Skip to main content

Contribution to Social Security Fund is now Deductible from Income for Income Tax Calculation

Through the 10th Amendment of the Income Tax Rules 2059, made on 2076 B.S. Nepal government has added a clause to add a contribution to Social Security Fund as a deductible expense. Notice was published in the Gazette on 2076/11/12.

According to the new amendment, a person contributing to the Social Security Fund established per Social Security Fund Act, 2074 can deduct a minimum of
a) contributed amount maximum up to NRs. 500,000 or 
b) 1/3rd of Assessable Income

What does it mean?
It means a person who hasn't yet started a contribution to Social Security Fund or limited contribution to approved retirement funds such as Provident Fund and Citizen Investment Trust are availed existing deduction which is minimum of
a) contribution amount up to NRs. 300,000 or
b) 1/3rd of Assessable Income

And, those contributing to Social Security will get an additional deduction of NRs. 200,000 (from NRs. 300,000 to NRs. 500,000) provided 1/3rd of his/her assessable income is higher than NRs. 500,000.

Does this mean person contributing to Citizen Investment Trust and Social Security Fund will be availed NRs. 500,000 combining contribution to both CIT and SSF? The answer is no, a person can choose between one of the two. Either CIT hence, NRs. 300,000 or SSF and NRs. 500,000.

Here's how Rule 21 should be read now:

अवकाश योगदानको सीमा: कुनै आय वर्षमा स्वीकृत अवकाश कोषको हिताधिकारी प्राकृतिक व्यक्तिले अवकाश कोषमा अवकाश योगदान गर्दा तीन लाख रुँपैया वा निजको निर्धारणयोग्य आयको एक तिहाईमा जुन घटी हुन्छ सो रकमसम्म आफ्नो कर योग्य आयबाट घटाउन सक्नेछ । 

तर योगदानमा आधारित सामाजिक सुरक्षा कोष ऐन, २०७४ बमोजिम स्थापना भएको सामाजिक सुरक्षा कोषमा योगदान गर्ने हिताधिकारी प्राकृतिक व्यक्तिले सो कोषमा योगदान गर्दा पाँच लाख रुँपैया वा निजको निर्धारणयोग्य आयको एक तिहाईमा जुन घटी हुन्छ सो रकमसम्म आफ्नो कर योग्य आयबाट घटाउन सक्नेछ ।

Here's the notice published in Gazette for your reference.



Labels:

Comments

Post a Comment

Most Viewed

Windfall Gain Tax (आकस्मिक लाभमा कर) per Nepal Income Tax Act

Nepal's Income Tax Act defines Windfall gain as a gain obtained by means of lottery, gift, prize, tips, share of earning in a game (जितौरी)  or any other gain acquired incidentally.  Let us explain by example what can potentially be Windfall Gain.  1) Let's say apple recently launched a iPhone 14 in Nepal. Part of such launch, company offered its customer who buys iPhone, an iPad for free. The market value of the iPhone is Rs. 214,000 and that of iPad is Rs. 189,000. In such case, customer who received Rs. 189,000 worth of iPad without any additional cost will be considered a prize hence, a windfall gain. 2) Recently DRS gaming won US$ 292,000 (approx. Rs 4 crore) for being runner's up in the grand finals of the PUBG Mobile Global Championship. Let's assume here that DRS gaming has not been registered as a company but simply represented by individuals. If I am not mistaken, there are 4 members in the team. So, each individual will have won Rs. 1 crore as share of earni...
Post a Comment
Read more

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 c...
9 comments
Read more

Nepal Accounting Standard (NAS) for Not for Profit Organizations (NGOs and INGOs) 2018 - Basics

Effective Date: Nepal Accounting Standard Board has published an Accounting Standard for Not for Profit Organizations in November 2019 effective Fiscal Year 2077/78 (July 16 2020, and onwards). Any organization adopting it to prior to the date above shall disclose the fact. Applicable Organization: NAS is applicable to all not for profit organization registered with the Social Welfare Council or working in Nepal under a general agreement, or project offices working under the bilateral agreement with Nepal Government and Foreign Government Purpose: Guide Not for Profit Organizations to prepare the general purpose financial statement to the entire non-profit organization as a single reporting entity . Improve the quality of the data to provide adequate information to the users of the financial statements Reduce the diversity that exists among NPOs in accounting practice and presentation We should note that NAS is based on the Going Concern assumption and the concep...
1 comment
Read more