NEPAL BUDGET 2078-79 (2021-22) - NBSM

1 NEPAL BUDGET 2078-79 (2021-22)HIGHLIGHTS FROM TAX PERSPECTIVE OBJECTIVESBUDGET SUMMARYTAXATION GENERALTAX AMNESTY SCHEMEINCOME TAXVALUE ADDED TAXEXCISE DUTYTABLE OF CONTENTS03-0506-0708-0910-13 CUSTOMS DUTY59-68 GOVERNMENT'S LONG TERM OBJECTIVEPROSPEROUS NEPAL , HAPPY NEPALESE;Da[4 g]kfn, ;'vLg]kfnLProtectingtheLifeofCitizensfro mtheCOVID 19 PandemicOptimumutilizationofresources, , , OF BUDGETPRIORITIES OF BUDGET 2078/791 Extensionoftesting,provisionfortreatment ,supplyofhealthequipmentandmaterials,ass uranceoffreevaccination,developmentofhea lthinfrastructureandeffectivemobilizatio nofhealthworkerstoprevent,controlandcure ofCOVID-193 Assuranceofjobandemploymenttotheentrants inlabormarketandlaborer swholosttheJobs5 AgriculturalProductionandProductivityenh ancementandAssuranceofFoodSecurity2 Upliftingtheeconomicactivitiesthroughrel iefpackagestoaffectedfamiliesfromCOVID-1 9andprovidingincentive.

2 Subsidiesandrevivingpackagestoprivatesec tors4 Socialsecurityandprotectionbasedonlifecy cletoallNepaleseCitizens6 InvestmentinInfrastructureortheSkillfula ndPracticalEducation7 Constructionofinfrastructurehavingstrate gicimportancewhichhelpsinrapidindustrial izationandprovidesearlierreturns8 Balanceddevelopmentthroughcoordinationan dcooperationbetweenFederal,Provincialand Locallevelstructure9 Endingalltypesofdiscriminationandinequal ity,equitabledevelopmentandjustifiedacce ssonthereturnsofdevelopment10 Provisionofresponsiblegovernance,assuran ceofpeaceandsecurity,corruptioncontrol,e ffectivenessongovernanceandservicesAlloc ation of BudgetSource of RevenueCurrent ExpenditureCapital ExpenditureFinancial ManagementTotal BUDGET # Amount in Billions Tax RevenueForeign GrantForeign DebtInternal OF BUDGETG rowth RateInflation Rate*2077-78 Estimate ** 2078-79 ProjectionEconomic Growth & InflationTotal BUDGET (in Billions NPR)Per capita Income: US $1,191.

3 It was $1,126 for 2067 ExpenditureCapitalExpenditureFinancial ManagementTransfer to Province andLocal LevelTransfer to Province & Local RevenueForeign GrantForeign DebtInternal 1, 1, 1, 1, 1, 1, | NEPAL BUDGET Highlights | 2078/79 (2021-22)Page 7 Governmenthasincreasedsocialsecurityallo wanceby33percentandraisedthemonthlyold-a geallowanceforseniorcitizensbyRs1,000toR s4,000. Thegovernmenthasannounced100percentwaive rforconsumersconsumingonly20unitsofelect ricitypermonthduringthelockdown/prohibit oryperiodand100percentwaiveronthedrinkin gwaterbillforconsumersconsumingonly20,00 0literspermonthduringthesameperiod. Licenseandrenewalfeewaiverforsectorssuch asfilms,handicraft,aviation,media,advert ising,healthclubs,amongothers. Thegovernmentwillcontributetheamounttobe paidbyorganizationsandworkerstotheSocial SecurityFundforthemonthsofmid-Maytomid-J une(Jestha)andmid-Junetomid-July(Ashad).

4 Toencourageentrepreneurship,thegovernmen thasannounceda100percentrebateonincometa xforstart-upsforuptofiveyearsfromthedate ofcommencementofoperation,aone-stopsyste mtofacilitatetheestablishmentandoperatio nofsuchstart-ups, GovernmenttoinitiateMadeinNepalandMakein NepalProgram/Movement. Toencouragetheuseofelectricvehicles,theg overnmenthasdecidedtowaivetherenewalfeea ndroadtaxonEVsforthenextfiveyears, GovernmentEmployee'sSalaryincreasedbyNPR 2,000, SUMMARYTAXES -GENERALH ealth Risk TaxBidiCigarette & CigarKhaini, Surti, Pan Masala,Gutkha40 Rupee Per KG50 Paisa per Stick25 Paisa per StickEducation Service FeesWhile exchanging foreign currency by the students going abroad for Development TaxImport of Petrol and Diesel at customs pointNPR 10 Per LiterCasino RoyaltyToGeneralCasino40 MillionPerannumToCasinousingModernMachin eEquipment10 MillionPerannum50%oftheAdditionalfeeanda nnualadditionalfeeoftheFY2076/77shallbew aivedtoapersonororganizationlicensedtoop erateacasino,ifitpaystheremaining100%roy altyand50%additionalfeeaswellasannualadd itionalfeefortheFY2076/77and100%royalty.

5 Additionalfeeandannualadditionalfeeforth eyear2076/77withintheendofChatira,2078.* Same as Previous YearNBSM | NEPAL BUDGET Highlights | 2078/79 (2021-22)Page 9 MajorHighlightsofBudget2078/79 taxation -GENERAL RoadMaintenanceandImprovementFeeshallbel eviedatthecustomspointforroadmaintenance andimprovementattherateofNPR4perLitrefor PetrolandNPR2perLitrefordieselimportedre spectively. CinemaDevelopmentFeeshallbechargedtocine mahousesandhallsasfollows: 15%onentryfeeforallcategoriesofforeignfi lms 20%onentryfeeforallcategoriesofforeignfi lmsshownfromcabins. Thecinemahouseandhallshavetoissuetickets throughelectronicsystem(e-ticketsystem)a ndconnectwiththeCentralCinemaManagementS ystembytheendofPoush,2077. TelecommunicationServiceChargetobelevied at13%whichwillbeimposedbytelecomindustri esonthetelecommunicationchargesmadetothe customer.

6 , ,inthecaseofmobiletelephones,TelephoneOw nershipFeewillbechargedattherateof2%ofea chSIMcardandrechargefee. Thegovernmenthasabolishedthe15% , AMNESTY SCHEME IfanytaxduesunderExciseAct,2015,IncomeTa xAct,2031andtaxesreplacedbyValueAddedTax Act,2052suchasHotelTax,EntertainmentTax, ContractTax,SalesTaxwhichisunpaidtillthe date andisdischargedupto75%ofsuchtaxordutybyP oushend,2078. thenbalance25%ofsuchtaxorduty,fees, WhereanytaxduesinrelationtoAssessmentorR e-assessmentmadeuptoAshadhend,2076undert heIncomeTaxAct,2058,ValueAddedTaxAct,205 2andExciseAct,2058isremainunpaid andanapplicationisfilledforoptingthisamn esty/reliefbythePoushend,2078byfullydisc hargingthe100%applicabletaxduesandintere stcalculatedup-tothedateofsuchapplicatio n thenanyfees,additionalfeeandpenaltyshall bewaivedoff. However, WhereanytaxduesinrelationtoAssessmentorR e-assessmentmadeuptoJestha15,2078underth eIncomeTaxAct,2058,ValueAddedTaxAct,2052 isunpaidandsuchAssessmentorRe-assessment hasnotgoneforappeal, andanapplicationforwaiverofsuchduesbythe Poushend,2078 | NEPAL BUDGET Highlights | 2078/79 (2021-22)

7 Page 11 MajorHighlightsofBudget2078/79 TAX AMNESTY SCHEME WithdrawalofcasespendingunderAdministrat iveReviewatInlandRevenueDepartmentorappe alunderconsiderationatRevenueTribunalorC ourts Wheretheassessmentorre-assessmentmadeupt oAshadhend,2077undertheIncomeTaxAct,2058 ,ValueAddedTaxAct,2052andExciseAct,2058i swithdrawn andanapplicationisfiledforoptingsuchamne sty/reliefbyMangsirend,2078byfullydischa rgingthe100%applicabletaxes,dutiesand50% ofinterestcalculatedup-tothedateofsuchap plication, thenanyfees,additionalfees,penaltyandbal ance50%interestshallbewaivedoff. However,casesrelatingtofalseandfakeinvoi cesarenotallowedforsuchamnesty/relief. SpecialreliefincaseoffeesrelatedTrekking andTourPackage PersonsinvolvedinthebusinessofTravelling andTrekkingAgencywhohavetreatedthesalesa sexemptsalesandhavenotcollectedanddeposi tedVATamountorwhereIRDhasassessedVATpaya bleonsuchsalesorwhereappealhasbeenfiledf orreviewagainsttheassessmentorderatreven uetribunalorrevenuedepartment andsuchpersonselfdeclaresthetransactions uptoJestha14,2078anddepositVATonsuchtran sactionsorasperassessmentwithinPoushend, 2078andwithdrawstheappealiffiledasmentio nedabove, thenanyinterest,penaltyandadditionalfeeo nsuchamountshallbewaivedoff.

8 SpecialreliefincaseofHealthServiceProvid ers WheretheHealthServiceProviderOrganizatio nshavebalanceinputVATafteradjustingwitho utputVAT, anddepositsthebalancepayableafterdebitad justmentofsuchInputVATonaccountoftheheal thservicebeingVATexemptwithinAshadend,20 79. thenanyadditionalfeeandinterestonsuchpay ablesshallbewaived. SpecialprovisionincaseofTransportationof GoodsService TransportationofGoodsServiceProviders,wh ohasreceivedtherentalincomefromthenatura lpersonsnotregisteredunderPANintheFY2076 /77, withholdsandpaystheTDSasperproviso8ofSec tion88(1)ofIncomeTaxAct,2058 thensuchexpensesshallbedeductiblewhileco mputingtaxableincomeofFY2076-77,evenwhen noinvoiceofsuchtransactionisavailable. Specialprovisionofreliefincaseofissuance ofcertificateoforigin Wheretheentityissuingcertificateoforigin forthepurposeofexport hasissuedsuchcertificatesuptoJestha14,20 78 thenVATduesonsuchissuedcertificatesorVAT payableasassessedbyIROalongwithinterest, of CasesOther ReliefNBSM | NEPAL BUDGET Highlights | 2078/79 (2021-22)Page 12 MajorHighlightsofBudget2078/79 TAX AMNESTY SCHEME & BENEFITS TO TAX PAYERS SpecialprovisionrelatedtoRenewalofExcise License WherethelicenseholderunderExciseAct,2058 whohasfailedtorenewitslicenseforoneormor efinancialyearundertheprescribedperiod andpaystheduelicensefeeofrespectivefinan cialyearfortheswiftcontinuationofitsbusi nessbytheendofSharwanend,2078 thenthepenaltyonlaterenewalonthelicensef eeshallbewaived.

9 However,iftherenewaloftheexciselicenseis notdonewithintheabovementionedtimeframet hentheregistrationwillbeautomaticallycan celled. SpecialprovisionrelatedtoRenewalofGSMM obileService WhereNepalTelecommunicationCompanyLimite dpaystheSecondRenewalofGSMM obileServicefromFY2070/71toFY2075/76infi veinstallmentsstartingfromFY2075-76, PaymentofSecondRenewalofGSMM obileServicefromFY2070/71toFY2075/76infi veinstallmentsstartingfromFY2075-76,ment ionedabove, PayerAnnual Transaction Volume (in Rs.)Tax Rebate1. Person paying tax u/s 4(4)Up to 20 Lakhs or Income up to Rs 2 Lakhs90%2. Person paying tax u/s 4(4ka)More than 20 Lakhs, up to 50 Lakhs75%3. Any PersonUp to 1 Crore50% , Trekking, Travels, Cinema Industry, Party palace, Media House, Transportation and Air Transport Service having transaction More than 1 CroreTax Rate Applicable 1% FurtherlossofFY2076-77andFY2077-78canbec arriedforwardfor3additionalyearsforthebu sinessmentionedinpoint4above DonationExpensesallowedasdeduction: DonationtoCoronaInfectionRelief,Controla ndTreatmentFundinFY2077/78establishedbyC entral,StateorLocalGovernmentofNepalwill beallowedfordeductionforthecomputationof totaltaxableincome.

10 SpecialrebateonrateoftaxesforFY2077/78to taxpayeraffectedbyCOVID-19 NBSM | NEPAL BUDGET Highlights | 2078/79 (2021-22)Page 13 MajorHighlightsofBudget2078/79 TAX AMNESTY SCHEME & BENEFITS TO TAX PAYERS CSRE xpensesusedinMedicalSectorallowedasdeduc tion: CSRE xpensesallocatedfortheconstructionofspec ialCovid-19hospitalasprescribedbyMinistr yofHealthandPopulation,NepalGovernmentan dexpensesincurredonpurchaseofhealthequip mentandmaterialsrelatedtotreatmentofCovi d-19willbeallowedasdeductionintheFY2077/ 78. Specialprovisionrelatedtotransferofcontr ibutiontotheSocialSecurityFund(SSF): Ifanyparticipantsorinterestedparticipant softheSocialSecurityFund(SSF)undercontri butionbasedSocialSecurityAct,2074transfe rtheirfunddepositedunderanyapprovedretir ementfundtotheSSFwithinChaitraend,2078 thentheTDSapplicableonsuchtransferasperS ection88oftheIncomeTaxAct,2058shallnotbe collected.