Monday, December 30, 2013

Sharing is Gaining: Highligts of Monetary Policy 2070/71

Sharing is Gaining: Highligts of Monetary Policy 2070/71

Monday, July 22, 2013

Highligts of Monetary Policy 2070/71

Highlights of the Monetary Policy 2070/71
Strengthening Financial Sector
Increasing financial access
Directing credit to Productive Sector

1.        Flexible Monetary Policy to attain the economic growth of 5.5%
2.        Inflation target 8%
3.        Broad Money Growth 16%
4.        Domestic Credit is projected to increase by 17.1%

Monetary Policy Instruments:

1.     Bank Rate 8% : No change
2.      Cash reserve ratio reduced by 1%, A: 5%, B – 4.5% and C: 4%
3.      Statutory liquidity ratio reduced. A: 12% , B: 9%, C: 8% (Earlier 15%, 11%, 10% respectively)
4.      Repo Maximum Tenure 21 days from 28 days earlier.
5.      Online Bidding System for TB and DB
6.      Loan term Bond to be issued.
7.      Base Rate implementation to other FIs.
8.      Interest rate on refinancing to agriculture, hydropower reduced to 5pc (Earlier 6pc)
9.      Interest rate on refinancing to sick industries and exports reduced to 1pc (Earlier 1.5pc)
10.    DSL: A: 4.5%, B: 4%, C: 3.5% (increased by 0.5%)
11.    Compulsory lending to hydropower, agriculture increased to 12pc
12.    Work plan of B & C class about productive sector lending within 3 yr to be submitted within 2070 Paush.
13.    New Licensing of A, B, C class still in hold.
14.    Continuity of 0% loan for establishment of new branch at remote area
15.    Spread rate to be maintained at 5pc
16.    Guideline on acquisition to be introduced
17.    BASEL III provision to be implemented as per need  
18.     Deadline for paid-up capital increment extended by one year (within 2070/71)
19.    Capital to be increased
20.    Supervision of IT Guideline and System Audit implementation
21.    Establishment of Infrastructure Development Bank
22.    Basel Core Principle Self Assessment
23.    Implementation of Problem Bank Resolution Framework
24.    PCA to be implemented even for failing to maintain required liquidity
25.    Stress testing required for finance companies
26.    Provision of dynamic provisioning
27.    BFIs to be forced to lower institutional deposits’ share to less than 60pc
28.    Mobilization of deposit collected at rural area in rural itself (limit to be introduced)
29.    Specialist service for supervision of Saving and Credit Cooperative having more than Rs. 500million transaction.
30.    Differentiate Banker and Industrialist
31.    Assess of Development bank to Note Chest


Highligts of Monetary Policy 2070/71

Highlights of the Monetary Policy 2070/71
Strengthening Financial Sector
Increasing financial access
Directing credit to Productive Sector

1.        Flexible Monetary Policy to attain the economic growth of 5.5%
2.        Inflation target 8%
3.        Broad Money Growth 16%
4.        Domestic Credit is projected to increase by 17.1%

Monetary Policy Instruments:

1.     Bank Rate 8% : No change
2.      Cash reserve ratio reduced by 1%, A: 5%, B – 4.5% and C: 4%
3.      Statutory liquidity ratio reduced. A: 12% , B: 9%, C: 8% (Earlier 15%, 11%, 10% respectively)
4.      Repo Maximum Tenure 21 days from 28 days earlier.
5.      Online Bidding System for TB and DB
6.      Loan term Bond to be issued.
7.      Base Rate implementation to other FIs.
8.      Interest rate on refinancing to agriculture, hydropower reduced to 5pc (Earlier 6pc)
9.      Interest rate on refinancing to sick industries and exports reduced to 1pc (Earlier 1.5pc)
10.    DSL: A: 4.5%, B: 4%, C: 3.5% (increased by 0.5%)
11.    Compulsory lending to hydropower, agriculture increased to 12pc
12.    Work plan of B & C class about productive sector lending within 3 yr to be submitted within 2070 Paush.
13.    New Licensing of A, B, C class still in hold.
14.    Continuity of 0% loan for establishment of new branch at remote area
15.    Spread rate to be maintained at 5pc
16.    Guideline on acquisition to be introduced
17.    BASEL III provision to be implemented as per need  
18.     Deadline for paid-up capital increment extended by one year (within 2070/71)
19.    Capital to be increased
20.    Supervision of IT Guideline and System Audit implementation
21.    Establishment of Infrastructure Development Bank
22.    Basel Core Principle Self Assessment
23.    Implementation of Problem Bank Resolution Framework
24.    PCA to be implemented even for failing to maintain required liquidity
25.    Stress testing required for finance companies
26.    Provision of dynamic provisioning
27.    BFIs to be forced to lower institutional deposits’ share to less than 60pc
28.    Mobilization of deposit collected at rural area in rural itself (limit to be introduced)
29.    Specialist service for supervision of Saving and Credit Cooperative having more than Rs. 500million transaction.
30.    Differentiate Banker and Industrialist
31.    Assess of Development bank to Note Chest


Friday, July 17, 2009

Sharing is Gaining: Change by Finance Act 2066

Sharing is Gaining: Change by Finance Act 2066

Change by Finance Act 2066

Major Changes by Finance Act 2066
In Income Tax Act 2058


1. Increment in Income Tax Ceiling

Income Tax Ceiling increased to Rs. 160,000 for individual and Rs 200,000 for couple. However, 1% tax will be charged up to this limit. For detail tax rates, refer Annexure 1

2. Capital gain tax decreased to 10%

Capital gain tax is has been reduced from 15 percent to 10 percent in case of natural person. The rate is 15% for other than natural person. – Sec 89Ka.

3. Capital Gain tax on disposal of Land and Building – New Sec 89kha added

Tax should be deducted at the Land Revenue Office on capital gain on disposal of Land or Land and Building on following basis:
a. If the ownership of disposed Land or Land and Building is more than years, 5 percent.
b. If the ownership of disposed Land or Land and Building is less than 5 years, 10 percent.

4. Casual Gain to be included in Taxable Income - Sec 5(gha) added

Casual gain should also be included in computation of taxable income of the along with income from business, income from employment and income from investment.

Tax should be deducted at 25% on payment of casual gain. As per Section 92, tax deducted will be final withholding tax.

But National and International Level Prizes derived against the contribution provided in the field of Literature, Art, Culture, Sports, Journalism, Science, Technology or Public Administration may be exempt from casual gain tax by notifying in the Nepal Gazzette.

5. Tax Rate Concession increased for Special Industry and Information Technology Industry - Sec 11(3)(ka): amended

a. Arrangement has been made to levy only 90 percent income tax on special industries and information technology industry which directly employ 300 or more Nepalese (up to last year it was 500 or more) all the year round. Similarly, industries which directly employ 1200 or more Nepalese nationals all the year round or which provide direct employment to more than 100 Nepalese nationals including 33 percent women, dalits (the downtrodden) or the handicapped will have to pay only 80 percent tax on their income of that particular year.
b. In case any special industry is operated in a very-undeveloped, undeveloped or underdeveloped area, tax shall be imposed at the rates of 50, 70 and 75 percent (earlier it was 70, 75 and 80 percent) respectively of the rates otherwise applicable, for ten years including the year in which the industry started its operation.

6. Tax Exemption for Hydro Power for first 7 years and 50% tax exemption for next 3 years - Sec 11(3gha) added:

A corporate institution having licensed of generation, transmission and distribution of electricity shall get full tax exemption for first 7 year from the date of commercial electricity generation, generation and transmission, generation, transmission and distribution if it is done within Chaitra end 2075. And it will get 50 percent tax rebate for next 3 years.

But the provision applicable at the time of getting license will be applicable to the licensed persons who have started commercial electricity generation before application of above provision.

7. Concession for the development of infrastructure of National Importance Projects - Sec 11kha added

Arrangement has been made not to look into Income source for the investment until Chaitra end 2075 in manufacturing industries using more than 50 percent indigenous raw materials, employing more than 300 national workers or those of national importance such as hydro electricity projects, international airports, tunnel ways, road ways or railways.

8. Tax on gain on transaction of Commodity Future : Sec 88(ka)(6) added

Tax shall be levied in at 10 percent on the profit and gain on transaction under Commodity Future Market.

9. No need to pay advance tax if estimated advance tax is less than Rs. 5, 000 - Sec 94(2) amended

Where the amount of total installments calculated is less than Rs 5,000, the amount of the installment shall not be required to pay. (Earlier it was less than Rs. 2,000)

10. Amendment in Definition of Non Business Chargeable Asset

Non-Business Taxable Assets mean lands, buildings and interest in any entity, or securities, other than the following assets:
1. Business assets, depreciable assets or trading stocks.
2. Private house of a natural person in the following conditions:
(a) Under continued ownership for ten or more years (up to last year it was 3 or more years), and
(b) Lived in for ten or more years (up to last year it was 3 or more years) continuously or at different times by the person.
2a. An interest of a beneficiary in a retirement fund,
3. Land and private house of a natural person which has been disposed of at a price of less than five million rupees (up to last year it was 10 million rupees), or
4. Assets disposed of through transfer by any means, other than sale and purchase within three generations

11. Increment of limit of Income and turnover of fixed tax payer : Amendment in Section 4(4)(kha)

The resident individual has to pay income tax at a fixed amount for an income year under following circumstances:

a. The person earned income during the income year only from a business having its source in Nepal;
a1. The person does not claim medical tax credit as per Sec.51 and withhold tax as per Sec.93;
b. If the income and turnover of the business does not exceed the threshold of Rs. 200,000 (up to last year it was Rs. 150,000) and Rs. 20,00,000 (up to last year it was Rs. 15,00,000) respectively, and
c. The person has opted for the application of this provision in that income year.

The fixed amount as per Schedule 1 (Sec 1(7))
a. Rs. 5,000: In case the business is being conducted at metropolitan or sub metropolitan cities.
b. Rs. 2,500: In case the business is being conducted at municipality area.
c. Rs. 1,500: In case the business is being conducted at any other area.

Monday, July 13, 2009

Budget 2066-67

Major Changes by Finance Act 2066

1. Income Tax Ceiling increased to Rs. 160,000 for individual and Rs 200,000 for couple. 1% tax will be charged up to this limit. But for Proprietorship firm 1% will not be levied.

2. Capital Gain Tax Decreased from 15% to 10%.

3. Local Development Tax of 1.5% removed

4. Windfall Gain included on taxable income of a person

5. 80% duty on milk tanker has been exempted.

  1. The agriculture reform fee has been reduced from 8 percent to 5 percent.

7. Health institutions liable to collect and pay health service tax may opt to collect and pay value added tax instead by voluntarily registering with the Value Added Tax.

8. Arrangement has been made to levy only 90 percent income tax on special industries and information technology industry which directly employ 300 or more Nepalese all the year round. Similarly, industries which directly employ 1200 or more Nepalese nationals all the year round or which provide direct employment to more than 100 Nepalese nationals including 33 percent women, dalits (the downtrodden) or the handicapped will have to pay only 80 percent tax on their income of that particular year.

9. Arrangement has been made not to look into the income source of manufacturing industries using more than 50 percent indigenous raw materials, employing more than 300 national workers or those of national importance such as hydro electricity projects, international airports, tunnel ways, road ways or railways until mid April, 2019.

10. In order to give further incentive to export trade, arrangement has been made for providing lump sum refund within 30 days to the person or organization exporting more than 40 percent of their monthly sale.

11. In order to reduce the cost of trade and industry as well as to simplify the process, except for brick industry, stone crusher and tobacco products (panparag, chewing tobacco gutka and khaini) the need to get excise license on the production, import, export, storage, sale and distribution of all other excisable items under self-release will be annulled.

12. Arrangement for excise duty exemption on items produced by using more than 90% domestic scraps has been made.

13. VDIS program not continued.

14. No need to pay advance tax if estimated annual tax is less than Rs. 5,000 earlier it was Rs. 2,000

15. Amendment in definition of Non Business Chargeable Asset: