Chapter 14 · Part 14 — Formula Sheet, Checklist and Glossary
Formula Sheet, Checklist and Glossary
Every formula, the compliance checklist, and the terms in one place.
14 of 14 · 13 min
Everything in the course, condensed for use rather than reading.
Formula sheet
Personal income tax
┌─────────────────────────────────────────────────────────────────────────┐ │ SLAB TAX │ │ │ │ Tax = Σ (income in band i) × (rate of band i) │ │ │ │ First 1,000,000 × 1% (social security tax, account 11211) │ │ Next 500,000 × 10% │ │ Next 1,000,000 × 20% │ │ Next 1,500,000 × 27% │ │ Above 4,000,000 × 29% (= 27% + additional 2%) │ │ │ │ 1% NOT applicable to: sole proprietors · pension income · │ │ contribution-based pension fund income · SSF contributors │ └─────────────────────────────────────────────────────────────────────────┘ ┌─────────────────────────────────────────────────────────────────────────┐ │ EFFECTIVE RATE = Total tax ÷ Taxable income × 100 │ │ MARGINAL RATE = the rate applying to the next rupee │ │ Effective is ALWAYS below marginal under a progressive schedule │ └─────────────────────────────────────────────────────────────────────────┘ ┌─────────────────────────────────────────────────────────────────────────┐ │ TAXABLE INCOME = Gross remuneration │ │ − approved retirement contributions [R] │ │ − reliefs and deductions (below) │ └─────────────────────────────────────────────────────────────────────────┘
Reliefs
┌─────────────────────────────────────────────────────────────────────────┐ │ INSURANCE PREMIUM, PRIVATE BUILDING │ │ = MIN( Rs 10,000 , actual premium paid ) │ ├─────────────────────────────────────────────────────────────────────────┤ │ TUITION FEE, CHILDREN'S EDUCATION │ │ = MIN( 25% × annual tuition fee , Rs 25,000 ) │ │ Maxes out at an annual fee of Rs 100,000 │ ├─────────────────────────────────────────────────────────────────────────┤ │ DONATION (Section 12) │ │ = MIN( Rs 300,000 , 5% × adjusted taxable income ) │ │ The Rs 300,000 ceiling binds above Rs 6,000,000 of adjusted income │ ├─────────────────────────────────────────────────────────────────────────┤ │ CSR (Section 12Gha) │ │ = 1% × taxable income │ │ Deducted in TAXABLE income; NOT in ADJUSTED taxable income │ └─────────────────────────────────────────────────────────────────────────┘ ! VALUE OF A DEDUCTION = deduction × MARGINAL rate. Compute tax WITH and WITHOUT the deduction and subtract — do not simply multiply by the headline rate unless the whole deduction falls inside one band.
Capital gains
┌─────────────────────────────────────────────────────────────────────────┐ │ CAPITAL GAIN = Net disposal proceeds − Cost base │ │ CGT = Gain × applicable rate │ │ │ │ Listed shares ≤ 365 days → 10% │ │ Listed shares > 365 days → 7.5% │ │ Land/building < 5 years → 10% │ │ Land/building ≥ 5 years → 7.5% │ │ Involuntary disposal (GoN) → 2.5% │ │ │ │ ! Shares: ≤365 days is the HIGH rate (365 is high) │ │ ! Land: <5 years is the HIGH rate (exactly 5 years is LOW) │ │ The two tests are NOT symmetrical. │ │ │ │ ! Final tax if no return is filed (Section 95Ka) │ └─────────────────────────────────────────────────────────────────────────┘ ┌─────────────────────────────────────────────────────────────────────────┐ │ NET PROCEEDS FROM A NEPSE SALE │ │ = Sale value │ │ − broker commission (on transaction value, SEBON slab) [R] │ │ − SEBON regulatory fee (on transaction value) [R] │ │ − DP charge (flat, per scrip, sell side) [R] │ │ then CGT on the GAIN, not on the value │ │ │ │ [R] Use the site's live calculators — these rates are revised. │ └─────────────────────────────────────────────────────────────────────────┘
Business
┌─────────────────────────────────────────────────────────────────────────┐ │ TAXABLE INCOME = Accounting profit before tax │ │ + disallowed expenses │ │ − additional allowable deductions │ │ − exempt income │ │ − allowable brought-forward losses [R] │ ├─────────────────────────────────────────────────────────────────────────┤ │ CASH DISALLOWANCE — any SINGLE transaction paid in cash │ │ above Rs 25,000 is FULLY DISALLOWED │ ├─────────────────────────────────────────────────────────────────────────┤ │ LENDER PROVISION (BFIs and NRB-licensed hire-purchase) │ │ Deductible ≤ 5% × (outstanding loans + written-off loans │ │ + non-banking assets) │ └─────────────────────────────────────────────────────────────────────────┘
VAT
┌─────────────────────────────────────────────────────────────────────────┐ │ VAT PAYABLE = OUTPUT VAT − INPUT VAT │ │ │ │ Rates: 0% · 5% · 13% · any further rate by Gazette │ │ │ │ 5% applies to: ride-hailing passenger transport and cargo/delivery; │ │ end consumers using >50 units of electricity per month │ │ (B2B electricity trading exempt) │ ├─────────────────────────────────────────────────────────────────────────┤ │ DIGITAL PAYMENT BENEFIT │ │ Benefit = 10% × VAT → at 13% VAT, an effective 1.3% discount │ │ Now EXEMPTED at billing, not refunded later │ └─────────────────────────────────────────────────────────────────────────┘
Transfer pricing
┌─────────────────────────────────────────────────────────────────────────┐ │ ASSOCIATED PERSON — any ONE of: │ │ (a) controls ≥ 30% of income, capital or voting rights │ │ (b) lender where >50% of its assets are loans to the entity │ │ (c) entity relies mainly/entirely on the other's IP or know-how │ │ (d) supplies ≥ 90% of raw materials or consumables needed │ ├─────────────────────────────────────────────────────────────────────────┤ │ SAFE HARBOUR (turnover ≤ Rs 1 billion, locked ≥ 5 income years) │ │ IT service exporters → price = operating cost × 1.15 │ │ Intercompany USD loans → rate = reference rate + 200 to 400 bps │ │ Low value-adding svcs → price = cost × (1 + up to 5%) │ ├─────────────────────────────────────────────────────────────────────────┤ │ APA — 5 years forward, up to 4 years rollback (so up to 9 years) │ │ Bilateral/multilateral binds the other jurisdiction too │ │ VOID from the start if obtained by fraud │ └─────────────────────────────────────────────────────────────────────────┘
Customs — EV
┌─────────────────────────────────────────────────────────────────────────┐ │ Customs duty: FLAT 20% in every band │ │ CIIF (levied AFTER customs duty): │ │ ≤ Rs 20 lakh → 2.5% │ │ Rs 20–30 lakh → 20% │ │ Rs 30–40 lakh → 20% + additional 15% │ │ Rs 40–50 lakh → 20% + additional 70% │ │ > Rs 50 lakh → 20% + additional 110% │ │ │ │ ⇒ ALL the progressivity is in the CIIF, not the duty │ └─────────────────────────────────────────────────────────────────────────┘
Amnesty
┌─────────────────────────────────────────────────────────────────────────┐ │ THE PATTERN: pay the tax + 1% → interest, penalties, fees waived │ │ │ │ ASHOJ END 2083 ≈ mid-Oct 2026 — excise licence renewal · │ │ Companies Act filings │ │ MANGSIR END 2083 ≈ mid-Dec 2026 — UN/diplomatic employees · │ │ containers · Finance Act dues · │ │ bonded warehouse exports │ │ POUSH END 2083 ≈ mid-Jan 2027 — everything else │ └─────────────────────────────────────────────────────────────────────────┘
The Nepali fiscal calendar
FY 2083/84 = Shrawan 1, 2083 → Asar end, 2084
≈ 16 July 2026 → mid-July 2027
1 Shrawan ≈ mid-Jul 7 Magh ≈ mid-Jan
2 Bhadra ≈ mid-Aug 8 Falgun ≈ mid-Feb
3 Ashwin ≈ mid-Sep 9 Chaitra ≈ mid-Mar
4 Kartik ≈ mid-Oct 10 Baisakh ≈ mid-Apr
5 Mangsir ≈ mid-Nov 11 Jestha ≈ mid-May
6 Poush ≈ mid-Dec 12 Asar ≈ mid-Jun
Filing and payment due dates for income tax, VAT and excise
are prescribed by the respective Acts and Rules. Confirm each
one against IRD — this course teaches the system, not the
deadline diary.The FY 2083/84 checklist
╔═══════════════════════════════════════════════════════════════════════╗ ║ INDIVIDUALS ║ ╠═══════════════════════════════════════════════════════════════════════╣ ║ - Check SSF status — it decides whether the 1% first-band tax ║ ║ applies ║ ║ - Claim the raised building insurance relief (Rs 10,000) ║ ║ - Claim tuition relief — lower of 25% of fees or Rs 25,000 ║ ║ - Check whether the couple-slab abolition changed your household ║ ║ position ║ ║ - If you sold shares or property, check the holding-period boundary ║ ║ - Decide, with advice, whether to file or accept the final tax ║ ║ - Re-examine refunds you thought were time-barred (now 5 years) ║ ║ - No PAN and taxable income? The amnesty is the most generous ║ ║ provision available — act before Poush end 2083 ║ ╠═══════════════════════════════════════════════════════════════════════╣ ║ BUSINESSES ║ ╠═══════════════════════════════════════════════════════════════════════╣ ║ - STOP cash payments above Rs 25,000 per transaction ║ ║ - Audit billing software for erase/alter capability (Rs 500,000) ║ ║ - Check the CBMS threshold (Rs 100 million of transactions) ║ ║ - Re-map every supply to the correct VAT rate (0 / 5 / 13 / other) ║ ║ - Check Schedule 1 changes — input VAT claw-back on newly exempt ║ ║ stock; 30-day registration if newly taxable ║ ║ - Claim share and debenture issue costs — now deductible ║ ║ - Test for associated-person status (IP dependence, 90% supply) ║ ║ - If in scope, model safe harbour across FIVE years before opting ║ ║ - Read the IRD circulars — they are final unless a court rules ║ ║ - Excise licence renewal by ASHOJ END 2083 or it is cancelled ║ ║ - Companies Act filings by ASHOJ END 2083 ║ ║ - Settle arrears and pending cases by POUSH END 2083 (not ║ ║ available in telecommunications) ║ ╚═══════════════════════════════════════════════════════════════════════╝
Glossary
| Term | Meaning |
|---|---|
| **Adjusted taxable income** | A defined computation, different from taxable income; the base for the 5% donation limit. CSR is **not** deducted in arriving at it |
| **Advance tax** | Tax collected before assessment; **creditable** against the final liability |
| **APA** | Advance Pricing Agreement — Section 33Kha; 5 years forward, up to 4 years rollback |
| **Arm's length principle** | Related parties must price as independent parties would |
| **Associated person** | Section 2 definition for transfer pricing; four alternative tests (Part 7.3) |
| **BS / Bikram Sambat** | The Nepali calendar. FY 2083/84 ≈ 16 July 2026 to mid-July 2027 |
| **CBMS** | Centralized Billing Monitoring System — the IRD's e-invoicing backbone |
| **CGT** | Capital gains tax |
| **CIF** | Cost, Insurance and Freight — the customs valuation base |
| **CIIF** | Clean Infrastructure Investment Fee — levied on imports after customs duty |
| **CSR** | Corporate social responsibility spending; Section 12Gha, 1% of taxable income |
| **DP charge** | Depository Participant charge on a share sale |
| **DTCO** | District Treasury and Accounts Controller Office |
| **Effective rate** | Total tax ÷ taxable income; always below the marginal rate |
| **Excise** | A control-and-behaviour tax on specific goods, principally alcohol and tobacco |
| **Final tax** | Withheld tax that ends the matter — no credit, no refund, no assessment |
| **Finance Act** | The annual statute that sets rates and amends the tax Acts |
| **Green tax** | Consolidated customs-point charge; 10% on imported petrol and diesel |
| **IRD** | Inland Revenue Department |
| **IRO** | Inland Revenue Office |
| **L.P. litre** | London Proof litre — a measure of absolute alcohol, used for liquor excise |
| **LTO** | Large Taxpayer Office |
| **Marginal rate** | The rate on the next rupee earned |
| **NPO** | Non-profit organisation |
| **PAN** | Permanent Account Number |
| **Physical Control System** | Excise regime with an officer present for release |
| **Risk-Based Selective Release Control System** | New excise regime; risk analysis selects establishments for limited supervision |
| **RCM** | Reverse charge mechanism — the recipient or platform accounts for the tax |
| **Safe Harbour** | Section 33Ka — prescribed margins accepted as arm's length; turnover ≤ Rs 1 billion; locks ≥ 5 years |
| **Schedule 1 (VAT)** | The **exemption** schedule. Added = exempt; removed = taxable |
| **SEBON** | Securities Board of Nepal |
| **Section 95Ka** | Advance tax on capital gains; final if no return is filed |
| **SSF** | Social Security Fund — contributors are outside the 1% first-band tax |
| **SST** | Social security tax — the 1% on the first band, to revenue account 11211 |
| **TDS** | Tax deducted at source |
| **Track and Trace** | Section 10K1 — electronic control of alcohol and tobacco through the chain |
| **Transfer pricing** | Rules ensuring cross-border related-party prices are arm's length |
| **VAT** | Value Added Tax — output VAT less input VAT |
Where to verify — always
| Source | What it governs |
|---|---|
| **Inland Revenue Department** — ird.gov.np | Income tax, VAT, excise: Acts, Rules, **circulars** (now final unless a court rules otherwise), rates, forms, deadlines |
| **Department of Customs** | Customs duty, tariff schedule, CIIF, valuation |
| **Ministry of Finance** | The Budget Statement and the Finance Act |
| **Nepal Law Commission** | Consolidated statute text |
| **Office of the Company Registrar** | Companies Act 2063 filings |
| **SEBON** — sebon.gov.np | Broker commission, regulatory fee, capital market rules |
| **Nepal Rastra Bank** — nrb.org.np | Foreign exchange rules, banking-channel requirements |
The ten things that matter most
╔═══════════════════════════════════════════════════════════════════════╗ ║ 1. The exemption threshold DOUBLED to Rs 1,000,000, and the top ║ ║ rate fell from 39% to 29%. One schedule now applies to every ║ ║ resident natural person — the couple slab is gone. ║ ║ ║ ║ 2. The 1% first-band tax is a SOCIAL SECURITY TAX and does not ║ ║ apply to sole proprietors, pensions, contribution-based pension ║ ║ funds, or SSF contributors. ║ ║ ║ ║ 3. CAPITAL GAINS TAX ROSE ON EVERYTHING. Listed shares 7.5%→10% ║ ║ short and 5%→7.5% long. On a long holding that is half again ║ ║ as much tax. ║ ║ ║ ║ 4. CGT is now a FINAL TAX if you do not file — which forecloses ║ ║ loss relief you might otherwise claim. ║ ║ ║ ║ 5. The cash-transaction disallowance threshold HALVED to ║ ║ Rs 25,000. Pay through a bank. ║ ║ ║ ║ 6. VAT is now MULTI-RATE — 0%, 5%, 13% and more by Gazette. Every ║ ║ supply needs a rate decision. ║ ║ ║ ║ 7. A TRANSFER PRICING REGIME now exists, with safe harbours and ║ ║ APAs — and association can arise from IP dependence or 90% ║ ║ supply, with no shareholding at all. ║ ║ ║ ║ 8. IRD PUBLIC CIRCULARS ARE NOW FINAL unless a court rules ║ ║ otherwise. Read the circulars, not only the Act. ║ ║ ║ ║ 9. The refund window widened to FIVE YEARS and the audit window ║ ║ narrowed to THREE. Re-examine old refunds. ║ ║ ║ ║ 10. THE AMNESTY IS LARGE AND TIME-LIMITED. Pay the tax plus 1% and ║ ║ interest, penalties and fees are waived. Three deadlines — ║ ║ Ashoj end, Mangsir end, and Poush end 2083. A taxpayer with no ║ ║ PAN can wipe out everything before FY 2079/80. ║ ╚═══════════════════════════════════════════════════════════════════════╝
A closing note on sources and limits
This course teaches Nepal's tax system for FY 2083/84 from the Budget Statement, the Finance Act 2083 and the underlying tax statutes — the Income Tax Act 2058, the Value Added Tax Act 2052, the Excise Duty Act 2058 and the Customs Act 2064. Those are public legal instruments.
Three limits you should hold onto:
- 1Rates change. Every figure here is FY 2083/84. The Finance Act is annual, and Gazette
notifications can amend rates mid-year. The formulas and structures are durable; the numbers are not.
- 1Circulars now bind. With IRD interpretations final unless overturned by a court, the
administrative reading of a provision matters as much as the statutory text. Check both.
- 1This is education, not advice. It explains how the system works. Applying it to your facts —
particularly the final-tax choice on capital gains, a safe harbour election, or an amnesty settlement against a live dispute — is work for a qualified tax practitioner who can see your whole position.
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