www.brsa.com.np

4

www.brsa.com.np

In Billion (NRs.)

PARTICULARS FY 2075/76 % FY 2074/75 %

ALLOCATION OF FUND

Current Expenditure 845.45 64.28% 803.53 62.83%

Capital Expenditure 314.00 23.88% 335.17 26.21%

Financial Management 155.72 11.84% 140.29 10.97%

TOTAL 1,315.16 100.00% 1,278.99 100.00%

SOURCE OF FUND

Revenue 831.31 63.21% 730.05 57.08%

Foreign Grant 58.82 4.47% 72.17 5.64%

TOTAL REVENUE & GRANTS 890.13 67.68% 802.22 62.72%

TOTAL SURPLUS / (DEFICIT) (425.03) (476.77)

DEFICIT MANAGEMENT

Foreign Loan 253.03 19.24% 214.04 16.74%

Internal Loan 172.00 13.08% 145.00 11.34%

Cash Reserve - 0.00% 102.73 8.03%

Principal Repayment - 0.00% 15.00 1.17%

TOTAL 425.03 32.32% 476.77 37.28%

GRAND TOTAL 1,315.16 100.00% 1,278.99 100.00%

845.

45

314.

00

155.

72

1,31

5.16

803.

53

335.

17

140.

29

1,27

8.99

C U R R E N T E X P E N D I T U R E

C A P I T A L E X P E N D I T U R E

F I N A N C I A L M A N A G E M E N T

T O T A L

ALLOCATION OF FUND

FY 2075/76 FY 2074/75

831.

31

58.8

2 253.

03

172.

00

1,31

5.16

730.

05

72.1

7

214.

04

145.

00

102.

73

15.0

0

1,27

8.99

SOURCE OF FUND

FY 2075/76 FY 2074/75

BUDGET SYNOPSIS FY 75/76 (FY 18/19)

FOCUSED AREAS AND ALLOCATION5

www.brsa.com.np


COMMERCE & TRADE FOCUS AND ALLOCATION

EARTHQUAKE REHABILITATION

NRs. 151.08 Billion Allocated for expenditure via

National Reconstruction Authority

TRANSPORT & ROAD CONSTRUCTION

NRs. 109.38 Billion allocated.

HOUSING & URBAN DEVELOPMENT


AIR TRANSPORT


DRINKING WATER


AGRICULTURE DEVELOPMENT


DEFENCE MISNISTRY


ENERGY SECTOR

• Energy Sector got budget of NRs. 83.90 Billion

FOR TOURISM DEVELOPMENT

• NRs. 5.20 Billion

EDUCATION, SCIENCE & TECHNOLOGY

• NRs. 134.51 Billion for Education related program

HEALTH

• NRs. 56.41 Billion allocated for health sector

YOUTH & SPORTS

• NRs. 4.18 Billion allocated.

WOMEN ,CHILDERN, SOCIAL WELFARE


COMMUNICATION & INFORMATIN TECHNOLOGY


FORESTRY & SOIL CONSERVATION


6

www.brsa.com.np


DIRECT TAX

• Individual slab rate revised to 10%, 20% & 30%

• No major changes in Corporate tax rate

• No major changes in TDS rates

INDIRECT TAX

• No changes in existing VAT rate of 13.00%

• Major Amendments in Excise duty rates

• Additional provision on Custom Schedule

• Major Changes in Yearly Vehicles Taxes

PROVISION WITHDRAWN / RELAXATION / EXTENSION

• Education Service Fee & Health Service Tax Withdrawn

• Fine & Penalty Waived for

• non filer who wants to regularise their return within

Poush 2075 for VAT.

• Tax return submitted and tax paid for 2071.72, 72.73

and 73.74 within Poush end 2075.

• Income tax exempt for 5 Years for micro entrepreneurial

industries and if run by women exempt for 7 Years.

• Income Tax Rebate 50% to Tea, Textile & Dairy Industries

• 20% rebate on tax rate to community based hospitals

• Income source declaration not required to invest in

projects of national pride employing more than 100 people

and use 50% local raw materials.

NEW PROVISION

• Private Limited companies involved in manufacturing with Paid up capital NRs. 100 Crore or

more to be converted into public company and should get listed in stock exchange.

• Private Limited companies involved in manufacturing with Paid up capital NRs. 50 Crore or

more shall have option to get converted into public company and get listed in stock

exchange and get 10% tax rebate for next 3 years from date of conversion.

• Health Risk Tax imposed @ 25 paisa per unit of Cigarettes production or import.

• Import of Raw Gold up to 100 grams allowed by person returning from abroad paying

applicable tax

• Subsidised loan up to NRs. 7 lakhs against academic certificate to invest in business and

Subsidised loan up to NRs. 10 lakhs against successful skill test for person returning from

abroad and investing in skill related business.

• Contribution based pension plan mandatory from 01.04.2075 to all Govt. Employees

• Mandatory VAT registration for carrying out certain business

• Life insurance premium deduction increased to NRs. 25,000/- from 20,000/-

• Cooperatives can claim 5.00% as loan loss provision.

IMPORTANT TARGETS

• Economic Growth Rate expected 8.00% & Inflation Rate expected below 6.50%

• At least on medical college in each province

• Increase tourism inflows to 1.2 million by FY 2019 and 2 million by FY 2020

• Focuses on controlling revenue leakages, pushing forward with preparatory work for large-

scale projects, development of sports facilities, hospitals and industrial estates.

IN BRIEF- BUDGET SUMMARY

5

www.brsa.com.np


8

www.brsa.com.np


MAJOR AMMENDMENTS IN

INDIVIDUAL TAX SLAB RATES | CORPORATE TAX RATES & REBATES | TDS RATE CHART

NOTES:

• 1% tax mentioned above (i.e. Social Security Tax or SST) is not

applicable for proprietorship firms, pension holders and contributors of

contributory pension fund.

• 20% Surcharge (On Tax Calculated for income above NRs. 20 Lakh) if

the total income exceeds NRs. 20 Lakhs. This is applicable to

proprietorship firm also. (Effective rate above 20 lakhs is 36.00%)

• In case of resident disabled natural person an additional 50% of

exemption limit shall be allowed to be deducted.

• 10% tax rebate to resident woman earning remuneration income only.

• Remote area allowance NRs. 50,000 (Deductible from taxable Income)

• Employees employs at foreign agency in Nepal, deduction 75% of

foreign allowance from taxable income.

• Medical tax credit for approved medical expenses, get rebate of NRs.

750/- or Medical expenses incurred whichever is lower.

• Foreign Tax Credit, Foreign tax paid can be deducted as expense or

reduction in tax liability up to avg. rate of tax applicable in Nepal at the

option of tax payer.

9

www.brsa.com.np


PERSONAL TAX FOR NATURAL PERSON

FOR RESIDENT

ASSESSED AS INDIVIDUAL FY 2075/76 ASSESSED AS COUPLE FY 2075/76

EARNING SLAB EFFECTIVE RATE EARNING SLAB EFFECTIVE RATE

Up to 350,000/- 1.00% Up to 400,000/- 1.00%

Next 100,000/- 10.00% Next 100,000/- 10.00%

Next 200,000/- 20.00% Next 200,000/- 20.00%

Next 1,350,000/- 30.00% Next 1,300,000/- 30.00%

Above 2,000,000/- 36.00% Above 2,000,000/- 36.00%

ASSESSED AS INDIVIDUAL FY 2074/75 ASSESSED AS COUPLE FY 2074/75

EARNING SLAB EFFECTIVE RATE EARNING SLAB EFFECTIVE RATE

Up to 350,000/- 1.00% Up to 400,000/- 1.00%

Next 100,000/- 15.00% Next 100,000/- 15.00%

Next 2,050,000/- 25.00% Next 2,100,000/- 25.00%

Above 2,500,000/- 35.00% Above 2,500,000/- 35.00%

ADDITIONAL NOTES:

• Husband and Wife having separate income source are given choice to adopt either to get assessed separately or jointly as family.

• Deduction of Life insurance premium paid to Resident or Non-resident Insurance Company, a sum equal to premium paid or NRs. 25,000/- (PY NRs. 20,000/-)

whichever is lower.

• Health insurance premium deduction NRs 20,000/- allowed. .

• Deduction for retirement fund contribution is available @ 1/3rd of salary or NPR 300,000 whichever is lower (IT Rule 21).

• 1% tax (SST) is required to be deposited separately in Revenue Account No.11211.

• Income from Non-chargeable business assets (i.e. land, buildings and shares) is taxable as follows (Capital Gain):

@ 2.5% (if land or land and building held for more than 5 years) and 5% (if up to 5 years) for transaction value exceeding 10 Lakhs. (Earlier 30 Lakhs)

@ 10% on sale of shares of non-listed entity

@ 7.5% (PY 5%) on sale of shares of listed entity

• Tax @ 15.00% (PY @ 20.00%) on income from export and Tax @ 20.00% (PY @ 15.00%) on income from special industry shall be levied on the income on which

30.00% tax would have been charged otherwise.

10

www.brsa.com.np


11

www.brsa.com.np


PRESUMPTIVE TAXATION

The amount of Presumptive Tax for natural person having income up to Rs 2 Lakh and turnover up to Rs 20 Lakh has been continued, as follows:

TURNOVER TAX RATE APPLICABLE TO NATURAL PERSON UNDER SEC 1(17) OF SCH. 1 TO INCOME TAX ACT, 2002 AS FOLLOWS:

NOTE: Tax as above should be paid in 2 installments. 1st install in Poush End and 2nd Install & Final in Ashad based on actual transaction up to 20th

day of the month respectively.

INDIVIDUALS CONDUCTING BUSINESSLUMP SUM TAX LUMP SUM TAX

FY 2075-76 FY 2074-75

IN THE METROPOLITAN OR SUB METROPOLITAN CITIES 5,000 5,000

IN MUNICIPALITIES 2,500 2,500

ANYWHERE ELSE IN NEPAL 1,500 1,500

INDIVIDUALS CONDUCTING BUSINESSTAX RATE TAX RATE

FY 2075-76 FY 2074-75

PERSON WHO SALES CIGARETTE, GAS BY ADDING

COMMISSION OR PROFIT UP TO 3%

0.25% OF THE TURNOVER OR NRS.

5,000 WHICHEVER IS HIGHER



PERSON WHO IS ENGAGED IN THE TRANSACTION OTHER

THAN ABOVE





PERSON ENGAGED IN SERVICE PROVIDING BUSINESS2% OF THE TURNOVER OR NRS. 5,000

WHICHEVER IS HIGHER

2% OF THE TURNOVER OR NRS. 5,000

WHICHEVER IS HIGHER

12

www.brsa.com.np


TAX RATES: NON-RESIDENT PERSON

PARTICULARSTAX RATE TAX RATE

FY 2075-76 FY 2074-75

INCOME EARNED FROM NORMAL TRANSACTIONS 25.00% FLAT 25.00% FLAT

INCOME EARNED FROM PROVIDING SHIPPING, AIR TRANSPORT OR TELECOMMUNICATION SERVICES,

POSTAGE, SATELLITE, OPTICAL FIBER PROJECT.5.00% 5.00%

INCOME EARNED PROVIDING SHIPPING, AIR TRANSPORT OF TELECOMMUNICATION SERVICES

THROUGH THE TERRITORY OF NEPAL.2.00% 2.00%

REPATRIATION BY FOREIGN PERMANENT ESTABLISHMENT (PE) 5.00% 5.00%

CAPITAL GAIN TAX ON SALE OF SHARES (WITHHOLDING TAX 25.00% (PY WHT 15.00% PLUS FINAL TAX

10%) SUBJECT TO TAX TREATIES.25.00% 25.00%

DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA)

To avoid double taxation, Nepal Government has tax treaty with 10 countries namely India, Sri Lanka, Mauritius, Thailand, Qatar, Pakistan, Norway, Korea, Austria &

China. Taxpayer have right to opt the provisions contained in either Nepal Income Tax Act, 2002 or Treaty whichever is beneficial to them.

13

www.brsa.com.np


TAX RATE: ENTITIES

ENTITIES TAX RATE TAX RATE

FY 2075-76 FY 2074-75

Normal Tax Rate 25.00% 25.00%

Company Operating In The Following Areas Telecom, Internet, Money Transfer, Capital

Market, Stock Exchange, Merchant Banking, Commodity Future Market, Stock Brokers30.00% 25.00%

Bank & Finance Company, General Insurance Company, Petroleum Entities; Cigarette, Beer,

Liquor, Khaini, Gutkha And Pan Masala Manufacturing Company30.00% 30.00%

Special Industries (Manufacturing, Forest, Agriculture And Mining industries; Except Liquor,

Cigarette, Khaini, Gutkha And Pan Masala As Defined In Sec. 11) & It Industries20.00% 20.00%

Entities Constructing & Operating Road, Bridges, Tunnel, Ropeway, Trolley Bus And Tram 20.00% 20.00%

Entity Wholly Engaged In The Projects Conducted So As To Build Public Infrastructure, Own,

Operate And Transfer (Boot) It To The Gon & In Power Generation, Transmission, Or

Distribution

20.00% 20.00%

14

www.brsa.com.np


TAX RATE: ENTITIES CONT………

ENTITIES TAX RATE TAX RATE

FY 2075-76 FY 2074-75

Non-resident Person Providing Shipping, Air Transport Or Telecommunications Services In

Nepal (Sec 70)5.00% 5.00%

Private Limited Company, Public Co., Partnership Firm Not Specifically Mentioned Above 25%. 25%.

Airline Services Having Office In And Business In Nepal But Not Operating Flights To And

Within Nepal2.00% 2.00%

Export Income Of Manufacturing Industries 15.00% 15.00%

Other Export Entities 20.00% 20.00%

Co-operative Institution Registered Under Co-operative Act, 2048 (Except Dealers In

Exempted Transaction) 20.00% 20.00%

Income Of Mutual Funds Exempt Exempt

15

www.brsa.com.np


16

www.brsa.com.np


REBATES

Type of Industry TAX REBATE TAX REBATE

FY 2075-76 FY 2074-75

Industries established in Special Economic Zone

situated in mountainous districts and hilly

districtsprescribed by Nepal Government

- For the first 10 years

- After such period

-Tax Exempt

-50% of the applicable tax rate

-Tax Exempt


Industries established in Special Economic Zone

situated in other regions -

For the first 5 years

- After such period

-Tax Exempt


-Tax Exempt


Income from Foreign technology and management

service fee and royalty of Foreign investor in Special

Economic Zone

50% tax rebate on applicable tax ra50% tax rebate on applicable

tax ra

IT industry established within IT Park, biotech park and

technology park as specified in the Gazette 50% tax rebate on applicable tax ra

50% tax rebate on applicable

tax ra

Brandy based on fruits, cider and wine manufacturers in

undeveloped area

40% tax rebate on applicable tax rate

for period of 10 years

40% tax rebate on applicable

tax rate for period of 10 years

17

www.brsa.com.np


REBATES CONT…..1


FY 2075-76 FY 2074-75

Entities (Manufacturing, Tourism, Hydro electricity

production, distribution and transmission, IT industry

established within IT Park, biotech park and technology

park as specified in the Gazette) listed in Securities

Market

15% tax rebate 15% tax rebate

Person involved in exploration & extraction of petroleum,

Mining and natural gases, will start its operation within

Chaitra end 2075.

Tax exempt for first 7 years and 50% of

applicable rate on subsequent 3 years

Tax exempt for first 7 years and

50% of applicable rate on

subsequent 3 years

Person having license to generate, transmit and distribute

electricity will be allowed if the commercial electricity

generation, generation and transmission, generation and

distribution or generation, transmission, distribution

commences before Chaitra end 2080 (PY Chitra 2075)

Tax exempt for first 7 years and 50% of

applicable rate on subsequent 3 years

Tax exempt for first 7 years and

50% of applicable rate on

subsequent 3 years

Income earned by manufacturing industries through

export sales25% concession on applicable rate

25% concession on applicable

rate

18

www.brsa.com.np


REBATES CONT….. 2


FY 2075-76 FY 2074-75

Income earned from Road, Bridge, Airport, tunnel way

construction and operation or from tram and trolleybus

operation

40% concession on applicable rate40% concession on applicable

rate

Royalty income earned from export of intellectual Assets 25% concession on applicable rate25% concession on applicable

rate

Income earned from the disposal of intellectual assets 50% concession on applicable rate50% concession on applicable

rate

Special industry (Manufacturing) and IT industry providing

direct employment to

>100 Nepalese citizen during entire year




10% of the applicable tax rate




-




19

www.brsa.com.np


REBATES CONT….. 3


FY 2075-76 FY 2074-75

Special industry providing direct employment to 1200 or

more Nepali citizen

30% of the applicable tax rate 20% of the applicable tax rate

Special industry providing direct employment to 100 or

more Nepali citizen including women, dalits and disabled

in the proportion of 33%

Additional 10% rebate on above rate 20% of the applicable tax rate

Special industry operating in following regions have

following tax rates for first 10 years: a. Underdeveloped

Regions,

b. Undeveloped Regions,

c. Partly developed Regions

a.90% of applicable tax rate

b. 80% of applicable tax rate

c.70% of applicable tax rate

a.90% of applicable tax rate

b. 80% of applicable tax rate

c.70% of applicable tax rate

Hydropower projects, solar energy projects, waste-

toenergy and wind turbines projects commercially start

generation of electricity by Chaitra end 2080

Tax Exempt for first 10 years and 50%

of the applicable tax rate thereafter for

next 5 years

Tax Exempt for first 10 years

and 50% of the applicable tax

rate thereafter for next 5 years

20

www.brsa.com.np


REBATES CONT….. 4


FY 2075-76 FY 2074-75

Special Industry with capital investment of Rs. 1 billion and

direct employment of 500 people during whole year Further, if

existing special industry increases its installed capacity by

25% and inject new investment so as to reach the capital to

Rs. 1 billion and employs 500 persons during the whole year

Tax Exempt for first 5 years and 50% of

the applicable tax rate thereafter for next 3

years

Full exemption on the profit earned on the

increased capacity and 50% exemption on

such profit for additional 3 years

Tax Exempt for first 5 years and


thereafter for next 3 years

Full exemption on the profit

earned on the increased capacity

and 50% exemption on such

profit for additional 3 years

Tourism Industry or International Airlines Operators with

capital investment of Rs. 2 billion. Further, if existing such

industry/ Airlines Operators increases its present capacity by

25% and inject new investment so as to reach the capital to

Rs. 2 billion

Tax Holiday for first 5 years from the date

of commencement of business and 50%

tax exemption for additional 3 years.

Full exemption on the profit earned on the

increased capacity and 50% exemption on

such profit for additional 3 years

Tax Holiday for first 5 years from

the date of commencement of

business and 50% tax exemption

for additional 3 years.

Full exemption on the profit

earned on the increased capacity

and 50% exemption on such

profit for additional 3 years

21

www.brsa.com.np


REBATES CONT….. 5


FY 2075-76 FY 2074-75

In case special industry, industry based in agriculture and

tourism sector provides direct employment to at least 100

Nepalese national during the whole year,

Rebate 30% of applicable tax rate.Rebate 30% of applicable tax

rate.

Tax on dividend by Special industry, industry based in

agriculture and tourism sector which capitalizes its profit

(issues bonus shares) for the purpose of expansion of

capacity of industry.

Exempt Exempt

The licensed person or entity commencing commercial

production, transmission or distribution of hydroelectricity

within Chaitra 2080. The exemptions shall also be

provided to electricity produced through solar, wind or bio

fuel energy. Provided that For those that are in

commercial operation on the date of implementation of

this provision, the facilities mentioned at the time of

granting license shall be applicable

Full exemption of Income tax for first ten

years and 50% exemption in income tax

for next five years.

Full exemption of Income tax

for first ten years and 50%

exemption in income tax for

next five years.

22

www.brsa.com.np


REBATES CONT….. 6


FY 2075-76 FY 2074-75

Existing Private Limited Company with paid up capital of

more than NRs. 50 Crores converts into public company.

10% tax rebate for 3 years from the date

of conversion-

Tea Production & Processing, Dairy Industry and Textile

Industry50% tax rebate -

Community Hospital 20% tax rebate -

Small scale industry (Laghu Udhyam) having fixed

capital upto 5 lac (Except Land and building), total

annual turnover below 50 Lakhs and employing up to 9

employees (Including Proprietor)

100% tax rebate for 5 years from the

date of commencement of operations

and 7 years incase operated by

women.

Compensation received in respect of death of natural person

Compensation received in respect of death of natural person is not taxable [Sec 31 (2)]

TDS CHART FOR FY 2075/ 2076 (FY 2018/19)

23

www.brsa.com.np


24

www.brsa.com.np


TAX DEDUCTION AT SOURCE (TDS) RATE CHART

PARTICULARS RATE RATE

FY 2075-76 FY 2074-75

Remuneration (Sec.87) Normal rate of Individual Normal rate of Individual

Investment Returns & Service Fees (Sec.88)

Natural Resource Payment 15.00% 15.00%

Interest income from deposit up to Rs 25,000 under 'Micro Finance

Program', 'Rural Development Bank', 'Postal Saving Bank' & Co-

Operative (u/s-11(2) in rural areas

Tax Exempt Tax Exempt

Rent - Natural Person - 10.00% (Final Tax)

Rent - Individuals Hire Charges 10.00% (Final Tax) 10.00% (Final Tax)

Rent – Others 10.00% 10.00%

Transportation / Freight (Not applicable if paid to Natural Person) 2.50% -

Rent payable to the vehicle rental service provider registered in VAT 1.50% 1.50%

Royalty 15.00% 15.00%

Gain from Investment Insurance

- In case of death claim Exempt Exempt

- In other case 5.00% (Final Tax) 5.00% (Final Tax)

Service Fees 15.00% 15.00%

25

www.brsa.com.np


TAX DEDUCTION AT SOURCE (TDS) RATE CHART CONT……. 1


FY 2075-76 FY 2074-75

Service Fees paid to Service Oriented Resident person registered

under VAT or Dealing in Tax exempt transaction 1.50% 1.50%

Meeting Allowances 15.00% (Final Tax up to NRs.

20,000/-)15.00% (Final Tax)

Verification of answer sheet and preparation of question paper 15.00% (Final Tax) -

Commission 15.00% 15.00%

Bonus on Sales/target bonus 15.00% 15.00%

Aircraft Lease Payment 10%(Final Tax) 10%(Final Tax)

Commission paid by Resident Employment Companies to Non

Residents5.00% (Final Tax) 5.00% (Final Tax)

Dividend distributed by Resident Companies to Residents 5.00% (Final Tax) 5.00% (Final Tax)

Dividend distributed by Resident Companies to Non Residents 5.00% (Final Tax) 5.00% (Final Tax)

Interest on Deposits / Debentures from Resident Bank, Finance

Companies or listed companies and on Govt. Bonds to Individuals

not related to business.

5.00% (Final Tax) 5.00% (Final Tax)

26

www.brsa.com.np




FY 2075-76 FY 2074-75

Interest to Others-not stated above 15.00% 15.00%

Income distributed by Mutual Fund to Natural Person 5.00% (Final Tax) 5.00% (Final Tax)

Payment against use of Satellite, Bandwidth, Optical Fiber,

Telecom related equipment or electric transmission line 10.00% 10.00%

Income distributed by Mutual Fund to Other Person (Entity) 15.00% 15.00%

Gains from Unapproved Retirement interests 5.00% (Final Tax) 5.00% (Final Tax)

Lump Sum Retirement Payment from Approved Fund & Nepal

Government under Sec 65(1b)5.00% (Final Tax) 5.00% (Final Tax)

Teaching-not on regular basis (Part time teaching) 15.00% (Final Tax) 15.00% (Final Tax)

Casual income 25.00% (Final Tax) 25.00% (Final Tax)

Dividend distributed by Partnership Firm 5.00% (Final Tax) 5.00% (Final Tax)

Gain From Commodities Future Market (Sec 95Ka) 10.00% 10.00%

Contract Payments (Sec.89)*

Payment under contract exceeding Rs.50,000/- 1.50% 1.50%

27

www.brsa.com.np




FY 2075-76 FY 2074-75

Payment to non-resident person under a contract (Sec 89(3)):

Payment under service contract to Non-resident 15.00% (Final Tax) 15.00% (Final Tax)

Payment under Repair for Airplane & Other contract 5.00% (Final Tax) 5.00% (Final Tax)

Premium paid to non-resident insurance company & Commission

paid against reinsurance premium received from non-resident

insurance company.

1.50% (Final Tax) 1.50% (Final Tax)

Others:

Gain from disposal of interest in Resident Entity (Sec 95 Ka) For

listed securities to

'-Natural Person

'-Resident Entity

'-Other

7.5.00%

10.00%

25.00%

5.00%

10.00%

10.00%

28

www.brsa.com.np




FY 2075-76 FY 2074-75

Gain from disposal of interest in Resident Entity (Sec 95 Ka) For

unlisted securities to

'-Natural Person

'-Resident Entity

'-Other

10.00%

15.00%

25.00%

10.00%

15.00%

15.00%

Capital gain tax on sales of land and land & building owned by

natural person (Deducted by Malpot Office)

i) For more than 5 years

ii) For less than 5 Years iii)

In Other cases

2.50%

5.00%

10.00%

2.50%

5.00%

10.00%

Work done through Consumer Committee (Upbokta Samiti) if the

amount exceeds NRs. 50 lakhs.1.50% -

ADDITIONAL NOTES:

• NRs. 50,000/- referred to 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 ten days under the same contract to the same payee or an associate of the payee.

• No TDS is required to be deducted on the following:

• Payment of remuneration to the writer of the articles published in Newspaper & magazines.

• Payment of remuneration for preparation of question paper or checking of answer sheet

• Interregional interchange charges paid to a bank issuing Credit Cards.

• Interest or fee paid by Nepal Govt., under an agreement, to Foreign Govt. or an international organization (to which Nepal is a party).

• Interest and Dividend paid to Mutual Fund

• No Tax need to be deducted while making following Payments:

• Payment of interest to a resident bank or other resident financial institution

• Payments that are exempt from tax

• General insurance premium.

• Withholding tax need to be deposited along with TDS Return with IRD within 25 days from end of month.

• Withholding Tax Certificate should be issued to the person from whom tax has been deducted based on the TDS Return filed with IRO to get the credit for

such withholding tax.

• Delay in submission of Tax or Return will attract penal provision as per the Act. Penalty @ 2.50% p.a. on TDS Amount.

29

www.brsa.com.np


VAT, EXCISE AND CUSTOM RATES FOR FY 2075/ 2076 (FY 2018/19)

30

www.brsa.com.np


Amendments in VAT Act

31

www.brsa.com.np


VALUE ADDED TAX (VAT)

• Threshold of VAT on goods remains at NRS 50 Lakhs

• The Threshold for Service and Service and Goods mixed business remains NRS. 20 Lakhs

• VAT Rate remains unchanged at 13.00%

MAJOR AMENDMENTS IN VALUE ADDED TAX (VAT)

• VAT refund facility withdrawn for following: mobile set, flour, match, vegetables ghee, mustered oil, sugar, textile, copper, dairy, tea etc. has been withdrawn.

• Hostel and Canteen Service provided by the Educational Institutions for its own purpose has been exempted from VAT registration. Also, VAT on these services

assessed by tax office earlier has also been waived.

• Business of Money Transfer, Capital Market, Stock Exchange, Merchant Banking, Commodity Future Market, Stock & Commodity Broker are also exempted from

VAT. Further, Vat on Share broker assessed by tax office earlier has also been waived.

• No VAT for 1 Bus of Community School, 30 seater.

• Brick Industries, Alcohol Distributors, Wine Shop, Software, Trekking, Rafting, Ultra light Flight, Paragliding, Tourist Vehicle, Crusher, Slate, Sand Mines and

Aggregate Industries are brought under VAT bracket

• Business of Hardware, Sanitary, Furniture, Fixture, Furnishing, Automobiles, Motor Parts, Electronics, Marble, Educational Consultancy, Discotheque, Health Club,

Massage Therapy, Beauty parlor, Catering Service, Dry clean service, Restaurant with Bar, Ice cream Industries, Tailoring business with Suiting & Shirting, Suppliers

of Uniform to Educational Institution & Health Institute operating in Metropolitan City, Sub-Metropolitan City, Municipality, or any other area specified Department are

mandatorily required to registered in VAT.

• Telecommunication service fee 13% to be collected by Telecom Companies (Telephone, Mobile, Internet Service Provider) (Previous year rate was 11%).

• Casino Royalty: Annual Royalty Rs.4 Crore (Previous Year Rs. 3 Crore) but if gaming is by Modern Machine and Equipment only, then Rs. 1 Crore (Last year Rs. 75

Lakhs) shall be paid by each casino.

FINE & PENALTY

• Invoice raised without delivering goods and rendering services attract penalty @ 50% of invoice value.

• Non Compliance of Electronic Billing directive – 5 lakhs.

32

www.brsa.com.np


Amendments in Excise Act

33

www.brsa.com.np


EXICSE

• Excise Duty has been introduced in cosmetic items, mobile phones, home appliances such as mixers, juicer, refrigerator,

vacuum cleaners, iron and non-alloy products .

• 25% Rebate on Excise Duty for unassembled vehicles in condition at the time of import for the Industries engage in assembling

the vehicles. Moreover, some percentage of rebate is also enjoyable on sale of such assembled vehicle.

• 100% Excise Duty is exempted on domestic production of Marbles and lid acid battery.

• Excise Duty increased in Beverages, Tobacco and cigarettes, alcohol & Beer, cement, paint, vehicles.

34

www.brsa.com.np


35

www.brsa.com.np


PRODUCTSEXCISE RATE EXCISE RATE

FY 2075-76 FY 2074-75

Katha Ras (1404.90.10) Rs. 15 / Kg Rs. 10 / Kg

Khayar Katha (1404.90.20) Rs. 140 / Kg Rs. 115 / Kg

Jaggery (1701.13.10) Rs. 115 / Kg Rs. 90 / Kg

Molasses (Hc1703.10.00) Rs. 70 / Kg Rs. 55 / Kg

Chewing Gum (Hc 1704.10.00) 10% -

Other Sweets (Not Containing Coco) 1704.90.00 5% -

Items Containing Chocolates & Coco (Hc 1806) 5% -

Potato Chips (1905.90.20) Rs. 15 / Kg Rs. 7.5 / Kg

Dalmoth, Papad, Namkin Bhujia (Hc2106.90.10) 5% -

Pan Masala (No Tobbaco) (Hc2106.90.20) Rs. 555/Kg Rs. 462/Kg

Kurkure, Kurmure, Lays (Hc2106.90.60) Rs. 15 / Kg Rs. 7.5 / Kg

Sugandhit Supari (No Tobbaco) (2106.90.70) Rs. 205 / Kg Rs. 171 / Kg

All Types Of Juice (Hc2009.11.00-90) Rs.10/ Litre Rs.4.50/ Litre

Alcohol Free Beer (Hc2202.91.00) Rs.15/Litre Rs.7/Litre

Other Beverages (Alcohol Free Not Included In 20.9) (Hc2202.91.00) Rs.15/Litre Rs.7/Litre

Energy Drinks (Hc2202.99.10) Rs.25/Litre -

AMMENDED EXICSE TAX RATE

36

www.brsa.com.np



FY 2075-76 FY 2074-75

Beer (Hc 2203.00.00) Rs.150/ Litre Rs.115/ Litre

Wine Upto 12% Alcohol (Hc 2204.10.10) Rs.335/ Litre Rs.280/ Litre

Wine Upto 17% Alcohol (Hc 2204.10.10) Rs.335/ Litre Rs.280/ Litre

Wine Above 17% Alcohol (Hc 2204.10.10) Rs.390/ Litre Rs.325/ Litre

Denatured Spirit (80-99 % Alcohol) (Hc2207.20.00) Rs.15/ Litre Rs.12/ Litre

Raw Material Of Alcohol Such As Spirits (Hc 2208.30.10) Rs.150/ Litre Rs.127/ Litre

Alcohol 15 U.P Strength (2208.20.90.10) Rs. 1204/ Litre Rs. 1003/ Litre

Rs. 1416/ L.P Litre Rs. 1180/ L.P Litre






37

www.brsa.com.np




FY 2075-76 FY 2074-75

Cigarette 70 Mm Without Filter (Hc2402.20.10) Rs.450/M Rs.374/M

Cigarette 70 Mm With Filter (Hc2402.20.21) Rs.1030/M Rs.859/M

Cigarette (Over 70 – Up To 75 Mm) With Filter (Hc2402.20.22) Rs.1340/ M Rs.1116/ M

Cigarette (Over 75 – Up To 85 Mm) With Filter (Hc2402.20.23) Rs.1747/M Rs.1456/M

Cigarette (Over 85 Mm) With Filter (Hc2402.20.24) Rs.2466/M Rs.2055/M

Granite (Hc2516.12.00) 15% 15%

Cement (Hc2523) Rs.200 /M.T Rs.180 /M.T

Paints (Hc3208) 7% 5%

Makeup & Beauty Products (Hc 3304, 3305, 3306, 3307, 3401, 3402) 5% -

Rod & Tmt (Hc 7213) Rs. 1500 /M.T Rs. 1000 /M.T

Iron & Non Alloy Angle & Section (Hc 7216) Rs. 1500 /M.T -

Cast Fitting, Bends, Elbow (Hc 7307) Rs. 1500 /M.T -

Iron & Ispat Structures Bridge, Towers, Windows,door (Hc 7308) Rs. 1500 /M.T -

L.P G Cylinder (Hc7311) 5% -

Iron Or Ispat Chain & Parts (Hc 7315) Rs. 1500 /M.T -

Refrigerator , Freezer (Hc 8418) 5% -

38

www.brsa.com.np




FY 2075-76 FY 2074-75

Vaccum Cleaners & Parts (Hc 8508) 5% -

Mixers, Juicer, Grinder & Parts (Hc 8509) 5% -

Motorbikes 150 Cc To 250 Cc (8711.30.99) 50% 40%



Motorbikes Above 800 Cc (8711.50.00) 100% 40%

Spares Parts Of Motorcycle (Hc 8714) 5% 5%

Car, Station Wagon, Racing Car Above 1000 Cc Upto 1500 Cc (Hc 8703.22.00) 65% 60%




Car, Station Wagon, Racing Car Above 3000 Cc (Hc 8703.23.30) 100% 60%

Car, Station Wagon, Racing Car (Diesel) Above 1500 Cc Upto 2000 Cc (Hc 8703.32.10) 70% 60%

39

www.brsa.com.np




FY 2075-76 FY 2074-75

Car, Station Wagon, Racing Car (Diesel) Above 2000 Cc Upto 2500 Cc (Hc 8703.32.20) 85% 60%

Car, Station Wagon, Racing Car Above 2500 (Diesel) ( Hc 8703.33.00) 100% 60%

Micro Bus 11-14 Seater (H. Code 8702.10.30) 55% 55%

Double Cab Pick Up (H. Code 8704.21.10) 60% 60%

Three Wheeler (Auto Rickshaw) (H. Code 8703.21.10) 55% 55%

Single Cab Pick Up (H. Code 8704.21.20.10) 50% 50%

Delivery Van (H. Code 8704.21.20.20) 30% 30%

Mini Bus 15-25 Seater (H. Code 8702.10.20, 8706.00.20) And Chassis 35% 35%

Bus & Truck (H. Code 8702.10.10 & 8702.90.10) 5% 5%

Video Games, Consoles (Hc 9504) 5% -

Amendments in Custom Act

40

www.brsa.com.np


41

www.brsa.com.np


AMMENDED CUSTOM RATE

HS CODE PRODUCTSCUSTOM RATE CUSTOM RATE

FY 2075-76 FY 2074-75

Milk and cream, concentrated or containing added sugar or other sweetening matter.

0402.10.00 In powder, granules or other solid forms, of a fat content,

by weight, not exceeding 1.5% 30% 20%

0402.21.00 Not containing added sugar or other sweetening matter 30% 20%

0402.29.00 Others 30% 20%

0402.91.00 Not containing added sugar or other sweetening matter 30% 20%

Butter and other fats and oils derived from milk; dairy spreads.

0405.10.00 Butter 30% 20%

0405.20.00 Dairy spreads 30% 20%

0405.50.00 Other 30% 20%

Pepper of the genus Piper; dried or crushed or ground fruits of the genus Capsicum or of the genus Pimenta.

0904.11.00 Neither crushed not ground 10% 5%

0904.12.00 Crushed or ground 10% 5%

Soyabean oil and its fractions, whether or not refined, but not chemically modified.

1507.10.00 Crude oil, whether or not degummed 10% 5%

1507.90.00 Other 15% 10%

42

www.brsa.com.np




FY 2075-76 FY 2074-75

Palm oil and its fractions, whether or not refined, but not chemically modified.

1511.10.00 Crude oil 10% 5%

Sunflower-seed, safflower or cotton-seed oil and fraction thereof, whether or not refined, but not chemically modified.

1512.11.00 Crude oil 10% 5%

1512.19.00 Other 15% 10%

Rape, colza or mustard oil and fractions thereof, whether or not refined, but not chemically modified.

1514.19.00 Other 15% 10%

1514.99.10 Of Canola (Rapeseed) 15% 10%

1514.99.90 Other --Other: 15% 10%

Other fixed vegetable fats and oils (including jojoba oil) and their fractions, whether or not refined, but not chemically

modified

1515.21.00 Crude oil 10% 5%

1515.29.00 Other 15% 10%

43

www.brsa.com.np




FY 2075-76 FY 2074-75

Cane or beet sugar and chemically pure sucrose, in solid form.

1701.12.00 Beet sugar 30% 15%

1701.13.10 Sakhhar (Gud 30% 15%

1701.13.20 Khanda sugar 30% 15%

1701.13.90 Other 30% 15%

Food preparations not elsewhere specified or included.

2106.90.10 Dalmott, Papad, Salted, Bhujyia and Chamena 20% 15%

Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured,

and other non-alcoholic beverages, not including fruit or vegetable juices of Heading 20.09

2202.99.10 Energy Drinks 30% 30%

2202.99.90 Others 30% 30%

Unmanufactured tobacco; tobacco refuse

2401.10.00 Tobacco, not stemmed/stripped 20% 15%

2401.20.00 Tobacco, partly or wholly stemmed/stripped 20% 15%

2401.30.00 Tobacco refuse 20% 15%

44

www.brsa.com.np




FY 2075-76 FY 2074-75

Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or similar purposes (other than that of

Heading 70.10 or 70.18).

7013.91.00 Of lead crystal 20% 15%

7013.99.00 Others 20% 15%

7020.00.00 Other articles of glass. 20% 15%

Primary cells and primary batteries

8506.90.00 Parts 15% 5%

Electric accumulators, including separators therefor, whether or not rectangular (including square).

8507.90.00 Parts 15% 5%

45

www.brsa.com.np


NOTES

• Arrangements have been made to the Nepal-based authorized dealers of the vehicle importers to publish mandatorily the maximum retail price of the vehicles in the

national-level daily newspaper in every 4 months, and undertake continuous monitoring of the same.

• Import Duty of NRs 2,000 per day to be levied in case Trucks entered into Nepal importing goods from foreign countries, trailers with loaded and empty containers

intended to load goods from the place other than customs area, if such Truck and Trailers fails to returns back within 48 hours from the time of entry to Nepal.

• Import duty has continued to be 20% on unassembled television parts, semi LCD & LED panel, Picture tube etc., under HS Code 8528.72.00 imported by Television

Assembling Company.

• Cooperatives & Companies established as public transport operator intended to purchase at least 5 buses of 40 seat or more for the specified purpose, only 5%

import duty levy on buses & chassis of buses. However, if such vehicles are sold or transferred within 10 years from the date of acquisition to any person other than

public transport operator registered as cooperatives or Companies, full custom duty shall be recovered. Further, Road Construction & Development tax also waived

for such vehicles.

• In case of Ambulance and Dead Body Carrying Vehicle imported by private hospital, on recommendation of Ministry of Health and Population of Nepal, custom duty

is charged at 1%.

• For one Ambulance and one Dead Body Carrying Vehicle – for hospital having less than 100 beds.

• For two Ambulances and one Dead Body Carrying Vehicle– for hospital having more than 100 beds

• Rebate of 50% custom duty on the import of either of two no. of Luxury Coach, Micro bus and Mini bus is allowed to the Travel Agents, Trekking Agency, Rafting

agency, Star hotels and resort on the recommendation of Tourism and Civil Aviation Ministry continues.

• Import of Gold by Passenger returning from abroad:

• First 50 gm – NRs. 5200/- per 10 gm

• Next 50 gm- NRs. 6200/- per 10 gm

• Import above 100 gm shall considered illegal and will be confiscated.

• Goods imported from INDIA via LC for good manufactured in India 5 % discount in custom rate for custom rate 5% - 30% and 3%discount above 30%.

• Goods imported from CHINA via LC for good manufactured in China 5 % discount in custom rate for custom rate 5% - 30% and 3%discount above 30%.

46

www.brsa.com.np


ROAD CONSTRUCTION FEES DURING REGISTRATION OF VEHICLES

PARTICULARSFEES FEES

FY 2075-76 FY 2074-75

Car, Jeep, Van, Microbus, Bus,

7% 7%Truck, Tipper, Mini-bus, Mini

Truck, Mini Tipper

Upto 2000 Cc Car, Jeep, Van 8% 7%

Above 2000 Cc Car, Jeep, Van 10% 7%

Motorbike Upto 125 Cc - NRs. 15,000 NRs. 10,000

Motorbike Of 126-150 Cc NRs. 15,000 NRs.12,000

Motorbike Of 151-250 Cc NRs. 18,000 NRs.12,000

Motorbike Up To 251-400 Cc NRs.50,000 NRs.15,000

Motorbike Above 401 Cc NRs. 200,000 NRs. 20,000

ADDITIONAL NOTES:

• 50% on road construction fees is waived on Electric Vehicle, 2 wheeler up to 1500 watt it will be considered as 150 CC and above 1500 watt it will considered in 151

to 250 cc bracket.

• 50% on road construction fees is waived on electric, solar and battery operated vehicles.

• No Road construction fees to 2 wheeler made for disables people up to 150 cc.

47

www.brsa.com.np


YEARLY VEHICLES TAX FOR PUBLIC VEHICLE

PUBLIC VEHICLES FY 2075/76 FY 2074/75

Car, Jeep, Van, Micro Bus

Up to 1300 CC 4000 8,000

1301-2000 CC 4500 9,000

2001-2900 CC 5000 11,000

2901-4000 CC 6000 13,000

Above 4000 CC 7000 15,000

Dozer, Excavator, Loader, Roller, Tripper, Crane, Gas Bullet, Oil Tanker,

Tipper12000 17,000

Auto, 3 Wheeler, Tempo, Power Tiller

Auto Rickshaw, 3 Wheeler & Tempo 2000 4,000

Tractor 2000 2,500

Power Tiller 1500 2,000

Mini Truck / Mini Bus 6000 12,000

Truck / Bus 8000 16,000

Mini Tipper 7000 14,000

48

www.brsa.com.np


YEARLY VEHICLES TAX FOR PRIVATE VEHICLE

PRIVATE VEHICLES FY 2075/76 FY 2074/75

Car, Jeep, Van, Micro Bus:

Up to 1000 CC 19,000 19,000

1001-1500 CC 21,000 21,000

1501-2000 CC 23,000 23,000

2001-2500 CC 32,000 32,000

2501-2900 CC 37,000 37,000

Above 2900 CC 53,000 53,000

Dozer, Excavator, Loader, Roller, Tripper, Crane 35,000 35,000

Mini Tipper 25,000 25,000

Auto, 3 Wheeler, Tempo, Tractor, Power Tiller:

Auto Rickshaw, 3 Wheeler & Tempo 5,000 5,000

Tractor 4,000 4,000

Power Tiller 3,000 3,000

Mini Truck / Mini Bus 22,000 22,000

Truck / Bus 30,000 30,000

Motor Cycle:

Up to 125 CC 2,500 2,500

126 CC – 250 CC 4,000 4,000

251 CC – 400 CC 8,000 8,000

Above 400 CC 15,000 15,000

49

www.brsa.com.np


Health Service Tax Tax On Education Fees Tax on Movie Ticket

• VAT on Health Service withdrawn from

01.04.2075.

• Health Service tax withdrawn from

01.04.2075.

• Community Health Service Providing

institution to get rebate 20% on tax rate.

• Health Risk Tax imposed on cigarrate,

Tobacco, Pan Masala 25 Paisa per pcs, 25

Paisa per pcs, 25 per kg respectively from

15.02.2075.

• Education Service tax withdrawn from

15.02.2075

• Education Service tax for outgoing (abroad)

students increased from 1% to 2% w.e.f.

15.02.2075

• VAT registration withdrawn for canteen

service & hostel of educational institution.

• Tax on movie ticket imposed (Other than

Nepali movie) @ 15.00% per ticket (non

cabin cinema hall) & 20.00% per ticket

(Cinema hall with cabin).

• 50% student discount in morning 8 a.m.

show on Saturday and on public holidays.

NEW PROVISIONS INTRODUCED BY FINANCE BILL, 2075

50

www.brsa.com.np


NO Disclosure Required Compulsory Conversion Micro Entrepreneur Industries

• NO disclosure for source of Income required

for money invested in development project

of National pride or entity employing more

than 300 employees or for manufacturing

company using more than 50 % of its RW

from domestic market.

• Company involved in manufacturing

activities having paid up capital 100 Crore or

more to be converted into public company

and get listed in stock exchange.

• 5 Years tax exemption for micro

entrepreneur.

• 7 Years tax exemption for micro

entrepreneur if run by women.

NEW PROVISIONS INTRODUCED BY FINANCE BILL, 2075

51

www.brsa.com.np


IMPORTANT DEADLINES THIS YEAR

52

www.brsa.com.np


PARTICULARS TAX PAYMENT RETURNS FILING DUE DATE REMARKS

Income TaxAnnual* (Advance tax

schedule is given below)Annual Ashoj End

VAT Returns Monthly Monthly25th of every

Month

Tax Liability for the month is to be paid within 25th of

subsequent month

Excise Returns Monthly Monthly25th of every

Month


subsequent month

E-TDS Returns Monthly Monthly25th of every

Month


subsequent month.

Tax on Movie

Ticket Monthly Monthly

25th of every

Month


subsequent month

IMPORTANT DEADLINES THIS YEAR

53

www.brsa.com.np


ADVANCE TAX IS TO BE DEPOSITED AS FOLLOWS:

PARTICULARS DUE DATE QUANTAM OF TAX

1st Installment Poush End 40 percent of the total estimated tax liability for the year

2nd Installment Chaitra End 70 percent of the total estimated tax liability for the year

Final Installment Ashad End 100 percent of the total estimated tax liability for the year

VARIOUS OTHER DUE DATE UNDER COMPANY ACT

Annual Audit within 6 Month of Close of FY

AGM within 6 Month of Close of FY

AGM within 6 Month of Close of FY

Annual Return Filing – Public Co. within 30 Days from AGM Date

Annual Return Filing – Private Co. within 6 Month of Close of FY

54

www.brsa.com.np


IMPORTANT AMMENDMENTS IN LABOR LAWS

Applicability

The New Labor Act is applicable to entity, which has been defined to include company, private firm, partnership firm, cooperatives, association or

other organization ("entity") in operation, or established, incorporated, registered or formed under prevailing laws to undertake industry or business

or provide service with or without profit motive.

Head Count Threshold

The New Labor Act has removed the head count requirement for applicability. The New Labor Act is applicable to all entities regardless of number of

labors (worker/ employees). Previous Act was applicable only to entity where ten (10) or more people engaged in the work.

However, the threshold of head count continues for certain arrangements to be made in the entity such as an entity having ten (10) or more workers

should constitute a collective bargaining committee, labor relations committee etc.

Exempted Entity

The New Labor Act is not applicable to civil service, armed force etc. It is also not applicable to entities incorporated under other prevailing laws or

special economic zone, provided that terms and conditions of services in those entities have been covered in other prevailing laws. The Working

Journalists are also not governed by the New Labor Act, unless the employment contract specifically provides for the applicability of the New Labor

Act.

The New Labor Act does not specifically provide its application to the persons working with the foreign diplomatic missions. The foreign missions are

exempt from local laws and jurisdiction which of course may be extended to the employment matters in Nepal.

55

www.brsa.com.np



Probation Period

The New Labor Act has shortened the probation period as shown in the table below

Leave & Holidays

There have been major changes in maternity leave, sick leave and accumulation of leave in the New Labor Act. It also provides additional category

of leave such as paternity leave which was not there in the Previous Act. The comparison of leave is given in the following table.

56

www.brsa.com.np


PREVIOUS ACT NEW LABOR ACT

1 year (240 days) 6 months

HEADING PREVIOUS ACT NEW LABOR ACT

Weekly Off 1 day every week 1 day every week

Public Holidays 13 days

13 days

14 days including International Women Labor Day for female

employees

Home Leave 1 day for every 20 worked days 1 day for every 20 worked days

Sick LeaveHalf paid up to 15 days

Eligibility: completion of 1 year of service

Fully paid up to 12 days

Eligibility: on a proportional basis for those employees who has not

completed 1 year of service


Leave & Holidays

57

www.brsa.com.np



Maternity Leaveup to 52 days

fully paidup to 14 weeks, fully paid for 60 days

Paternity Leave No up to 15 days, fully paid

Mourning Leave 13 days 13 days

Leave in lieu No For the laborers put in work on public holiday or weekly off

Special Leave30 days in a year, not exceeding 6 months in

total service period-unpaidNo

Accumulation Home Leave - Up to 60 days

Home Leave- 90 days

Sick Leave- 45 days

Excess Accumulation- Encashed every year.


Terminal Benefits

There have been also major changes in the terminal benefit provided to the employees such that the benefits are provided to each laborers

irrespective of length of service or nature of employment. The Previous Labor Act provided the terminal benefits to the permanent employee and for

certain benefits such as gratuity the employee should have completed certain year of services. The eligibility criteria have been removed by the New

Labor Act. The benefits have been compared in the following table

58

www.brsa.com.np



Provident Fund

Contribution: 10% by employer and 10% by employee of the basic remuneration of

the concerned employee.

Eligibility: permanent r employee

The Act has continued the same provision. Such amount

should be deposited in the Social Security Fund.

Gratuity

Rate of Gratuity:

for the first 7 years of service: an amount equal to a half a month salary of the

relevant year for each year of service.

for more than 7 up to 15 years service: an amount equal to a two third of a month

salary of the relevant year for each year of service

for service exceeding 15 years: an amount equal to one-month salary of the

relevant year for each year of service.

Time of Allocation: Every year

Eligibility: completion of 3 years of service

Rate of Gratuity: 8.33% of basic remuneration

Time of Allocation: Every month (time of payment of

remuneration)

Eligibility: since the first day of employment


Terminal Benefits

There have been also major changes in the terminal benefit provided to the employees such that the benefits are provided to each laborers

irrespective of length of service or nature of employment. The Previous Labor Act provided the terminal benefits to the permanent employee and for

certain benefits such as gratuity the employee should have completed certain year of services. The eligibility criteria have been removed by the New

Labor Act. The benefits have been compared in the following table

59

www.brsa.com.np



Leave EncashmentAccumulation- Home Leave up to 60 days.

Encashment at the time of discontinuation of service as per the last drawn salary.

Accumulation:

-Home Leave up to 90 days

-Sick Leave up to 45 days

Encashment -at the time of discontinuation of service at

the rate of last drawn salary.


Other Benefits

60

www.brsa.com.np


HEADINGS PREVIOUS ACT NEW LABOR ACT

Housing FundAllocation of 5% of gross profit to provide housing

to the worker/employees.No.

Festival Expenses No.

Amount equivalent to the monthly remuneration

once a year. The employee not completing 1

(one) year service is entitled to the expenses on

proportional basis.

Disability Compensation

If disability is caused by accident while on duty to

any employee or worker, he/she is entitled to

disability compensation depending on degree of

disability. For 100% disability a lump sum amount

equivalent to 5 years’ salary should be paid.

from insurance amount on the basis of degree of

disability

Compensation against Injury

The Proprietor should pay the whole amount

incurred on treatment of worker or employee as

compensation in case such worker or employee is

injured while doing a work designated by Entity, on

the recommendation of the medical practitioner

recognized by Government of Nepal.

from insurance amount


Other Benefits

61

www.brsa.com.np


HEADINGS PREVIOUS ACT NEW LABOR ACT

Death Compensation

The entity is to be pay the nearest successor of an

employee who dies while on duty a lump sum

amount equivalent to 3 years’ salary of such

employee.

The Act provides that the nearest successor is

entitled to the amount of accident insurance.

Medical Insurance No.

Coverage: at least one hundred thousand rupees

(Rs. 100,000) per year for every worker

Premium: half by the employer and half by the

employee

Accident Insurance No.

Coverage: at least seven hundred thousand

rupees (Rs. 700,000) for every worker

Premium: fully paid by employer

62

www.brsa.com.np


Firm Profile

B.R.S.S. & ASSOCIATES (BRSSA) | Chartered Accountants

ELITE BIZ CONSULTING | Business Consulting

Head Office: 4th Floor, Everest Bank Building, Bagdole, Lalitpur, Nepal

Branch Office: Itahari-1, Pachhim Line, Sunsari, Nepal

63

www.brsa.com.np


B.R.S.S. & ASSOCIATES (BRSSA) | Chartered Accountants, is an Auditing, Assurance and Advisory firm, registered on October

2015, with The Institute of Chartered Accountants of Nepal (ICAN), Firm Registration No. 584. Team BRSSA have diversified

experience of auditing and are well exposed with business arena and enriched corporate culture, their individual efforts took the

shape of institution during the mid of last year. BRSSA has been able to serve the clients from the diverse sectors which include

manufacturing industries, trading business, not for profit organizations, cooperative organizations, Investment companies, and

service industries.

We are a team of professionals with diverse areas of specialization in Statutory Audit, Internal Audit, Taxation and Legal

Compliances for following industries including Hospitality, FMCG, Telecommunication, Financial Institutions, Automobiles, NPOs &

NGOs, Various manufacturing and Import/ Export Entities. We aim to disseminate the firm's expertise to clients in the best possible

way to assist them in growing and aim to be one stop solution to our clients and provide full range of services related to accounts,

audit, finance, taxation and regulatory compliances.

Our Offices

B.R.S.S. & ASSOCIATES (BRSSA) | Chartered Accountants


Branch Office: Itahari-1, Pachhim Line, Sunsari, Nepal

64

www.brsa.com.np


B.R.S.S. & ASSOCIATES | Chartered Accountants

Audit | Compliance | Taxation


E: [email protected] | T: +977-1-6226783 | W: www.brsa.com.np

Branch Office: Itahari-1, Paschim line, East of Khetikhola, Sunsari, Nepal

M: +977-9852063791 | E: [email protected]

ELITE BIZ CONSULTING | Private Limited

Business Advisory Services


E: [email protected] | T: +977-1-6226783 | W: www.ebconsulting.com.np

Branch Office: Itahari-1, Paschim line, East of Khetikhola, Sunsari, Nepal

M: +977-9852063791 | E: [email protected]

mailto:[email protected]

http://www.brsa.com.np/



http://www.ebconsulting.com.np/


Date post:	23-Mar-2020
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

Tuesday, Jestha 15, 2075 (May 29, 2018) for the financial year … · 2018-06-04 · anywhere else...

Documents