Registration and De-Registration of PAN and VAT in inland revenue department in Nepal

1. PAN is 9 digit numeric number provided by Inland Revenue Department of Nepal to the tax payers. 2. PAN can be personal PAN and Business PAN according to the purpose and uses. 3. Personal PAN can be converted into business PAN, if required. Any person, who already has personal PAN, should not obtain New Business PAN instead the same personal PAN shall be converted into business PAN. Documents required to Obtain Personal PAN: a. Nepali Citizenship b. For Indian Citizen obtaining PAN in Nepal, Identity Card issued by Government of India and Recommendation letter for employment in Nepal. c. For other foreign Nationals, a copy of passport and identity card issued by diplomatic commission, Work permit, and Employers Recommendation letter. d. A passport size photo. e. Online form duly filled in the prescribed format. Documents required to Obtain Business PAN: a. Business Registration Documents b. Citizenship Certificate c. Property documents (in case of Owned property) or Rent agreement d. duly filled form In case of Entity: e. Partnership Agreement f. JV Agreement g. AOA, MOA in case of company If wanted to registered under VAT, such requeset should be submitted with the same online form. Certain Firms need compulsory registration under the VAT. De-Registration of under Income Tax and VAT: Income Tax De-Registration: Close of Business D1/D2/D3 an online entry shall be made:

VAT De-Registration : an online entry to be made at IRD website for VAT close business entry. at Website: www.ird.gov.np

Set - Off, Carry Forward and Set - Off of Business Losses:

Loss from business or investment: Section 20. (1) For the purposes of computing the income earned by any person from any business or investment in any income year, such person may deduct the loss as mentioned below: (a) Loss suffered by that person from any other business and not deducted in that year, and (b) Loss suffered by that person from any business and not deducted in the last seven income years. Provided that in the case of a project of building and operation of any public infrastructure, which is then transferred to the Government of Nepal, a project on construction of powerhouse and generation and transmission of electricity, and an entity conducting petroleum work pursuant to the Nepal Petroleum Act, 2040 (1983), loss not deducted in the last twelve income years. Example: A Pvt. Ltd. suffered Loss of Rs. 75,00,000 during FY 2072/73. This loss can be carried forward to set-off with the income of the any of the Next Seven Years, and can be carried upto FY 2078.079. (2) For the purposes of computing the income earned by any person from any investment in any income year, such person shall be allowed to deduct the loss suffered by that person from any other investment and not deducted in that year and the loss incurred by that person from such investment or any other investment which could not be deducted in the past seven years. Note: Loss on Business can be set-off against the Income from the Investment. But Loss on Investment can be set-off only against Investment Income (cannot be set-off against the business income).

VAT on Air Travelling

 

Introduction of VAT on Airlines Services (Air Travelling)

 

Finance Act, 2080 introduces VAT on Air Travel by removing it from the list of VAT exempted items as in Schedule 1 of the VAT Act.

 

 

( Notice by IRD published on 2080/03/11)

Application for Registration shall be given by filling an online form

 

An application for registration under VAT shall be given (online form).
Foreign company (Airlines) shall submit an operating license issued by respective authority.

 

Credit of Input VAT on Purchases

 

If there is any Stock/ Inventory item on which VAT had been paid credit can be claimed by filling up a form Annexure - 16, for any item which was purchased within previous 12 months of date of registration.
Such form shall be filled within 15 days of registration into VAT.

 

VAT Invoice to be issued

1. Amount Charged by Airlines Service Company	XX
2. Add: Add: Profit Margin (commission)	XX
Total	100
3. Add: Value Added Tax (VAT)	13
Total	113

Internal Travelling (within Nepal)

 

 All internal airlines' services collect VAT on ticket price.

 

New Income Tax Slab Rate for Salaried or Business Individual Person in Nepal For F.Y. 2080-081

Selection of Single (for Unmarried Individual) or Coupled (for Married Individual) is very important factor for determining Income Tax Slab in Nepal.

Income Tax Rates for Individual are as follows:

 

 But if you are married and you wish to claim for coupled return (if both husband and wife are working, you cannot opt for this option), the following would be the tax implications:

There are some tax savings facilities that an Individual person can obtain. We will discuss them one by one.

1. Contribution into a retirement funds.

 Contribution into Citizen Investment Trust (CIT) or PF (max. 3 Lakh Combined)

 Contribution into Citizen Investment Trust (CIT) or PF or SSF (max. 5 Lakh Combined or SSF only)

For above both conditions, Max. ceiling is 1/3 of Assessable Income

2. Remote Area Allowances 

(10k to 50k, according to remote area category)

3. Amount paid into Life Insurance Premium 

(Max. upto Nrs. 40,000)

4. Amount paid into Medical Insurance Premium 

(Max. upto Nrs. 20,000)

5. Amount paid for Insurance Premium of self owned house

(Max. upto Nrs. 5,000)

Notes: 

a. 10% Rebate will be allowed on computed tax to Female Individual, if she has income only from salary.

b. Nrs. 750 can be claimed as Income Tax Credit (on computed tax amount) for Medical Expenses upto presetation of Medical Bills.