1. What is tax rebate?
Tax rebate is the mechanism where registered person can get refund of the tax because the output tax does not match with input tax. If the tax he has paid is higher than the tax he collects, he can get refund of the excessive tax amount. Not only registered persons, those who are free from the burden of taxation like diplomats and embassies and international institutions or projects organized in Nepal based on bilateral or multilateral agreements exercising tax exemption privilege from Ministry of Finance are refunded of the tax paid by them on purchase of goods and services.
2. When can you get tax rebate?
You can get tax rebate on following circumstances:
- Regular Exporters that has been registered as exporter having exports more than 40% of total sales has payment of tax in purchase greater than tax collected and is unadjusted can get tax rebate.
- Tax that could not be adjusted for four consecutive months.
- Persons exercising diplomatic immunity from Ministry of Foreign Affairs and having tax exemption privilege can get tax rebate on the purchase of goods and services with tax.
- International institutions exercising tax exemption privilege from Ministry of Finance can get tax rebate for the tax paid by them.
- Projects organized in Nepal based on bilateral or multilateral agreements exercising tax exemption approval from Ministry of Finance can get tax rebate for the tax paid by them.
- Tax amount paid mistakenly that include payment of tax for non-taxable goods and services
- If a tourist purchases and takes goods of worth exceeding NRs 15,000 who was on Nepal tour and returns on flight, he can get tax rebate for the purchase.
- Goods that have been re-exported after being imported to Nepal qualifies for tax refund.
3. When and how should you claim for tax rebate?
You should submit an application for tax rebate within three years from the date of tax period.
You can claim tax refund through submission of tax returns. You should submit necessary documents along with the application during tax examination based on tax returns.
4. When do you get tax rebate after submitting application?
For tax that could not be adjusted for four consecutive months, tax officer should provide tax rebate within sixty days from the date of application.
For other conditions, it should be provided within thirty days from the date of application.
5. What happens if you do not get tax rebate within the prescribed time?
You get interest for the delay in receiving tax rebate at the rate of 15% per annum. The interest amount shall be calculated after sixty days from the date of application.
6. When can a diplomat get tax rebate?
When a diplomat or diplomatic mission purchases taxable goods and services from local market (except purchase worth less than 1500 at a time), they can get tax rebate.
In order to get refund, following documents are required:
- Submission of refund claim as per Schedule 17 through diplomatic mission along with copy of identity of diplomat,
- Must be claimed for refund at Tax Refund Section of IRD through Consular Department and recommendation by the Ministry of Foreign Affairs regarding transparency,
- Original invoice of tax payment and its copy.
7. What should a tourist do in order to claim for refund?
A tourist can fill up tax rebate form from the authorized vendors. The form may be submitted along with the original invoice to Rastriya Banijya Bank counter at the Tribhuwan Internnational Airport. Evidence regarding foreign exchange (payment from debit card or credit card), passport, flight ticket and boarding pass are also needed to be submitted along with the claim form. It should be certified by the Custom officer that the goods purchased are being taken with himself. After examination of documents, Rastriya Banijya Bank shall refund the tax amount deducting 3% of the amount as service charge.