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Nepal Contents

Contents

General Section

General Information

Infrastructure

Introduction

Surface Transport

Roads

Telecom

Energy

Power

Banking

Banking

Travel

Travel

Policies

Exim Policy

Trade Policy

Economic Policy

Trade

Trade

Exim

Tax Structure

Tax System

Important Contacts

Important Contacts

   
 

 

 
   

 

 

Tax Structure

 Other Link : Incentives And Facilities

Company Taxation

The present rate of corporate tax is 25 percent. However, industries, other than cigareette, bidi, cigar, khainy, tobacco, alcohol or beer, will not be imposed more than 20 percent income tax on their industrial come.

Personal Taxation

The single or married status of an individual determines the relief to which he/she is entitled. Taxable income includes profits from a business, income from salaries along with other benefits provided by the employer, income from house rent, interest, dividends and other sources. The first Rs. 50,000 of income of a married couple or family are exempt from income tax. In the case of an individual, the exemption limit is 40,000. The rates of income tax are as below.

Rates of Income tax

  15 percent on the first additional Rs. 75,000

  25 percent on balance.

Royalties, Technical Services Fees and Management Fees

Royalties, technical service fees and management fees will be taxed only at a concessionery rate of fifteen percent. Income tax will not be levied on the interest on foreign loan.

Deduction

The Income Tax Act of 1974 has provision for deduction of expenses from taxable corporate and personal income. Expenses wholly and exclusively incurred in the generation of income are deductible from taxable income. Furthermore, five percent of the total gross income of industrial units will be allowed for deductions for advertisement , entertainment and other contingencies.

Depreciation

Industries are entitled to depreciate the fixed assets either on a straight line method or on reducing instalment system. All plant, machinery and equipment qualify for depreciation at the rate of five to twenty five percent per annum. While calculating depreciation on the fixed assets, industries shall be entitled to depreciate additional one third of the rate of depreciation that prevails to others.

Value Added Tax

In order to replace the existing sales tax by value added tax the Department of Value Added Tax (VAT) has been established by which tax system will be made more realistic and transparent. The tax will be ascertained on the basis of value addition and based on records.

Double Taxation Agreements

In order to avoid the double taxation on incomes of foreign investors, the government will take necessary action to conclude agreements for the avoidance of double taxation with the countries of the concerned foreign investors. At present, agreements for the avoidance of double taxation have been concluded with India, Norway and Thailand

 

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