1. TAX ASSESSMENT, APPEAL & REVIEW AND RENEWAL OF TAX EXEMPTION CERTIFICATE
1.1. Self-Assessment
The taxpayer is required to make self-assessment of its tax and should file annual return and pay tax within 3 months from the end of an income year. So, the tax should be paid and return should be filed within Asoj end 2079 (Mid October, 2022) for the income year 2078/79 (2021/22). However, a taxpayer may have due date extended for a maximum period of 3 months i.e. up to Poush end 2079 (mid-January, 2023) on request to IRD with bonafide reasons for such extension.
1.2. Amended Assessment
The tax return filed as per self-assessment by a taxpayer is not final. Tax Authority may revise the assessment within four years from the date of submission of tax return under self-assessment. It may revise it as many times as it deems necessary but within the four years period. If tax authority obtains evidence that the tax return of any year is misleading due to fraudulent assessment, it may revise the assessment at any time after the submission of return, but within one year of obtaining the information. If any authorized body restricts tax authority to make additional assessment, the tax authority cannot make amended assessment.
1.3. Review and Appeals
Application for Administrative Review may be submitted at IRD against revised assessment or an assessment of fees, interest and penalty within 30 days from the date of receipt of notice about the decision. While filing an application for administrative review it is mandatory to deposit 100% of the undisputed tax and one fourth of the disputed tax.
1.4. Renewal of Tax Exemption Certificate
Tax Exempt Organizations are required to renew their tax exemption certificate within six months of the end of fiscal year, i.e. with Mid-January every year, for which an application shall be filed along with the following documents:
- Proof of filing Annual Income Return of immediately preceding Income year
- Withholding Tax Return and proof of deposit of Withholding Taxes
After renewal of tax exemption certificate, a new certificate is issued by Tax Officer. A Tax-Exempt Organization cannot enjoy tax exemption benefits unless the certificates are renewed.
2. Accounting Records & Books of Account for Tax Accounting:
According to Section 81, every person, liable to pay tax as per this Act, has to keep records and documents as specified by IRD. Moreover, the Section compels a person to keep the following records and documents:
- All records and documents those are necessary to explain the information provided or to be provided in tax returns and in other documents to be filed with IRD or Inland Revenue Office (IRO).
- All documents and records that are sufficient to determine the actual tax liability of the person, and
- All documents and records those are sufficient to prove the validity of the expenses shown in the books.
It is, therefore, necessary to keep the supporting vouchers and documents, books, subsidiary books, registers, etc. with regard to every transaction or event that has happened during the year. Section 81(2) has allowed a person to keep accounts and record either in English or in Nepal language. In case a person keeps accounts and records in any other language, it has to get them translated into Nepali from an authorized person on its own cost.