Professional Documents
Culture Documents
Indirect tax
An indirect tax is that tax where the person pays tax to
the businessman, not to the government. In other words,
an indirect tax is imposed on one person but paid partly
or fully by another like excise duty, VAT, etc. indirect tax
can be shifted.
Merits:
1. It is convenient
2. It is difficult to evade
3. It has wide base
4. Mass participation
5. It is universal in nature, it is collected from all the
citizen
Demerits:
1. It is not based on ability to pay
2. It creates inequality in the society, rich and poor are
same.
3. This tax is uncertain with the fluctuation in demand
the tax amount can also fluctuate.
Major taxes in Nepal
Nepal government collects revenue from different
sources. Right now, the types of these taxes are around
24. However, from the revenue point of view only five
types of tax have importance.
1. Custom duty
Taxes imposed by a country on all import and export
goods, when the goods cross the boundaries of the
country are called custom duty. It is also called boarder
tax. The customs imposed on imported goods are called
import duty whereas, imposed on imported goods are
called export duty. In Nepal, from custom duty cover in
previous year around 19% of the total revenue.
2. Value added tax (VAT)
VAT system was introduced in 1919 in France and used in
1954. Right now more than 160 countries in the world
and latest country, south Sudan of the world use this tax
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Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7 Income from employment
i.
1
3 of Assessable income
Or
Maximum Rs 300000
Or
Actual paid by employees to the recognized P.F office
whichever is less
Recognized P.F. offices are:
a. Providend fund building, Thamel
b.Citizen Investment Trust, (CIT),
Baneshwor
ii.
Donation (Sec.12)
Life insurance
a. Old concept:
Insured 7
Or
Maximum Rs 20,000
Or Actual whichever is less
b.New concept:
Maximum Rs 20000 or Actual, whichever is less
1%
15%
25%
35%
Couple:
Up to Rs. 250,000
Next Rs. 100,000
Next Rs. 2150,0000
Balance
1%
15%
25%
35%
Particular
Rate
1. House
rent/Accommodation
facility
2. Vehicle facility
3. Disable person rebate
4. Pension rebate
5. Women rebate
6. Casual gain
for e.g. lottery
7. Capital gain
8. Income from copy
checking
9. Income from making
questions, invigilator
10. Providend fund
reduction
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
Gross
Net
Casual gain
Meeting allowance
Dividend received
Tax free
Saving from TADA
Income from copy checking
Detail
Intangible assets like goodwill, trademark,
Rate
amount of assets
No. of year
Particular
Block
- A
Block
- B
Block
-C
Block
-D
Purchase date
1st Shrawan to
30th Poush
1st Magh to 30th
Chaitra
1st Baishakh to
30th Ashadh
Absorbed
3/3 of total
purchase amount
2/3 of total
purchase amount
1/3 of total
purchase amount
Unabsorbed
3/3 of total
purchase amount
1/3 of total
purchase amount
2/3 of total
purchase amount
25%
Chapter 10
Chapter 11 Set off and losses carry forward
Chapter 12 Residential Status
B.
A partnership firm
Tax rates
A non-resident person is not entitled to any exemptions.
Unlikely a resident person, non-resident person is taxed
at a flat rate of 25%. Similarly, any withholding taxes
levied on employment income (Sec.87), investment
returns and service fees (Sec.88), contract payments
(sec.89) in respect of non-resident person are treated as
final taxes.
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20 House and land tax in Nepal
House
Particular
Squa
Depreciation
re
feet
cost
450
525
575
635
rate
Rate Depreciat
ion year
3%
25
2%
30
1%
75
0.75 100
%
Land
Particular
First 10,00,000
Next 10,00,000
Next 30,00,000
Next 50,00,000
Next 1,00,00,000
Remaining
Rate
Nil
Rs 300
0.05%
0.25%
0.50%
1.50%
VAT
Cos
t
pric
e
Valu
e
adde
d
Imported 100
goods
0
Importer 100 100
Selling
price
exclusi
ve VAT
VAT
rate
@
13%
Selling
price
inclusi
ve VAT
1000
130
1130
VAT
payable
to
governme
nt
130
1100
143
1243
13
to
0
wholesal
er
Wholesal 110 110 1210
157.3 1367.3 14.3
er to
0
retailer
Retailer
121 121 1331
173.0 1504.0 15.73
to
0
3
3
consume
r
Hence,
The cost price of consumer of the imported goods is
Rs 1504.03.
The VAT payable to government is Rs 173.03
(130+13+14.3+15.73)
Sales tax
Old concept
Channel Cost profi
price t
Selling
price
exclus
ive
VAT
1100
VA
T
rat
e
@
13
%
14
3
Selling
price
inclusi
ve VAT
VAT
payable
to
govern
ment
1243
143
Questions
Mr. Hari, a retailer purchase a table fan paying Rs 3300
inclusive VAT from wholesaler. He incurred carriage and
selling expenses of Rs 150 and Rs 80 respectively and
sold to customer the profit in each stage is 15% on selling
price. It is assumed that VAT rate is 10%
Required:
a. VAT collected in each level
b. Value Added by each businessman
Cost Valu
price e
adde
d
Sellin
g
price
exclu
sive
VAT
manufac 9734
9734.
turer
.50
50
manufac 9734 4857 1460
turer to
.50
.50
2
dealer
dealer to 1460 2898 1750
retailer
2
0
Retailer 1750 1969 1946
to
0
9
consume
r
VAT
rate
@
13%
Sellin
g
price
inclus
ive
VAT
1265 1100
.50
0
1898 1650
0
VAT
payable
to
govern
ment
2275 1977
5
2531 2200
0
377
1265.5
0
632.50
256