1. What do you mean by Income Returns?
Income return is the statement or document that is prepared by the taxpayer which includes:
- Assessable income earned by the person from each employment, business or investment in that year and source of such income,
- Taxable income of the person in that year and the tax to be imposed in respect of that income,
- The income sent abroad in that income year by a non-resident person’s foreign permanent establishment situated in Nepal, and the tax imposable in that income
- Tax deduction, installment or amount of any assessed tax paid in that year by any person in a manner to have tax adjustment
- Amount of tax due and payable to be set by subtracting the tax paid by that person in that year
- Any other information and details as specified by the Department.
2. What do you mean by Self-Assessment?
The process of stating the income of the year, taxable income, payable tax, deductions in the form specified by Inland Revenue Department by every taxpayer and payment of such tax is self-assessment.
3. Where can a person find the form of income return?
The form of income returns, and schedules can be obtained from any IRO or Taxpayer Service Office. It can also be downloaded from the website of IRD www.ird.gov.np.
4. Who shall submit income return?
Any person who has income from employment, business or investment in any income year shall submit income return.
The following person does not need to submit income return:
- The person who has income from employment only and works for only one employer at a time,
- The person who receives such payment only in which final withholding tax is levied,
- The natural person who is owner of rental transport vehicle
5. Does different source of income require separate income return? The format of income return is different for natural person and legal person. Similarly, there are different forms for income from employment, business, investment or profit from taxable non- business property. There is separate form for natural person who pays presumptive tax.
Different details are to be submitted as per the head of the income.
6. Is there any directives to help to fill the income return form?
The directives regarding the filling up of the form and the schedules are available along with the forms. Such forms and directives can be downloaded from the website of IRD www.ird.gov.np.
7. When the income return shall be submitted?
Each person shall submit the income return of that year within three months of expiration of an income year.
In case, the income return could not be submitted within time limit, application should be written within time limit for submission to the department for the extension of the time limit. The department may extend at one time or several times, the time limit up to three months.
8. Can amended assessment could be submitted if there is any mistake in self-assessment?
If the taxpayer finds out that the self-assessment has been mistaken, he/she shall give notice to the concerned office immediately. If the self-assessed tax has already been registered in IRO, it cannot be amended.
9. Is tax auditing shall be done separately after the audit?
The taxpayer who has more than one crore profit from investment or business in a year (in case of professional business more than fifty lakhs) shall cause to do audit and get it certified. Such tax auditors are listed in the Nepal Chartered Accountant Association. The permission of IRD is not necessary to audit.
10. I have already paid payable tax as presumptive tax. Do I also need to submit income return?
Though, presumptive tax has been paid, if the presumptive tax is not final withholding tax like Rent paid for the land or building and fixtures and equipment, Profit paid by a resident person for investment insurance, the taxpayer need to submit income return.
If such income return is not submitted, fine will be imposed. If tax is remaining to pay along with income return, the fine will be imposed by 15%.
11. What will happen if there is any mistake in self-assessment? Do I have to pay fine though it was not deliberate?
If there has been mistake in self-assessment and if less amount has been mentioned, the fine of 50% to 100% shall be imposed. If the mistaken was not done deliberately r negligently or by submitting false documents but a genuine mistake only 50% fine is imposed. If the false return has been submitted deliberately or negligently 100% fine is imposed.
12. Can I submit income return through online and pay tax online?
IRD has provide the facility of e-filing. Thus, those who have PAN can submit their income return through e-filing by logging in www.ird.gov.np. Till date there is no provision of e-payment. So, the tax shall be deposited in bank and the voucher shall be presented before concerned IRO.
13. After I submit income return and pay tax, isn’t my duty as taxpayer finished?
After you submit the income return and pay tax, the duty as taxpayer is finished. He/she need not request IRO to assess his/her tax. The self-assessment f tax shall be considered the final assessment of tax. If the IRD finds any mistake or fault in such assessment, it can amend the tax assessment. In such situation, before final tax is determined, all the documents are investigated as per law and you will be given opportunity for clarification also and you will be given notice about it.
14. I cannot exactly predict about my transaction or business. I cannot appoint auditor too. Can the IRO assess the tax in reasonable manner?
The taxpayer him/ herself knows most about their business and there is provision of self-assessment in the Income Tax Act. The income return shall be submitted after certification from financial auditor or tax auditor if necessary. In case where the taxpayer has submitted income return, the tax of the income return is deemed assessed and tax paid. The department can determine amended tax after making necessary investigation.
15. In what conditions, the self-assessment is investigated further?
The self-assessment is investigated further in following conditions:
- If such assessment is not okay when tested
- If the condition of the taxpayer is not sound i.e. poor income
- If the participation of taxpayer is seen less
If the taxpayer has properly mentioned his/her income and included all the information as required by the Income Tax and the directives, such self-assessement will not be selected for further test and investigation.
16. How to fill the form of income return through online?
- Log in www.ird.gov.np.
- Click on taxpayer portal
- Select Income Tax Folder
- Click on D03- Return Entry
- Fill up all the details required in the screen: username, password, PAN, income year (since income return is submitted after the end of income year, the previous income year shall be selected).
- You will get Submission number then click on the Proceed Button
- Enter the following details
Type of taxpayer (personal PAN or business PAN)
Details of Schedule 5, Schedule 6, Schedule 7, Schedule 8, Schedule 13
- Upload audit report (Financial Statement), other necessary documents in pdf. Or jpg. Format. The maximum size of file shall be 1 MB.
- If you have saved all these entries and you need to change something, you should select Income Tax Folder and Click on Tax Return Login and login by typing submission no, username and password and you can make changes.
- Then you can submit the form by clicking on submit button.
- After you submitted, the Save and Submit Button are disabled, and Print Button is Enabled.
- Then you shall print them and submit in the concerned Large Taxpayers Office, IRO, or Taxpayer Service Office and verify it. If you have the username and password, you can verify it yourself.
- Until the submission has been verified, the income return is not deemed submitted. Thus, you should verify the submission made.
- If you need any help, you can click on Help menu.
- If you need to submit the information about suspension or de registration of PAN, you need to click on Income Tax Folder and choose Close of Business D03 menu and follow the same procedure as return entry and then submit and verify.
17. Can I do Auto Verification through internet?
- There is a tax policy of auto verification the submission made. Thus, you can get username and password for self-verify from IR or Taxpayers Service Office.
- If the username and password are same, there would not be verification. S, you have to change the password by going in General Folder inside Taxpayer Portal.
- Now, click on the Login menu inside General Folder and type username, password and login and select Module of income tax as per necessity and select your Submission Number.
- Through this login menu, taxpayer can review and print income returns. All the statements that are submitted by taxpayer can be viewed from this page and can verify it too.
18. When income return is submitted through online, username and password are to be asked every month?
The username and password received once can be used forever. Thus, it shall not be asked every month