NEPAL BUDGET HIGHLIGHTS

FISCAL YEAR 2079/80 (2022/23)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF NEPAL

(ICAN)
 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

Contents
A. BUDGET SUMMARY .......................................................................................................................................................................................... 3
1. Objectives of Budget .......................................................................................................................................................................... 3
2. Priorities of Budget............................................................................................................................................................................. 4
3. Economic Growth Rate and Inflation ................................................................................................................................................... 5
4. Comparison of Budget Size ................................................................................................................................................................. 5
5. Ministry Wise Budget Allocation......................................................................................................................................................... 7
6. Function Wise Budget Allocation ........................................................................................................................................................ 8
7. Major Highlights of Budget 2079/80 .................................................................................................................................................... 9
8. Major Highlights Relating to Tax as per Budget Speech ...................................................................................................................... 10
B. MAJOR AMENDMENTS IN TAX LAWS ........................................................................................................................................................ 12
1. Special Amendments made by Finance Bill, 2079 ............................................................................................................................... 12
2. Amendments in Income Tax Act, 2058 .............................................................................................................................................. 14
3. Amendments in Value Added Tax Act, 2052 ...................................................................................................................................... 21
4. Amendments in Excise Duty Act, 2058 .............................................................................................................................................. 23
5. Amendments in Custom Act, 2064 .................................................................................................................................................... 25

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

A Quick Insight of Nepal Budget 2079/80 (2022/23)

A. BUDGET SUMMARY

The annual budget functions as leverage for economic development by providing policy guidance and facilitating through investment
to bring effectiveness in economic, social and governance system of the country. The Budget for Fiscal Year 2079/80 was framed with
the mission to increase in Stability, Productivity and Employment: Inclusive development, Self-dependency and Economic prosperity.
Budget for Fiscal Year 2079/80 as presented by Hon’ble Finance Minister, Mr. Janardhan Sharma (Prabhakar) on 29th May
2021(2079/02/15) has been summarized below:

1. Objectives of Budget

To attain High and Sustainable Economic Growth through developing Production based Economy.

To create Employment and Alleviate Poverty through unified mobilization of Available Resources, Labor Forces, Capital
and Technology.

To maintain Financial Discipline and to maintain unified Economic Stability through maintaining appropriate limit of
Inflation Level.

To establish Federalism as the carrier of Prosperity through transferring the Resources to State and Local Level.

To create the base of Balanced, Inclusive, Self-dependent and Socialism-oriented Economy through Economic and Social
transformation.

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

2. Priorities of Budget

Transformation of Agriculture Sector,

Increase in Production and Productivity, creation of Employment and Alleviation of Poverty through collaboration of
Governmental, Private and Cooperative sector,

Neo-enforcement based Local Economic Development,

Human Resource Development,

Infrastructure Development and Capital Formation,

Electricity Production, Expansion of Extension Line and Rural Electrification,

Industrial Development, Investment Promotion and Revival of Tourism Sector,

Environment Protection, Disaster Management and Reduction of Risk relating to Climate Change,

Effective Public Service, Governance Promotion and Periodic Election,

Scientific Research and Development.

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

3. Economic Growth Rate and Inflation

Expected Economic Growth Rate Expected Inflation

8.0% 8.0%
7.0% 7.0%
6.0% 6.0%
5.0% 8.00% 5.0%
4.0% 4.0% 7.3% 7.00%
5.8%
3.0% 3.0%
2.0% 2.0%
1.0% 1.0%
0.0% 0.0%
2078/79 ( Expected 2079/80 (Expected) 2078/79 ( 9 Months 2079/80 (Expected)
Actual) Actual)

4. Comparison of Budget Size

SN Source of Fund NPR (Billion)- Revised NPR Application of Fund NPR (Billion)- Revised NPR
2079/80 (Billion)-2078/79 2079/80 (Billion)-2078/79
1 Revenue 1,240.11 1,018.52 Recurring expenditures 1,183.25 971.86
2 Foreign Grants 55.46 24.81 Capital expenditures 380.38 300.09
3 Loans and borrowing 498.26 404.18 Debt Financing 230.20 175.56
Total 1,793.83 1,447.51 Total 1,793.83 1,447.51

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

Source of Fund -2079/80

Application of Fund -2079/80
Debt
Loans and Financing
Borrowings 13%
28%

Foreign Capital
Grants Expenditure
3% 21%

Recurring
Revenue Expenditure
69% 66%

Source of Fund -2078/79 Application of Fund -2078/79

Debt
Financing
Loans and
12%
Borrowings
28%

Foreign Capital
Grants Expenditure
2% 21%

Recurring
Expenditure
Revenue
67%
70%

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

5. Ministry Wise Budget Allocation

(NPR in Millon)
Local % of
Ministry Central Province Total Budget
Level Total
Office of the Prime Minister and Council of Ministers 4,607.80 - - 4,607.80 0.26%
Ministry of Finance 41,668.00 - - 41,668.00 2.32%
Ministry of Industry, Commerce and Supplies 10,774.00 18.20 2,292.30 13,084.50 0.73%
Ministry of Energy, Water Resources and Irrigation 100,396.80 7,553.70 668.20 108,618.70 6.06%
Ministry of Law, Justice and Parliamentary Affairs 886.70 886.70 0.05%
Ministry of Agriculture and Livestock Development 52,160.30 1,645.20 6,093.20 59,898.70 3.34%
Ministry of Water Supply 30,135.30 5,425.60 1,893.10 37,454.00 2.09%
Ministry of Home Affairs 185,034.50 911.90 185,946.40 10.37%
Ministry of Culture, Tourism and Civil Aviation 20,320.30 168.00 1,143.40 21,631.70 1.21%
Ministry of Foreign Affairs 5,833.50 5,833.50 0.33%
Ministry of Forests and Environment 13,006.80 2,270.20 859.80 16,136.80 0.90%
Ministry of Land Management, Cooperatives and Poverty Alleviation 7,150.60 59.60 7,210.20 0.40%
Ministry of Physical Infrastructure and Transport 161,567.40 14,768.40 176,335.80 9.83%
Ministry of Women, Children and Senior Citizen 1,469.30 315.00 1,784.30 0.10%
Ministry of Youth and Sports 2,455.00 395.20 402.30 3,252.50 0.18%
Ministry of Defense 55,039.50 55,039.50 3.07%
Ministry of Urban Development 40,053.10 6,965.60 7,993.20 55,011.90 3.07%
Ministry of Education, Science and Technology 70,053.30 5,323.60 121,016.20 196,393.10 10.95%
Ministry of Information and Communications 9,089.00 9,089.00 0.51%
Ministry of Federal Affairs and General Administration 25,034.40 6,357.70 5,602.90 36,995.00 2.06%
Ministry of Health and Population 69,380.20 6,266.80 27,444.30 103,091.30 5.75%
Ministry of Labor, Employment and Social Security 2,080.30 10.00 7,030.90 9,121.20 0.51%
Others than above-including committees, commission 455,809.00 72,292.40 116,645.30 644,746.70 35.94%
Total Budget 1,364,005.10 129,460.60 300,371.60 1,793,837.30 100.00%
% of Total Budget Level Wise 76.53% 6.29% 17.18% 100%

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

6. Function Wise Budget Allocation

F u n c t i o n a l A l l o c a t i o n o f E xp e n d i t u r e ( N P R I n M i l l i o n )
450,000.00

400,000.00

350,000.00

300,000.00

250,000.00

200,000.00

150,000.00

100,000.00

50,000.00

Central Government Province level Government Local Level Government

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

7. Major Highlights of Budget 2079/80

 The Government shall establish Farmer Welfare Fund to introduce contribution-based Farmer Pension Plan under the Government with
Farmer Program and the Government will deposit 10 percent of the amount deposited by the Farmers in this Fund. NPR 1 Billion has been
allocated as seed money to establish the Fund.
 Free health check-up once a year for people over age of 40 years.
 Only licensed persons and companies to be allowed to deal with the real estate business, to begin with, in metropolitan and sub-metropolitan
cities this year.
 Up to 8 percent cash subsidy on Cement, Steel, Footwear and Mineral Water exports
 Government land leased facility for 50 years for setting up industries
 Each branch of commercial banks will have to provide loan to at least 5 agricultural production and processing industries.
 Commodity Exchange Market shall be operated. License shall be granted to operate Private Equity and Venture Capital.
 Hedging Fund shall be established to mitigate foreign investment risk arising from foreign exchange fluctuations.
 Reservation of 10% share in the Initial Public Offering (IPO) to the Nepalese on foreign employment.
 Government announces to operate sick and almost closed industries such as Janakpur Cigarette Factory, Krishi Aujar Karkhana Ltd.,
Biratnagar Jute Mill, Butwal Dhago Kharkhana Ltd., Hetauda Textile Industry etc.
 Ten thousand youths shall be imparted with entrepreneurship training through Business Incubation Centre.
 Insurance coverage shall be expanded through One Family One Insurance concept. Studies shall be conducted to issue Catastrophic Bond.
 Salaries of government employees increased by 15 percent.
 The government has lowered the minimum limit for foreign investment to NPR 2 Crore from existing limit is NPR 5 Crores
 Social Security allowance to Old age citizen in 68 years now. Previously, it was 70 years. People volunteering to not receive the social security
allowances to be honored.
 One electric stove per family will be distributed through the local level.
 Government offices are encouraged to use domestic produces. Make in Nepal and Made in Nepal campaign shall be promoted.
 The government shall make arrangement for free kidney transplant.
 2 to 15 percent concession on electricity bill to industries consuming electricity having the bill at least of NPR 10 crores monthly.
 Construction of Gautam Buddha International Cricket Stadium in Chitwan to be taken over by the government.
 Construction of Kathmandu-Chitwan fast track.
 Flyover at Satdobato, Gwarko and Ekantakuna and underpass in Koteshwar-Baneshwar in Kathmandu.
 Arrangements will be made for electronic payment in transportation in major cities
 Unbundling of the Civil Aviation Authority of Nepal into two bodies –service provide and regulator.
 Rs 1.5 billion allocated for allowances to people living with chronic diseases such as cancer and kidney problems.
 Day-meal program extended up to grade 6, to be upgraded up to grade 8 later.

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

 Melamchi Drinking Water Development Board and Rural Drinking Water and Cleaning Fund Development Board are dissolved, and the
Department of Water Supply and Sewerage Management to take over.
 Singhadurbar to be free of gas cylinders to promote electric stove usage within next Shrawan.
 National ID card for all citizens in the next two years.
 Waiver on Annual Licensing and Renewal Fee for Fiscal Year 2079/80 to Tourism sector business including Hotel affected by COVID -19.
 Government will provide subsidies of 5% of Capital to cooperative establishing Agricultural Manufacturing Industry with at least NPR 20
Crore paid capital.
 Government will provide subsidies of 20% on procurement of necessary machinery to Local Level establishing the Agricultural
Manufacturing Industries with own capital including at least 300 local farmers.
 Funds allocated for provincial and federal elections.

8. Major Highlights Relating to Tax as per Budget Speech

 PAN registration and e-TDS return to be made compulsory for Government offices under Federal Government, Province Government and
Local Government.
 PAN registration to be made compulsory for all citizen including minor citizens engaged in investment or business
 PAN and tax clearance certificate to be made compulsory for foreign citizen working in Nepal while renewing VISA and Work Permit.
 PAN and tax clearance certificate to be made compulsory for professionals while renewing professional certificates and PAN to be made
compulsory for buyer of four wheelers.
 First tax slab (1%) increased to NPR 5 lakhs for single natural person and NPR 6 lakhs for couple. Investment Insurance limit for deduction
has increased to NPR 40 thousand.
 40% tax waiver for industry established to manufacture or assemble electric 4 wheelers upto 5 years from the date of operation.
 Resident person earning foreign exchange by providing services based on information technology such as business process outsourcing,
software programming, cloud computing shall be levied only 1 % tax as per Income Tax Act 2058 on income earned in foreign currency.
 COVID-19 affected small taxpayer with annual turnover of NPR 30 lakhs in 2078/79 to be provided 75% waiver in applicable tax rate and
taxpayer with annual turnover of NPR 30 lakhs to NPR 1 crore in 2078/79 to be provided 50% waiver in applicable tax rate.
 For hotel, travel, trekking, film industries affected by COVID -19, 50 % waiver in applicable tax rate.
 Income tax of industries manufacturing agricultural equipment, instruments or spare parts to be waived off up to 5 years from date of
operation.
 Special Industry established in Karnali Province and hilly districts of Sudur Paschhim Province and providing direct employment to more
than 100 citizens to be waived off from income tax upto to 15 years from date of operation.
 TDS @ 1.5% shall be deducted in case of royalty payment to a resident person for literary article and composition.
 Industry established for manufacturing or assembling of four wheelers shall be provided 25% waiver in applicable custom duty and 50%
waiver in applicable excise rate while importing parts or raw materials on recommendation of Department of Industry. Only 1% custom duty
shall be levied on raw materials or spare parts to be imported by industries producing electric rickshaw and electric motorcycle or scooter.

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Nepal Budget Highlights 2079/80

 90% waiver in applicable custom duty for import of sanitary pad. 1% custom duty for import of raw materials for locally producing sanitary
pad.
 100% waiver in applicable custom duty for 1 agricultural ambulance or transport vehicle purchased by local level government. 50% custom
duty waiver in transport vehicle purchased by agricultural co-operative for purpose of transporting agricultural goods.
 75% waiver in applicable custom duty while importing up to 2 school buses by community or public schools.
 100% waiver in applicable custom duty in recommendation of Department of Industry while importing raw materials by industries
manufacturing assisting materials of disabled persons. No custom duty shall be imposed for urine bags to be used by disabled person.

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

B. MAJOR AMENDMENTS IN TAX LAWS

1. Special Amendments made by Finance Bill, 2079

Section Particulars
Section 15 Entity providing telecommunication services like telephone, mobile, internet etc. shall collect 10 % amount of service fee as
telecommunication service charge (which was 13% in previous income year).
Section 16 Entity or person licensed for operating casino in Nepal shall pay royalty Rs.5 crore on annual basis for operating casino (which was
Rs. 4 crores in previous income year) and shall pay royalty of Rs. 1 crore 50 lakhs on annual basis for operating games entirely
based on modern equipment or machine. 40 % such royalty amount shall be deposited within Poush end, another 30 % within
Chaitra end and remaining 30 % within Ashadh end.
Section 20 Digital service tax of 2 % shall be levied on digital service provided by nonresidents to Nepalese Citizens. However, digital service
tax shall not be levied up to the annual transaction of Rs. 20 lakhs of digital service.
Section 21 Exemption on COVID 19 affected transactions:

 75 % exemption on income tax for fiscal year 2078/79 shall be provided to the taxpayer paying income tax as per section 4(4)
of the Income Tax Act, 2058.

 50 % exemption on income tax for fiscal year 2078/79 shall be provided to the taxpayer paying income tax as per section 4(4ka)
of the Income Tax Act 2058.

 Resident person having Hotel, travels, trekking, motion picture business (production, distribution and screening), party palace,
media house or transportation service conducting transaction more than 1 crore as per its objective in fiscal year 2078/79 shall
be provided 50 % exemption in income earned as per its objective.
Section 22 Resident person earning foreign exchange by providing services based on information technology such as business process
outsourcing, software programming, cloud computing shall be levied only 1 % tax as per Income Tax Act 2058 on income earned
in foreign currency.
Section 23 If the transport business operator has taken service of transport vehicle on rent from a natural person not having PAN in IY 2077/78
and deposited TDS as per section 88(1)(8), such expenses will be allowed for deduction while calculating taxable income even
though such expense is not supported by an invoice.
Section 24 Firms and companies established as per private firm registration act, 2014 and company act, 2063 and failing to submit the annual
returns and renew the entity shall be allowed to submit returns and to renew business by paying 5 % of fines and charges applicable
on such delay and remaining fines and charges shall be waived if paid within Poush end 2079.
Section 25 If any person who have earned taxable income but not paid any tax on such income obtains PAN and submits income tax and
income tax return for Income Year 2075/76, 2076/77 and 2077/78 within Poush end 2079, applicable interest and charges shall be
waived.

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Nepal Budget Highlights 2079/80

Section Particulars
Section 26 Joint ventures registered as per Value Added Tax Act, 2052 and failing to pay VAT and submit tax returns up to 2078 Chaitra shall
be waived applicable fines, additional charges and 50 % of interest if the joint venture submits the tax return along with tax as per
tax return and 50 % interest within Poush end 2079. If any join venture has submitted the tax return up to Chaitra 2078 but tax has
not been paid, additional charge and 50 % interest shall be waived if due amount of tax and 50 % of interest is paid within Poush
end 2079.
Section 27 Entities established as per Excise Act, 2058 and licensed under self-removal system failing to submit excise return and failing to
pay excise duty up to 2078 Chaitra shall be waived applicable fines and 50 % of late fees if the entity submits the return along with
payment of excise duty and 50 % of late fees within Poush end 2079. If excise return has been submitted by such entities up to
Chaitra 2078 but excise duty has not been paid, applicable fine and 50 % of late fee shall be waived if due amount of excise duty
and 50 % of late fee is paid within Poush end 2079.
Section 30 Custom duty, excise duty and value added tax shall be waived for IY 2079/80 on import of machine equipment for establishing
vaccine factory as per the approved scheme.
Section 31 Custom duty, excise duty and value added tax shall be waived for IY 2079/80 on import of machine equipment falling under custom
subhead 8421.39.10 for establishing liquid oxygen factory.

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Nepal Budget Highlights 2079/80

2. Amendments in Income Tax Act, 2058

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

Section No tax shall be levied on an income earned by No tax shall be levied on an income earned by Cent percent tax is exempted on
11(1) carrying on agricultural business other than carrying on agricultural business other than income from agriculture business,
income earned by carrying on an agricultural income earned by carrying on an agricultural the business of dehydrating
business by getting registered as a firm, business by getting registered as a firm, vegetables, and cold storage
company, partnership, and corporate body company, partnership, and corporate body and business earned by any firm,
and other than on agricultural income earned other than on agricultural income earned from company, partnership firm, and
from an agricultural business in the land as an agricultural business in the land as referred to other corporate body.
referred to in clauses (gha) and (nga) of in clauses (gha) and (nga) of Section 12 of the
Section 12 of the Act Relating to Land, Act Relating to Land, 2021(1964).
2021(1964).
Provided, if any income is earned by carrying
Provided, if any income is earned by carrying on agricultural business, business of
on agricultural business by being registered as dehydrating vegetables, and cold storage
any firm, company, partnership firm and other business by any firm, company, partnership
corporate body, 25 % tax on applicable firm, and other corporate body, 100 percent tax
income tax shall be exempted. on applicable income tax shall be exempted.
Section Special Industry established in Karnali Special industries established in Karnali Special industries established in
11 (3) Province providing employment to more than Province and hilly districts of Sudurpashchim hilly districts of Sudurpashchim
(Kha) 100 Nepali citizens shall be exempted from Province providing employment to more than Province providing employment
income tax for 15 years from the date of 100 Nepali citizens shall be exempted from to more than 100 Nepali citizens
starting the transaction. income tax for 15 years from the date of starting
shall be exempted from income
the transaction. tax for 15 years from the date of
starting the transaction.
Section Tax exemption shall be provided as below to Tax exemption shall be provided as below to a Time to start production and
11 (3) a person engaged in commercial transactions person engaged in commercial transactions of distribution of electricity to get an
(Gha) of electricity: electricity: exemption facility has been
extended and reservoir-based and
Ka) 100 % tax exemption for the first 10 years Ka) 100 % tax exemption for the first 10 years semi reservoir-based hydropower
from the date of starting the commercial from the date of starting of commercial

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Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

transaction and 50 % tax exemption for the transaction and 50 % tax exemption for next 5 with the capacity of a minimum of
next 5 years shall be provided to the licensed years shall be provided to the licensed person 40 MW can also get this facility.
person starting commercial production and starting commercial production and distribution
distribution of hydroelectricity, electricity of hydroelectricity, electricity from solar,
from solar, electricity from wind, and electricity from wind, and bioelectricity within
bioelectricity within Chaitra 2082. Chaitra 2083.

Provided, 100 % tax exemption for the first Provided, 100 % tax exemption for the first 15
15 years and 50 % tax exemption for the next years and 50 % tax exemption for the next 6
6 years shall be provided to reservoir-based years shall be provided to reservoir-based and
and semi reservoir-based hydropower projects semi reservoir-based hydropower projects with
with a capacity higher than 200 MW a capacity higher than 40 MW completing
completing financial closure within Chaitra financial closure within Chaitra end, 2085.
end, 2082.
Section Tax exemption on income earned from export Tax exemption on income earned from export in The rate of exemption on income
11(3Nga) in any income year from a source in Nepal any income year from a source in Nepal shall be earned from the export of goods
(Ga) shall be as follows: as follows: produced in Nepal by any
person/entity has been increased
(a) if tax is chargeable at the rate of twenty (a) if tax is chargeable at the rate of twenty from thirty-five percent to fifty
percent on an income of a resident natural percent on an income of a resident natural percent.
person, twenty-five percent of that tax, and if person, twenty-five percent of that tax, and if
thirty percent is taxable, fifty percent of that thirty percent is taxable, fifty percent of that tax,
tax,
(b) twenty percent of tax leviable on the income
(b) twenty percent of tax leviable on the of an entity,
income of an entity,
(c) additional fifty percent of the tax on income
(c) additional thirty-five percent of the tax on earned from the export of goods produced in
income earned from the export of goods Nepal after deduction of the exemption under
produced by a production-based industry, clause (ka) or (Kha).

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Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

after deduction of the exemption under clause
(ka) or (kha).
Section1 Industry producing medical vaccines, oxygen Industry producing medical vaccines, oxygen Industry producing medical
1(3Ba) gas, and the sanitary pad shall be exempted gas, and the sanitary pad shall be exempted from vaccines, oxygen gas, and sanitary
from tax at 100 percent for the first 3 years tax at 100 percent for the first 5 years from the pad will get a 100 percent
from the date of starting production, and 50 date of starting production, and 50 percent tax exemption facility for additional 2
percent tax shall be exempted for the next 2 shall be exempted for the next 2 years. years.
years.
Section1 No Provision In the case of Industries established within Newly added provision.
1(3Bha) Ashadh end 2082, with the objective of
production and assembly of electric vehicles, 40
% income tax will be exempted for 5 years from
the date of starting the transaction.
Section1 No Provision In the case of Industries established within Newly added provision.
1(3Ma) Ashadh end 2082, with the objective of
production of agricultural equipment, 100
percent income tax will be exempted for 5 years
from the date of starting the transaction.
Section In case of investment made up to Chaitra end In case of investment made up to Chaitra end Provision removed.
11 Ga 2080 in infrastructure development projects 2080 in infrastructure development projects
such as hydropower projects of national such as hydropower projects of national
importance, international airports, underpass importance, international airports, underpass
and roadways, railways, etc. cement industry, and roadways, railways, etc. cement industry,
steel industry, industry based on agriculture, steel industry, industry based on agriculture,
industry based on tourism, special industry industry based on tourism, special industry
providing employment to more than 300 providing employment to more than 300 Nepali
Nepali citizens and utilizing more than 50 citizens and utilizing more than 50 percent local
percent local raw materials, any source of raw materials, any source of investment will not
investment will not be sought. be sought.

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Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

Section Explanation: Explanation: Payment made through digital
21 c) “Cash Payment” means a payment except Ga) “Cash Payment” means a payment except wallet will not be considered as a
(3)(Ga) for payment by a letter of credit, account for payment by a letter of credit, account payee cash payment.
payee cheque, draft, money order, telegraphic cheque, draft, money order, telegraphic transfer,
transfer, money transfer (hundi) through a money transfer (hundi) through a bank or
bank or financial institution, and a transfer financial institution, payment through a digital
made by any other means between banks or wallet approved by Nepal Rastra Bank, and a
financial institutions. transfer made by any other means between
banks or financial institutions.
Section For the purpose of calculation of change in For the purpose of calculation of change in The word “Partner” has been
57 (1Ka) ownership by fifty percent or more than fifty ownership by fifty percent or more than fifty inserted due to which the related
percent of an entity, only following ownership percent of an entity, only following ownership provision will be applicable to
of such entity shall be taken into of such entity shall be taken into consideration. partnerships also.
consideration. Ka) Ownership owned by shareholder or partner
Ka) Ownership owned by shareholder having having ownership of one percent or more than
ownership of one percent or more than one one percent of total ownership
percent of total ownership Kha) Ownership owned by shareholder or
Kha) Ownership owned by a shareholder partner having ownership of less than one
having ownership of less than one percent percent who is associated person of a
who is associated person of a shareholder shareholder or partner holding ownership of
holding ownership of more than one percent more than one percent of total ownership
of total ownership

Section No Provision Clarification: For the purpose of this section, Newly added clarification.
65(1)(Kh “Contribution-based Interest” means interest
a) related to the retirement contribution
contributed within the limit as per section 63(3).
Sec 88 No Provision TDS @ 1.5% shall be deducted in case of Newly added provision
(1) (12) royalty payment to a resident person for literary
article and composition.

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Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

Sec 95ka The Land Revenue Office shall collect The Land Revenue Office shall collect advance The advance tax rate on disposal
(5) advance tax as follows at the time of tax as follows at the time of registration on of non-business taxable asset
registration on capital gain earned from the capital gain earned from the disposal of land or revised from previous 2.5 % to 5%
disposal of land or private building of any private building of any individual:
and from 5% to 7.5%
individual:
Tax Particulars Tax
Particulars
rate rate
Non-business taxable asset (land Non-business taxable asset (land 5%
2.5
and building) having ownership and building) has the ownership of
%
of five years or more five years or more
Non-business taxable asset (land Non-business taxable asset (land 7.5%
and building) having ownership 5% and building) has the ownership of
of five years or more five years or more

Sec 97 No Provision Resident natural person having income only as Newly added provision.
(1)( Ga1) mentioned in sub section (6kha), (6 Ga) (6 Gha) Resident natural person having
of Sec (95Ka). income only as mentioned in sub
section (6kha), (6 Ga) (6 Gha) of
Sec (95Ka) don’t have to file
income tax return under section
96.
Schedule The provision contained in sub-section (4) of The provision contained in sub-section (4) of Replaced the existing provision
1 sec this Schedule shall apply in the following this Schedule shall apply in the following with new provision
1(3) circumstances: circumstances:
Ka) In the case of a resident individual, Ka) In the case of a resident individual,
where the income is more than four where the income is more than five
hundred thousand rupees in any income hundred thousand rupees in any income
year or in the case of a resident couple year or in the case of a resident couple who
who has made choice referred to in has made choice referred to in Section 50,
Section 50, where the income is more where the income is more than six hundred
than four hundred fifty thousand thousand rupees in any income year, and
rupees in any income year, and Kha) Where the net profit derived from the
Kha)Where the net profit derived from the disposal of non-business taxable assets is
disposal of non-business taxable assets is included in the computation of the income
included in the computation of the income

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Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

and corresponding taxable income of that and corresponding taxable income of that
individual or couple. individual or couple.
Schedule Tax rate to be levied on taxable income of Tax rate to be levied on taxable income of Changes in slab rate for
1 Sec resident individuals and couple elected under resident individual and couple elected under calculation of income from
(1)(2) section 50 shall be as follows. section 50 shall be as follows. employment of individual and
couple
Taxable Taxable Tax Taxable Taxable Tax
Income of Income of rates Income of Income of rates
Resident Couple U/S Resident Couple U/S
Individual 50 ((NPR) Individual 50 ((NPR)
(NPR) (NPR)
First 400,000 First 1% First 500,000 First 1%
450,000 600,000
400,000 – 450,000 – 10% 500,000 – 600,000 – 10%
500,000 550,000 700,000 800,000
500,000 – 550,000 – 20% 700,000 – 800,000 – 20%
700,000 750,000 1000,000 1100,000
700,000 – 750,000 – 30% 1000,000 – 1100,000 – 30%
2,000,000 2,000,000 2000,000 2000,000
More than More than 36% More than More than 36%
2,000,000 2,000,000 2000,000 2000,000
Schedule As per Sec 4 (Ka), Tax shall be levied at the Tax shall be levied at the rate referred to in sub-
1 sec (4) rate referred to in sub-section (1) or (2) of this section (1) or (2) of this Schedule on the amount
Schedule on the amount whichever is higher whichever is higher of the following amounts,
of the following amounts, as if only it were the as if only it were the taxable income of that
taxable income of that individual or couple: individual or couple:
(1) The amount remaining after subtracting (1) The amount remaining balance after
the amount of profits from the total taxable subtracting the amount of profits from the total
income of that individual or couple, taxable income of that individual or couple,
(2) Four hundred thousand rupees, in the (2) Five hundred thousand rupees, in the case
case of that individual, or four hundred fifty of that individual, or Six hundred thousand
thousand rupees, in the case of that couple. rupees, in the case of that couple.
As per Sec 4(Kha), tax shall be levied @ 10%
on remaining amount of taxable income. As per Sec 4(Kha), tax shall be levied @ 10%
Provided that, tax @ 2.5% shall be levied if on remaining amount of taxable income.

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Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

the ownership of disposed non-business Provided that, tax @ 5% shall be levied if the
taxable asset (land and house) is of five years ownership of disposed non-business taxable
or more, otherwise tax @ 5% shall be levied asset (land and house) is of five years or more,
for ownership of less than 5 years. otherwise tax @ 7.5% shall be levied for
ownership of less than 5 years.
Schedule No provision Notwithstanding anything contained elsewhere Newly added provision.
1 Sec in the section, tax shall be levied @1 % on
(1)(4 income under sub-section 6Kha, 6 Ga and 6Gha
(Ka)) of section 95K of a resident natural person not
engaged in any business.
Schedule Notwithstanding anything contained Notwithstanding anything contained elsewhere Increase in deduction amount of
1 Sec elsewhere in this Section, where any resident in this Section, where any resident individual investment insurance of resident
(1)(12) individual has made investment insurance, tax has made investment insurance, tax shall be natural person.
shall be computed only in the amount that computed only in the amount that remains after
remains after deduction of the annual deduction of the annual premium or forty
premium or twenty-five thousand rupees, thousand rupees, whichever is lesser, from the
whichever is lesser, from the taxable income. taxable income.
Schedule Tax shall be levied at the following rate on the Tax shall be levied at the following rate on the Change in tax rates levied in
1 Sec (2) transaction, except tax-exempt transaction, of turnover, except tax exempt turnover, of a Cooperative registered under
a cooperative registered under the cooperative registered under the Cooperatives Cooperatives Act.
Cooperatives Act, 2074 (2017): Act, 2074 (2017):

Area Tax Rate Area Tax Rate

Municipality 5% Municipality 7.5 %
Sub-Metropolitan City 7% Sub-Metropolitan City 10 %
Metropolitan city 10 % Metropolitan city 15 %

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

3. Amendments in Value Added Tax Act, 2052

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

Section “Registered person” means person registered “Registered person” means person registered for Sec. 10 (kha1) has been added in
2(Da) for doing transaction as per Sec. 10, 10 (ka) doing transaction as per Sec. 10, 10 (ka), 10 the definition
and 10 (kha) (kha) and 10 (kha1)
Section “Registered number” means registered “Registered number” means registered number Sec. 10 (kha1) has been added in
2 (Dha) number provided as per Sec. 10, 10 (ka) and provided as per Sec. 10, 10 (ka), 10 (kha) and 10 the definition
10 (kha) (kha1)
Section No Provision “Electronic services” means following services Definition of Electronic Service
2 (Ta2) provided through Internet to consumers has been added.
requiring Information Technology and
minimum manual intervention:
Ka) Advertisement service
Kha) Movies, television, music, OTT and
other similar membership-based services
Ga) Statistics collection related service
Gha) Cloud service
Nga) Gaming service
Cha) Mobile Application related service
Chha) Online market place service and service
to be provided from this medium
Ja) Software supply and update
Jha) Download service like statistics, image
Yna) Consultancy, skill development and
training service
Ta) Other services of similar nature
Section No Provision “Nonresident person” means person out of Definition of Nonresident person
2 (da1) Nepal not having permanent place of transaction has been added.
in Nepal, not having a business representative or
legally acceptable representative

Section No Provision Registration related provision for nonresident Provision related to registration of
10 person providing electronic services: nonresident person providing
(kha1) 1) Notwithstanding anything mentioned in the electronic services has been
Act, nonresident person providing added.

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Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

electronic service business of more than 20
lakhs in last 12 months shall register in
VAT.
2) Registration procedure for nonresident
person involved in electronic service
business shall be as decided by the
Department.
3) Nonresident person involved in electronic
service business and registered as per sub
sec. (1) shall deregister as decided by the
Department in case business is closed or
stop doing business
Section The procedure for submitting and sending the The procedure for submitting and sending the Provision for tax return by
18 tax return pursuant to Sub sec. (1) and (1ka) tax return pursuant to Sec. 10 (kha1), Sub sec. nonresident person providing
(1kha) shall be as determined by the Department. (1) and (1ka) shall be as determined by the electronic services has been
Department. added.
Section No Provision Notwithstanding anything mentioned in this Tax payment procedure for
19 Section, tax payment procedure of registered nonresident person providing
(7kha) person as per Sec. 10 (kha 1) shall be as decided electronic services has been
by the Department. added.
Section Tax officer may impose a fine of Rs. 20,000 Tax officer may impose a fine of Rs. 20,000 Punishment for Sec. 10kha1 (1)
29 (1ka) each time if any person is not registered as per each time if any person is not registered as per has been added.
the registration order given by tax officer as registration order given by tax officer as per Sec.
per Sec. 5 (kha) or Sec 10 (1) and (2) or not 5 (kha) or Sec 10 (1) and (2) or not registered as
registered as per Sec. 10ka (1), Sec. 10 kha (1) per Sec. 10ka (1), Sec. 10 kha (1) and Sec.
10kha1 (1)
Section No Provision Bank voucher of amount, as per subsection 1, New provision for deposit of
33 (3) deposited in the security deposit account of security amount has been added.
related office in Financial Comptroller General
Office or bank guarantee equal to such amount
shall be submitted along with appeal letter.

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

4. Amendments in Excise Duty Act, 2058

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

Section (1) The excise duty officer may assess (1) The excise duty officer may assess excise Service has been added and the
10Gha (1) excise duty in any of the following duty in any of the following circumstances: - circumstances on which duty
circumstances: Jha) if any person carries out transaction of officer may assess exercise duty is
Jha) if any person carries out transaction of goods or service subject to excise duty without added.
goods subject to excise duty without obtaining the license.
obtaining the license. Yna) if stock of excise duty ticket is found
higher or lesser than the stock as per book.
Section 16 (1) If a person commits the following (1) If a person commits the following offence, Service has been added.
(1) offence, the person shall be punished with the person shall be punished with imprisonment
imprisonment for a term not exceeding one for a term not exceeding one year or a fine in a
year or a fine in a sum equivalent to the sum equivalent to the claimed amount or with
claimed amount or with both for such both for such offence, and the claimed amount
offence, and the claimed amount shall also shall also be seized:
be seized: kha) to produce or import goods or provide
Kha) to produce or import goods subject to service subject to excise duty without obtaining
excise duty without obtaining license, license,
Section 16 (2) If a licensee who produces or imports (2) If a licensee who produces or imports liquor, Punishment for not using excise
(2) liquor, cigarette and tobacco product cigarette and tobacco product conceals, hides or duty ticket has also been added.
conceals, hides or evades excise duty by evades excise duty by committing the following
committing the following offence, the offence, the licensee shall be punished, for such
licensee shall be punished, for such offence, offence, with a fine of two hundred percent of
with a fine of two hundred percent of the the claimed amount or one hundred thousand
claimed amount or one hundred thousand rupees, whichever is higher, with confiscation of
rupees, whichever is higher, with the claimed amount, or imprisonment for a term
confiscation of the claimed amount, or not exceeding one year or both:
imprisonment for a term not exceeding one (Kha) to produce, release, sell, distribute, store
year or both: or import liquor, cigarette and tobacco products
(Kha) to produce, release, sell, distribute, by using a fake excise duty ticket or without
store or import liquor, cigarette and tobacco using excise duty ticket.
products by using a fake excise duty ticket
Section 16 (4) The excise duty officer may impose a (4) The excise duty officer may impose a fine as Punishment has been added for all
(4) fine as follows on any person who commits follows on any person who commits any of the provisions of Section 3Ka
any of the following offences: following offences:

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

(Tha) in the case of claiming credit of excise (l) in the case of claiming credit of excise duty
duty in violation of sub-section (3) of in violation of Section 3A., hundred percent of
Section 3Ka., hundred percent of the amount the amount of excise duty claimed as credit.
of excise duty claimed as credit.
Section 16 No Provision (Dha2) If stock of excise duty ticket is found Provision for punishment has been
(4) less, amount equal to hundred percent of added on mismatch of stock of
applicable excise duty and if found more, one excise duty ticket.
lakh rupees after getting the extra stock of ticket
booked as income.
Section 6Ga)Bank voucher of amount, as per subsection New provision for deposit of
19(6Ga) 1, deposited in the security deposit account of security amount has been added.
related office in Financial Comptroller General
Office or bank guarantee equal to such amount
shall be submitted along with appeal letter.

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 The Institute of Chartered Accountants of Nepal (ICAN)
Nepal Budget Highlights 2079/80

5. Amendments in Custom Act, 2064

Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

Section 2 "Import” means the act of bringing of goods "Import" means the act of bringing of goods Inclusion of shipping containers
(Da) into Nepal from a foreign country. into Nepal from a foreign country and this present in foreign country
word also means work of examination of purchased by shipping
containers purchased in foreign country, which companies registered in Nepal
is not possible to be brought in Custom Office
physically, by shipping company registered in
Nepal for carrying out the container service
Section 2 No Provision “Internal Transport” means the act of Transport of goods between two
(Ha) transporting goods from Custom Office in custom offices has been covered.
border point by making declaration there to
another Custom Office for custom
examination.
Section 57 Notwithstanding anything written elsewhere Notwithstanding anything written elsewhere in Additional punishment provision
(18) in this Section, if Authorized Officer, in the this Section, for the offences listed below, in for tampering GPS installed lock
course of re-examination pursuant to this Act addition to the fines and duties listed in this and seal of serial number.
before or after removal the goods from the Section, additional fine that is equal to three
customs area, made clearance pursuant to hundred percent of the value of goods can be
clause (ka), (kha) or (ga) of the Sub-section charged and goods can be released or
(2) of Section 20, finds the name, nature, additional fine that is equal to two hundred
physical feature, characteristics, percent of the value of goods can be charged
measurement, size and quality standard are and goods can be confiscated:
difference than those declared by the a. If Authorized Officer, in the course of re-
importer, such Officer may release the goods examination pursuant to this Act before or
by recovering an additional fine that is equal after removal the goods from the customs
to three hundred percent of the value of such area, made clearance pursuant to clause
goods apart from the fine and duty mentioned (ka), (kha) or (ga) of the Sub-section (2) of
in this Section or impose a fine that is equal Section 20, finds the name, nature, physical
to two hundred percent of value of such feature, characteristics, measurement, size
goods by confiscating such goods. and quality standard are difference than
those declared by the importer.
b. If the GPS installed lock of container used
for internal transport and serial number

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Section Existing Provision (2078/79) Amended Provision (2079/80) Changes

fixed according to Section 89 (Cha) has
been tampered with.
Section 57 No Provision Other than the situation out of control, if route Provision for punishment added
18(Ka) defined as per Section 89 (Cha) has not been for not using route defined for
used for internal transport and goods has not internal transport and not
reached to defined Custom Office in defined following the defined timeline.
time, fine of Rs 50,000 thousand to Rs 1 lakhs
shall be levied.
Section 62 No Provision 100% of undisputed custom duty shall be paid Provision of deposit of disputed
(2Ka) and 100% of disputed custom duty and fine amount added for making appeal
shall be deposited as security or bank to Revenue Tribunal.
guarantee equal to custom duty and fine shall
be provided, for making appeal to Revenue
Tribunal.
Section 62 No Provision Bank voucher of depositing amount pertaining Provision of deposit of disputed
(2Kha) to Subsection 2 (Ka) in the account of related amount added for making appeal
office present in Treasury Controller Office or to Revenue Tribunal.
bank guarantee equal to such amount shall be
present with appeal letter.

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DISCLAIMER
The Institute of Chartered Accountants of Nepal (ICAN) has created and maintains this publication as a service to its members, students and
the stakeholders. This publication is intended to provide general information and is not intended to provide or substitute legal or professional
advice. This publication has been prepared so that it is current as at the date of writing.

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF NEPAL

(Established under the Nepal Chartered Accountants Act, 1997
ICAN Marga, Satdobato, Lalitpur, Nepal;
Phone: 00977-1-5530832, 5530730
Fax: +977-1-5550774
Email: ican@ntc.net.np
Website: http://www.ican.org.np