PENALTIES, FINES, AND INTEREST u/s 117, 118, 119, 120,121,127)

1. Penalty for Non-Filing of Advance (Installments) Tax: Section 117 

The Installment Tax Return has to be filed as prescribed u/s 95 (1):

- Penalty of NPR 5000 per such return OR 0.01% of Income, whichever is more.

Penalty shall be paid by the person even if payment of installment tax is made.

2. For non filing of Income Tax Return: Section 117 

The Income Tax Return has to be filed as prescribed u/s 96:

>> Penalty of NPR 100 per month OR 0.10% Taxable Income whichever is more.

If person is under presumptive taxation scheme, then penalty would be NPR 100 per month only.

3. For non filing of Withholding Tax Return: Section 117

The Return of Withholding Tax has to be filed u/s 90(1): 

Penalty for not filing:

- 2.5% p.a. (per month or part of the month) of such Tax amount.
- Penalty is calculated from the due date of filing such return up to the date of filing.

4. Penalty for not maintaining Records: Section 117

For not maintaining records required as per section 81:

>>NPR 1000 or 0.10% of Taxable Income which ever is more.

5. If installment tax paid amount is less than 90% of the Tax Liability for the Year: Section 118

For Advance Tax deposited during the year is less than assessable tax liability: 15% Interest shall be charged in such Less deposited amount.

Note 1: Interest is to be computed for the period amount becomes due (e.g. if advance tax becomes short for 1st installment, 3 months duration has to be taken). Last day for interest computation is Ashadh end. If Tax payable is due at the end of financial year, Section 119 is applicable from Shrawan to the date of payment (see section 119 below).

6. Fine for not depositing tax on time: Section 119

If any person has not paid taxes on time prescribed by the act, 15% interest shall be charged (for duration the amount remain unpaid).

7. Fine for not depositing tax on time: Section 119

when a person agrees to pay tax liability in installment by requesting to the tax officer, and makes defaults in paying such installments: 5% interest shall be charged on outstanding amount of Tax.

8. Fine charged for default of any sections of the Act or Regulation Act: Section 119A

From NPR 5,000 up-to NPR 25,000 shall be made fine.

 9. Penalty for filing False Statement or Return: (Section 120)

If such statement is made by mistake, without intention of Fraud:

>> Penalty = 50% to 100% of Tax Loss due to such mis-statement.

If such statement is made to defraud, with intention of Fraud:
>> Penalty = 100% of Tax Loss due to such mis-statement.

For example, XYZ Co. has received insurance claim of NPR 1 million in FY 2073-74. The company did not show such income in the Income Tax Return filed with IRD. Later, IRD from the other information came to know about such Insurance Claim. Hence, during re-assessment of the Tax Return, 1 million is treated as income and Tax of NPR 250,000 (@25%) shall be charged. Penalty would be 100% i.e. NPR 250,000.

10. Charges and Fine to the Accomplice:

If any person helps/consults anyone to act which is punishable under this act, such person shall be charged an equal amount (100%) of TAX EVADED amount as fine.

11. Charges and Fine to the Accomplice/ Consultants:

If any person consults for false financial / accounts or helps in preparation of false accounting statements then:

 

Penalty is 50% of penalty which is levied to the person committing such crime. If such consultancy is provided by government employees, then 100%.