Asia/Kathmandu

Nepal Federal Budget FY 2076-77: Income Tax Slabs, Prices, and reductions

The Nepal Government is back with its brand-new tax rates and slabs for the new fiscal 2076-77 (2019-20) that started in April 2019.

The Finance minister Yubaraj Khatiwada introduced Nepal’s Annual Budget for FY 2076-77 on May 29, 2019.

The NPR 1 .53 trillion budget covered all the sectors with a key concentrate on developmental reforms that will develop living standards through effective execution and safeguarding of citizens’ fundamental rights.

Apart from sector-wise spending, the new budget displayed a 14 percent rise over the earlier year’s budget and dedicated NPR 957 billion ( 62% ) to the recurrent expense, followed by NPR 408 billion ( 27% ) to capital expenditure and NPR 167 billion ( 12% ) for provisioning finance for principal payment of loans.

Towards adding to the government’s treasury, the new budget is looking at NPR 981 billion (64%) revenue collection, NPR 58 billion from foreign grants, NPR 298 billion from foreign loans, NPR 195 billion from domestic loans. Given the factor that taxpayers play in government’s revenue earnings, Nepal Budget 2076-77 has some important announcements for the citizens, businesses, corporate entities and international players willing to business in Nepal, and more.

Highlights of Fundamental Tax Announcements from the Federal Budget 2076-77 (2019-20)

1) Tax Rates: Direct Tax

 1.1 Individual/Natural Person

Income Slab Tax Rate
Up to NPR 400,000 1%
Next NPR 100,000 10%
Above NPR 200,000 20%
Beyond NPR 600,000 30%
Taxable income > NPR 2,000,000 36% (20% additional tax on the calculation made under 30% slab)

 1.2 Couple

Income Slab Tax Rate
Up to NPR 450,000 1%
Next NPR 100,000 10%
Above NPR 200,000 20%
Above NPR 550,000 30%
Taxable income > NPR 2,000,000 36%

Payments of wages and salaries to workers/employees without PAN is an inadmissible expenditure

Provision of modified return has been introduced within 30 days of submission of tax return

Expenditures booked on invoices without PAN Invoice above RS 1000 is an inadmissible expense

Strict execution of ‘One man One PAN’ policy

Investment in share is inspired by cutting down applicable tax rate (for individual/natural person) from 7 .5% to 5%, and the estimation of gain will depend on weighted average cost

Letter of Intent to be submitted before 2077 Ashad end to get income tax facility and exemption on the merger of bank and financial institution and insurance providers

Tax advantages and exemptions available under section 11 has been synchronized with rebates and concessions available under other regulations

Husband and Wife with separate income sources can prefer the assessment as a joint (as a married family) or individually.

2) Tax charges: Indirect Tax

Goods transport has been brought under the ambit of VAT w .e .f from 15th Jestha 2076 ( May 29, 2019 )

A VAT tax refund can be claimed in case of nonstop VAT credit/ receivable for 4months (Previously 6 months)

Bonded storage place facility extended for import of all types of raw materials for producers exporting a lot more than 20% (Earlier 50%)

Exemption of 50% customs on import of vehicle by agro-based co-operative 1% custom rate for import of Mill equipment, spare parts and chemicals for self-utilization by textile sectors.

Import of water transport vehicle, vessel, etc. Is subject to a 5% custom rate instead of 15%

Nepalese national is able to bring upto100gms of gold while returning from foreign countries by paying applicable custom.

10% of the VAT of the relevant invoice will be deposited straight into the bank account of the buyer on the purchase of goods or services through card or online system.

VAT refund to person and entity enjoying diplomatic facilities can immediately be provided if they purchase goods and services from listed firms.

VAT not relevant for accidental and health insurance

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