Skip to main content

Types of Industries in Nepal

Industrial Enterprise Act that came into effect from 2076 B.S has classified industries into 5 different types.

1) Micro Enterprise: For any industry to be termed micro-enterprise, it must fulfill the following conditions:

  • Fixed Capital worth up to Rs. 2 million (20 lakhs) excluding land and building
  • Entrepreneur himself/herself is involved in the operation & management of the enterprise,
  • A maximum staff member of nine including entrepreneur himself/herself.
  • Annual turnover less than Rs. 10 million (1 crore)
  • Uses 20 Kilowatt or less powerful motors, in case, the enterprise uses plant, machinery or equipment 
2) Cottage Industry: For any industry to be termed as Cottage Industry, it must fulfill the following conditions:

  • Based on Traditional Skill and technology
  • Are labor-intensive and require specialized skill or local raw materials and based on local technology, art, and culture.
  • Uses 50 Kilowatt or less powerful motors, in case, the enterprise uses plant, machinery or equipment
  • Industries listed below in Annexure -2 of the Act
    • Handloom, Pedalloom, Semiautomatic loom, Warping, Dyeing and Printing, Tailoring (Other than Readymade Garments), and Knitting
    • Handknitted Woolen Mat and Blanket (Radi, Pakhi), Woolen Carpet, Pashmina, Woolen Garments, Hand Made Paper, and Goods made up thereof
    • Traditional Artistic Products
    • Traditional Sculptures
    • Handmade pottery and artisans products using brass, bronze copper, german silver
    • Handmade pottery and household items such as knives, dragger (khukuri), spades, and traditional tools made of iron.
    • Goods made up thereof, Gold, Philigiree Products including Silver, Brass, Copper Precious and SemiPrecious Stones
    • Leather Cutting and Tanning, Rural Tanning and Leather Goods-producing Works
    • Jute, Sabai Grass, Babio, Choya, Cotton Thread Products
    • Stone Carvings
    • Artistic Products made up of Bones and Horns, Ceramic and other soil-based pottery.
    • Fine Arts, Pauwa, and other traditional arts
    • Mask and other traditional Dolls and Toys
    • Musical instruments and artistic products representing tradition and culture
    • Handmade Brick Industry
3) Small Industry: For any industry to be termed as Small Industry, it must fulfill the following conditions:




  • Fixed Capital worth maximum of Rs. 150 million  (15 crores)
  • Must not fall under the category of Micro Enterprise or Cottage Industry
4) Medium Industry: For any industry to be termed as Medium Industry it must have capital above Rs.  150 million (15 crores) maximum up to Rs. 500 million (50 crores).

5) Large Industry: For any industry to be termed as Medium Industry it must have capital above Rs. 500 million (50 crores).



Act has further classified them into the following domains on the basis of the nature of the products and services being produced/provided through these industries. They are:

1) Energy Industry
2) Manufacturing Industry
3) Agro and Forest-based Industry
4) Minerals Industry
5) Infrastructure Industry
6) Tourism Industry
7) Information Technology and Communications based Industry
8) Service Industry

The question remains, how do we determine the Fixed Capital? Act, under Section 18, has defined the methodology. According to which, fixed capital shall include assets:

  • Physical Infrastructure constructed or improved in water or land/underground in earth or space.
  • Terrestrial physical infrastructure such as sewerage system, internal roads, drinking water system, and water supply system
  • Office, Manufacturing building, or Warehouse
  • Residential building for employees and labor
  • Equipment and system related to electricity supply
  • Plant, machinery, tools and their spare parts
  • Transportation Vehicles
  • Furniture & Fixture
  • Communication equipment and related systems
  • Office supplies and equipment of capital nature
  • Expenses incurred prior to the establishment of an industry or during the construction phase such as:
    • Technical and Supervision costs
    • Pre Investment and pre-operation costs
    • Capitalized Interest expenses
    • Research and Development cost 
    • Environmental Impact Study cost

Labels:
Location: Unknown location.

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 for Electronic Billing Software Registration with Inland Revenue Department Nepal

Process is straight forward, one is required to submit the online form along with the following documents: 1)       Copy of the Tax Clearance Certificate 2)       Copy of the Permanent Account Number (PAN) 3)       Copy of Company Registration Certificate 4)       User Manual for the software signed by company representative and stamped on each page 5)       Guarantee letter that Data Amendment or Edit (Manipulation) is not possible on the software 6)       Data Backup and Recovery System is available on the software 7)       System Architecture Detail 8)       Software Set Up file and Invoice Sample in Excel – 20 copies each in 20 pen drive 9)       Connection with Central Billing Management Software (CBMS) – API can be collected Service Branc...
17 comments
Read more

Tax Collection Agency codes for IRD Offices all over Nepal

Inland Revenue Department Nepal has published the agency codes that shall be used for the collection of direct and indirect taxes for the general public's information. Each code consists of 9 numbers. There are in total 59 agency codes currently in use. From these codes, we can classify that there are four types of IRD offices currently in operation. 1) Inland Revenue Office 2) Tax Payer Service Office 3) Large Tax Payer Service Office, and 4) Medium Tax Payer Service Office When shall you use these codes? It shall be used while choosing the agency where the tax should be deposited while completing the form for depositing the taxes. Agency Code list below: S.N. Agency Code Name Address 1 305011620 Inland Revenue Office Lahan 2 305030201 Tax Payer Service office Phidim 3 305030301 Tax Payer Service office Illam 4 305030401 Tax Payer Service office Khandbari 5 305030601 ...
1 comment
Read more