Subject Code: ACC 204
Course Title: Taxation and Auditing
Course No: ACC 204
Nature of Course: Theory & Practical
Full Marks: 100
Pass Marks: 50
Credit Hours: 3
Unit 1: Introduction to Taxation (2 LHs)
Meaning and objectives of tax; Classification of taxes: direct and indirect tax with merits and demerits; Canons of taxation.
Unit 2: Taxation of Income in Nepal (4 LHs)
Historical background of evolution of income tax in Nepal; Features of Income Tax Act,2058; Definition of basic terms under Income Tax Act; Tax accounting and timing accounting based on cash, accounting on accrual basis, quantification, allocation andcharacterization of amounts; Classification and status of assesse (Taxpayers): naturalperson and entity, resident and non-resident, single and couple; Heads and sources ofincome: concepts, classification: income from employment, income from business,income from investment, casual gain, sources of incomes: domestic and foreign. Tax Actwith other laws: Constitution, Tax Act, Tax rule, Finance Act, Legal precedentsestablished by court;Concepts of Presumptive taxation, Turnover taxation, Personal Income Tax (PIT),
Unit 3: Income from Employment (9 LHs)
Concept of employment, Features of employment income, Chargeable Income under thehead of employment; Non - taxable/non chargeable income; Valuation of perquisites;Allowable reduction; Exemptions; Tax credit; Tax rate; Computation of assessableincome; Taxable income; Tax liabilities and payable.
Unit 4: Valuation of Stocks, and Depreciation (2 LHs)
Methods of stock valuation, Adjustments of over and under valuation of stocks;Calculation of cost of trading stocks; Assets pooling system of depreciation, Calculationof depreciation basis and allowable depreciation; Provisions for unabsorbed pollutioncontrol cost, research and development cost Provision for repairs and maintenance cost; Provisions of additional depreciation allowance.
Unit 5: Income from Business (10 LHs)
Concept of business income; Concepts of capital and revenue incomes and expenses;Chargeable and non-chargeable incomes from business; Deductible and non-deductible expenses; Assessable income from sole proprietorship business and profession other than entities; Set-off and Carry forward of business loss.
Unit 6: Income from Investment (4 LHs)
Concept of investment income; Difference between investment and business; Chargeableand non-chargeable incomes from investment; Deductible expenses and non-deductible
expenses; Taxation on Capital Gain: tax on gain on sale of shares and non-business, land and building; Investment income from domestic sources and foreign sources; Assessable
income from investment, taxable income, Tax liability and tax payable for individual taxpayers other than entities. Set-off and carry-forward of investment losses;
Unit 7: Total Assessable income tax liability and tax payable (3 LHs)
Concepts of statement of total assessable income and taxable income; Allowablereductions: Exemption; Progressive slab rates and flat rates; Tax credit: Foreign taxcredit, Medical tax credit; Tax concessions; Adjustments of advance tax; Tax deductionat source (TDS); Computation of total assessable income Taxable income and tax payablewith sole proprietorship business and profession other than entities.
Unit 8: Tax Administration and Official Documentations (3 LHs)
Tax authorities and their powers, rights and duties; Rights and duties of a taxpayer;Documentation, record keeping and information collection; Income return and taxassessment; Payment, collection (recovery/realization), remission, refund and set-off;Penal Provision; Provision of fees and interest; Provision of penalties for offences;Administrative review and appeal.
Unit 9: Value Added Tax (5 LHs)
Concept of value added tax (VAT); Origin and evolution of VAT; Principle governingVAT; Types of VAT; Method of computing VAT; Method of collection/realization andrefund of VAT; Penalties and appeal; Threshold limit and rate of VAT; PermanentAccount Number and VAT number; Abbreviated invoice and VAT invoice.
Unit10: Auditing (6 LHs)
Meaning, scope, objectives and advantages of auditing, accounting, auditing andinvestigation, Errors and frauds: concepts, types, detection and prevention of errors and frauds, Concept of internal control: Internal auditing and internal check; Basic conceptsof audit plan, vouching, verification and valuation. Concept, contents and types of auditreport. Concept of tax audit.
Lekhi, R. K. (2018). Public Finance, Kalyani Publishers, New Delhi.
Government of Nepal, Income Tax Act, 2058 with amendments
Government of Nepal, Budget speech and Finance Act (recent)
Government of Nepal, Income Tax Rules, 2059 with amendments
Government of Nepal GON, Value Added Tax Act, 2052 with amendments
Government of Nepal GON, Value Added Tax Rules, 2053 with amendments
Dhakal, K. D. et.al. (Updated edition). Fundamentals of Taxation and Auditing, Ashmita
Books Publishers and Distributors Pvt. Ltd., Kathmandu.
Kandel, P. R. & Aryal, K.P. (Updated edition). Fundamentals of Taxation and Auditing, Bhundipuran Prakashan Pvt. Ltd., Kathmandu.
K.C., J.B. (Updated edition), Tax Laws and Tax Planning, Theory and Practice, Khanal Books
and Stationery, Kathmandu.
Regmi, G.N. et.al. (Updated edition). Fundamentals of Taxation and Auditing, KEC Books
Publication and Distribution Pvt. Ltd., Kathmandu.
Sapkota, P. P. et.al (Updated edition). Taxation in Nepal, Dreamland Publication Pvt. Ltd.
Kathmandu.
