Friday, July 17, 2009
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.
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.
- 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:
Thursday, April 2, 2009
List of IFRS
International Financial Reporting Standards (IFRS/IAS) List
IFRSs:
IFRS 2 Share-based Payment
IFRS 3 Business Combinations
IFRS 4 Insurance Contracts
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 6 Exploration for and evaluation of Mineral Resources
IFRS 7 Financial Instruments: Disclosures
IFRS 8 Operating Segments
IASs:
IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Cash Flow Statements
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 Events After the Balance Sheet Date
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investments in Associates
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 31 Interests in Joint Ventures
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
Wednesday, April 1, 2009
Internation Accounting Standard 12
IAS 12: Income Taxes
1. Objective
The objective of IAS 12 is to prescribe the accounting treatment for income taxes. The principal issue is how to account for the current and future tax consequences of:
(a) the future recovery (or settlement) of the carrying amount of assets (or liabilities) that are recognised in an entity's balance sheet, and
(b) transactions and other events of the current period that are recognised in an entity's financial statements
The items below reveal more about the requirements of IAS 12.
a. Deferred tax
The carrying amount of assets and liabilities may be recovered or settled at an amount, or under a timing, different from that considered for tax purposes.
In such cases, IAS 12 requires an entity to recognise a deferred tax liability or a deferred tax asset (with certain limited exceptions), so as to recognise the deferred tax effects in the current financial statements as if those differences did not exist.
The deferred tax liability (or asset) subsequently reverses as the differences between tax and accounting treatment reduce, and ultimately disappears.
b. Where to account for the tax
IAS 12 requires an entity to account for the tax consequences of transactions and other events in the same way that it accounts for the transactions and other events themselves, i.e:
in the income statement
in equity, or
in calculation of goodwill
c. IAS 12 also deals with...
IAS 12 also addresses:
the recognition of deferred tax assets arising from unused tax losses or unused tax credits
the presentation of income taxes in the financial statements, and
the disclosure of information relating to income taxes
2. The scope of IAS 12
IAS 12 should be applied in accounting for income taxes.
Income taxes include:
all domestic and foreign taxes that are based on taxable profits
taxes, such as withholding taxes, payable by a subsidiary, associate or joint venture on distributions to the reporting entity
IAS 12 does not address:
methods of accounting for government grants (see IAS 20, Accounting for Government Grants and Disclosure of Government Assistance), or
investment tax credits
However, it does address accounting for temporary differences that may arise from such grants or investment tax credits.
3. Key definitions
a. Accounting profit
Accounting profit is profit or loss for a period before deducting tax expense.
b. Taxable profit (or tax loss)
Taxable profit (or tax loss) is the profit (or loss) for a period, determined in accordance with the rules established by the taxation authorities, upon which it will be determined whether income taxes are payable (or recoverable).
This is the profit or loss, as calculated by the tax authorities, at the end of a financial period based on the income and expenses that are included or excluded for tax purposes (e.g. accounting depreciation versus tax depreciation).
c. Tax expense (or tax income)
Tax expense (tax income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
i.e. Tax expense (or tax income) = current tax + deferred tax
d. Current tax
Current tax is the amount of income taxes payable (or recoverable) in respect of the taxable profit (or tax loss) for a period.
i.e. Current tax = taxable profit (or tax loss) x tax rate
It is the amount of tax due to or from the tax authorities for a period.
e. Tax base
The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes, i.e. the value of an asset or liability in terms of the tax laws.
For example: an asset has a cost of 100, depreciation to date is 20 but tax depreciation is 25.
Therefore:
Carrying amount = 80 (accounting value)
Tax base = 75 (tax value)
f. Temporary differences
Temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base, i.e. the difference between the accounting value (carrying amount) and the tax authority amount (tax base) due to the differences in treatment between the relevant tax legislation and the accounting policies of the entity.
Temporary differences may be either:
(a) taxable temporary differences - temporary differences that will result in taxable amounts in determining taxable profit (or tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled
or
(b) deductible temporary differences - temporary differences that will result in amounts that are deductible in determining taxable profit (or tax loss) of future periods, when the carrying amount of the asset or liability is recovered or settled
g. Deferred tax liabilities
Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.
i.e. Deferred tax liabilities = taxable temporary differences x tax rate
h. Deferred tax assets
Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of:
(a) deductible temporary differences
(b) the carryforward of unused tax losses, and
(c) the carryforward of unused tax credits
i.e. deferred tax assets = deductible temporary differences * tax rate + unused tax losses * tax rate and tax credits
1. Objective
The objective of IAS 12 is to prescribe the accounting treatment for income taxes. The principal issue is how to account for the current and future tax consequences of:
(a) the future recovery (or settlement) of the carrying amount of assets (or liabilities) that are recognised in an entity's balance sheet, and
(b) transactions and other events of the current period that are recognised in an entity's financial statements
The items below reveal more about the requirements of IAS 12.
a. Deferred tax
The carrying amount of assets and liabilities may be recovered or settled at an amount, or under a timing, different from that considered for tax purposes.
In such cases, IAS 12 requires an entity to recognise a deferred tax liability or a deferred tax asset (with certain limited exceptions), so as to recognise the deferred tax effects in the current financial statements as if those differences did not exist.
The deferred tax liability (or asset) subsequently reverses as the differences between tax and accounting treatment reduce, and ultimately disappears.
b. Where to account for the tax
IAS 12 requires an entity to account for the tax consequences of transactions and other events in the same way that it accounts for the transactions and other events themselves, i.e:
in the income statement
in equity, or
in calculation of goodwill
c. IAS 12 also deals with...
IAS 12 also addresses:
the recognition of deferred tax assets arising from unused tax losses or unused tax credits
the presentation of income taxes in the financial statements, and
the disclosure of information relating to income taxes
2. The scope of IAS 12
IAS 12 should be applied in accounting for income taxes.
Income taxes include:
all domestic and foreign taxes that are based on taxable profits
taxes, such as withholding taxes, payable by a subsidiary, associate or joint venture on distributions to the reporting entity
IAS 12 does not address:
methods of accounting for government grants (see IAS 20, Accounting for Government Grants and Disclosure of Government Assistance), or
investment tax credits
However, it does address accounting for temporary differences that may arise from such grants or investment tax credits.
3. Key definitions
a. Accounting profit
Accounting profit is profit or loss for a period before deducting tax expense.
b. Taxable profit (or tax loss)
Taxable profit (or tax loss) is the profit (or loss) for a period, determined in accordance with the rules established by the taxation authorities, upon which it will be determined whether income taxes are payable (or recoverable).
This is the profit or loss, as calculated by the tax authorities, at the end of a financial period based on the income and expenses that are included or excluded for tax purposes (e.g. accounting depreciation versus tax depreciation).
c. Tax expense (or tax income)
Tax expense (tax income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
i.e. Tax expense (or tax income) = current tax + deferred tax
d. Current tax
Current tax is the amount of income taxes payable (or recoverable) in respect of the taxable profit (or tax loss) for a period.
i.e. Current tax = taxable profit (or tax loss) x tax rate
It is the amount of tax due to or from the tax authorities for a period.
e. Tax base
The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes, i.e. the value of an asset or liability in terms of the tax laws.
For example: an asset has a cost of 100, depreciation to date is 20 but tax depreciation is 25.
Therefore:
Carrying amount = 80 (accounting value)
Tax base = 75 (tax value)
f. Temporary differences
Temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base, i.e. the difference between the accounting value (carrying amount) and the tax authority amount (tax base) due to the differences in treatment between the relevant tax legislation and the accounting policies of the entity.
Temporary differences may be either:
(a) taxable temporary differences - temporary differences that will result in taxable amounts in determining taxable profit (or tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled
or
(b) deductible temporary differences - temporary differences that will result in amounts that are deductible in determining taxable profit (or tax loss) of future periods, when the carrying amount of the asset or liability is recovered or settled
g. Deferred tax liabilities
Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.
i.e. Deferred tax liabilities = taxable temporary differences x tax rate
h. Deferred tax assets
Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of:
(a) deductible temporary differences
(b) the carryforward of unused tax losses, and
(c) the carryforward of unused tax credits
i.e. deferred tax assets = deductible temporary differences * tax rate + unused tax losses * tax rate and tax credits
Nepalese Company Act 2063 in English
Dear Friends,
You can download the company act 2063 of Nepal in english version.
Download
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