Process of Obtaining Tax Clearance Certificate in Nepal?

A tax clearance certificate confirms that an individual or entity:

• is in compliance with the Nepalese Income Tax Act, 2058 and its regulations,
• has submitted the tax return, audit report and necessary schedules, and
• all the taxes have been duly paid to the Government of Nepal

Who issues Tax Clearance Certificate?

The Inland Revenue Department (IRD) is authorized to obtain tax clearance certificate on behalf of the Ministry of Finance, Government of Nepal.

How do I apply?

An application must be filed at the concerned Tax Payer's office with NRs 10 stamp with the following documents enclosed:

1) Entity:

• Copy of the payment of taxes per Self Assessment submitted to IRD.
• Copy of the Audit Report duly audited by the member of the Institute of Chartered Accountants of Nepal (ICAN).
• Copy of the Previous Year Income Tax Return and Copy of Tax Clearance Certificate Obtained if any.
• Copy of the Permanent Account Number (PAN) Certificate.

2) Individual:

• In the case of Income from Employment (Salary Income), income detail and a copy of the tax deposit detail certified by the employer.
• In case of Rental Income from House or Land, income detail and a copy of the tax deposited for the period.

What happens after the application is submitted?

• Tax officer reviews the document submitted for completeness and verify that taxes have been paid per the self-assessment submitted.
• The application is, then, forwarded to Tax Clearance Unit which is then, forwarded to Dues Assessment Desk to Verify whether there are any outstanding liability and/or errors.
• If there is an outstanding liability, a concerned applicant must clear the due amount and attach the deposit slip along with the application.
• Once Due Assessment Desk confirms that outstanding liability has been cleared, Tax clearance unit registers the application in the Tax Portal and issues a unique tax submission number.
• Tax officer, then, reverifies that application is complete and there is no dues remaining.
• Tax Clearance unit, then, prints the certificate which is authorized by the IRD officials.
• The authorized certificate is then stamped at the registry desk and handed over to the applicant.

How much does it cost?

There is no fee involved in obtaining the tax clearance certificate. However, an individual or entity must ensure that all outstanding dues to IRD have been deposited.

How much time does it require?

If there isn't anything outstanding or errors in the application or enclosed documents, officially, IRD may take 2-3 working days to issue the certificate. However, if there is any complication, it depends on how sooner issues are addressed.

When do I need a tax clearance certificate?

Tax clearance certificate has always been voluntary, as an entity or individual has to file an application themselves to obtain. However, these days, all the government entities, banks, financial institutions, I/NGOs, and public limited companies have made it compulsory to have Tax Clearance Certificate as one of the mandatory requirements for procurement.

Do I need to pay tax again for the period of tax clearance certificate?

A tax clearance certificate is generally issued when the self-assessment and the amount of tax paid matches with each other and there are no outstanding dues to IRD. However, if IRD during the Jeopardy Assessment or Amended assessment comes to the conclusion that additional taxes are required for the period where Tax Clearance Certificate was granted then, it will be the responsibility of the applicant to pay such additional dues assessed by IRD.

Note: You can now obtain the tax clearance certificate electronically through www.ird.gov.np. All you have to do is, ensure that you have the login credentials to the Tax Payer's portal.

Follow the steps below:

• Go to IRD website https://taxpayerportal.ird.gov.np/taxpayer/app.html
• Go to the General tab where you will find ‘Taxpayers Login’
• Enter the Username password and the Number and log in.
• After logging in, click on the option ‘Tax Clearance’ 
• After you click on ‘Tax Clearance’ a new screen will pop up.
• Then select the fiscal year and click on ‘Print’

That's it and you should have your tax clearance certificate available.

However, if you do not have the login username and password. You can create one on the same taxpayer's portal. Once you are on the website, click on General and then, Create Password.

Where can I find more information?

For further information, please contact your Auditor, concerned Tax Payer's Office or visit Inland Revenue Department website www.ird.gov.np