Taxation in Nepal

What is tax?

What is Permanent Account Number?

Differentiate between income year and assessment year.

State the meaning of "Canon of Economy".

What do you mean by "Non Changeable Business Assets"?

Mention the exemption of individual working in a remote area.

Mr. Rai has received the salary from a company as an employee Rs. 6,00,000. The vehicle and accommodation facility is provided by office to him.Required: The amount of vehicle and accommodation facility to be included in his income

Miss. Hira, a government employee, earned taxable income from employment Rs. 11,20,000.Required: Tax liability of Miss Hira.

Sole Trader Organization provided the following information:The opening written down value (Block D) is Rs. 5,00,000.Addition is made in 2nd Chaitra of Rs. 3,00,000.Actual repair and improvement cost is Rs. 50,000.Required: Allowable amount of repair and improvement cost of the year.

Susan runs small business in Kathmandu Metropolitan city annual turnover Rs. 3 Million and taxable income amount Rs. 3 LacksRequired : Tax liability he selected presumptive taxation.

Mrs. Muna an employee of government office was appointed on 1st Magh 2076 with a pay scale of Rs. 30,000 -

1000 - 42,000. The other particulars of her for previous year are given below.

Entertainment allowance Rs. 3,000 p.m.

Dearness allowance Rs. 3,000 p.m.

Meeting allowance Rs. 12,000

Accommodation and vehicle facility was provided by the office.

House keeper's salary provided by office Rs. 5,000 p.m. and Mrs Muna's contribution to housekeeper was Rs.

3000 p.m.

Her electricity bill of Rs. 1,000 p.m. was paid by the office.

Office provided soft loan Rs. 5,00,000 at interest rate of 5%. Market interest rate was 12%.

Her office is located at Zone B

She claimed following expenses for deduction:

Approved medical expenses spent by her of Rs. 3,000.

Life insurance premium (self) of Rs. 50,000 (on a policy of Rs. 10,00,000).

Health insurance premium of Rs. 23,000 on her own policy

She had donated Rs. 50,000 to a religious heritage of Nepal (an exempt organization approved by IRD).

Required:

a. Net (assessable) income from employment

b. Statement of total taxable income

c. Tax liability

The following receipts and payments accounts of an auditor are given below:

Additional information:

• 20 percent of car expenses were paid for personal purpose.

• Office salaries include Rs. 10,000 paid to domestic servant.

• 40 percent of donation was given to an organization which was not approved by IRD.

• Half of domestic expenses were spent for general expenses of the office.

• Allowable depreciation for the year was not shown in account.

Required:

• a. Assessable (Net) income from profession

• b. Statement of taxable income

• c. Tax liabilit

(a) An importer imported goods paying VAT amounted Rs. 5,200. He (importer) incurred carriage expenses of

Rs. 3,000 and sold them to a retailer charging 10% margin on cost. The retailer sold the goods to customer

charging 20% margin on outlay with Rs. 1,000 as selling expenses there on.

Required:

(i) Cost price of customer (ii) Total VAT payable to government at each stage(b) "Value Added Tax is levied on added value of goods and services."Explain in brief.

(a) Mr. Hari disclosed the following incomes and expenditures for the previous year.

Dividend from resident company Rs. 25,000

Income from natural resources Rs. 340,000 (net)

Royalty income Rs. 170,000 (net)

Interest from private money lending transactions Rs. 210,000

Interest from fixed deposit Rs. 9,500

Rent from house let out Rs. 180,000

Rent received by letting an asset Rs. 90,000 (after TDS)

Compensation received relating to investment Rs. 50,000

Dividend from foreign company Rs. 85,000

He claimed the following expenses for deduction:Donation to Pasupati Area Development Trust Rs. 50,000

Collection cost of natural resources income Rs. 1,000

Interest collection charge relating to money lending transactions Rs. 2,000

House rent collection charges Rs. 500

Collection cost of fixed deposit Rs. 400

Tax paid to foreign government Rs. 15,000

a. Assessable (Net) income from profession

b. Statement of taxable income

c. Tax liability

(b) Mention the conditions for an assesses to be resident person in case of natural person, partnership firm, trust and company.

What are the allowable reductions in calculation of taxable income of a national person?

What do you mean by tax auditing? Explain the major features of tax auditing.

(a) SS Trades provided the following details of its fixed assets under block B and C.

Required:

(i) Allowable depreciation

(ii) Closing value of fixed asset of the year

(b) The operating results of a company are provided:

The company has incurred loss in its 2^nd year of operations. The unrecovered loss of 2^ndyear, 3^rd year,  \( 4^{th} \) year and 5^th year is Rs. 30,000, Rs. 40,000, Rs. 50,000 and Rs. 60,000 respectively. The profit of the 6^th year is derived without deducting interest on bank loan Rs. 20,000 and profit of the 7^th year is derived without adding commission income Rs. 10,000. In year 9, profit was calculated after deducting donation to PADT Rs. 100,000 and the profit of 7^th year was ascertained deducting pollution control cost of Rs. 300,000. Required: Taxable income and explanation wherever necessary.

Given below is the trading, profit and loss account of a proprietorship firm:

Further information:

• i. Opening and closing stock were over valued by Rs. 10,000 and Rs. 50,000 respectively.

• ii. Purchase include purchase of plant costing Rs. 120,000 which was purchased on 15th Chaitra of previous year and the opening WDV of the plant was Rs. 400,000. A part of plant costing Rs. 80,000 was disposed during the previous year.

• iii. Business loss of last year is Rs. 50,000.

• iv. Donation was given to private nursing home and public hospital equally.

• v. Legal expenses include Rs. 5,000 incurred for domestic purpose.

• vi. 30% of bad debt recovered was not allowed previously by Inland Revenue Office.

Required: * i) Net (assessable) income from business

• ii) Statement of total taxable income

• iii) Tax liability

(a) Explain the historical development of income taxation in Nepal.

(b) What are the duties of taxpayer (accesse) as per Income Tax Act 2058?