The Financial Bill, 2082 introduces a range of tax exemptions and facilities across various sectors in Nepal. This bill particularly targets freight service providers, provident fund contributors, social organizations, VAT and excise duty taxpayers, international air transport service providers, and owners of old vehicles. This article provides a detailed overview of the key exemptions and facilities proposed by the Financial Bill, 2082.
1. Special Provision for Deduction of Rent Expenses for Freight Vehicles (Section 22)
For the fiscal years 2078/79, 2079/80, and 2080/81, if a freight service provider paid rent for freight vehicles to natural persons who did not have a Permanent Account Number (PAN) and deducted advance tax as per Clause (8) of the proviso to Sub-section (1) of Section 88 of the Income Tax Act, 2058, they will be allowed to deduct such rent as an expense when calculating their taxable income for that income year, even if they don’t have invoices stating the PAN. This provision is expected to provide relief to small freight businesses.
2. Special Provision for Transfer of Provident Fund Contributions (Section 23)
a. Mandatory Affiliation of Provident Funds: Previously approved provident funds by the Inland Revenue Department, as per the Income Tax Act, 2058, must compulsorily affiliate with the Employee Provident Fund established under the Employee Provident Fund Act, 2019, the Citizen Investment Trust established under the Citizen Investment Trust Act, 2047, the Social Security Fund established under the Contributory Social Security Fund Act, 2074, or the Pension Fund established under the Pension Fund Act, 2075, by Ashadh end, 2083 BS (mid-July 2026).
b. Tax Exemption on Transferred Amounts: If the accumulated provident fund contributions and any lump-sum amounts added to them are transferred to the specified funds within the given period, as per Sub-section (1), such transferred amounts will not be subject to advance tax deduction as per Section 88 of the Income Tax Act, 2058. This aims to streamline provident fund management and offer convenience to contributors.
3. Special Provision for Waiver of Tax, Penalties, Additional Fees, Charges, and Interest for Social Organizations (Section 24)
Community hospitals, health institutions, or transport-related associations registered under the Organizations Registration Act, 2034, that have outstanding tax, determined or revised, under the Value Added Tax Act, 2052, Income Tax Act, 2058, and annual Financial Acts before Jestha 15, 2082 BS (May 29, 2025), will have their remaining interest, fees, additional fees, and penalties waived if they pay the determined tax by Poush end, 2082 BS (mid-January 2026). This will help reduce the financial burden on social organizations.
4. Special Provision for Waiver of Value Added Tax Penalties, Additional Fees, and Interest (Section 25)
a. Waiver on Outstanding Payments: Value Added Tax (VAT) registered taxpayers who pay their outstanding VAT returns and tax due until Chaitra end, 2081 BS (mid-April 2025), along with 25% of the tax and interest, by Poush end, 2082 BS (mid-January 2026), will have the penalties, additional fees, and remaining interest waived under the Value Added Tax Act, 2052.
b. Waiver for Filing Returns and Paying Tax: Taxpayers who have submitted their VAT returns until Chaitra end, 2081 BS (mid-April 2025) but have only the tax payment remaining, will also receive a waiver on penalties, additional fees, and remaining interest under the Value Added Tax Act, 2052, if they pay 25% of the outstanding tax and interest by Poush end, 2082 BS (mid-January 2026).
5. Special Provision for Waiver of Excise Duty Penalties and Late Fees (Section 26)
a. Waiver on Excise Duty and Late Fees: License holders responsible for excise duty assessment and collection under Section 10A of the Excise Duty Act, 2058, who pay their excise duty returns due until Chaitra end, 2081 BS (mid-April 2025), along with 50% of the excise duty and late fees, by Poush end, 2082 BS (mid-January 2026), will have their penalties and remaining late fees waived.
b. Waiver for Filing Returns and Paying Excise Duty: License holders who have submitted their excise duty returns until Chaitra end, 2081 BS (mid-April 2025) but have only the excise duty payment remaining, will also receive a waiver on penalties and remaining late fees under the Excise Duty Act, 2058, if they pay 50% of the outstanding excise duty and late fees by Poush end, 2082 BS (mid-January 2026).
6. Provision for Value Added Tax Exemption for International Air Transport Service Providers and Ticket Sellers (Section 27)
a. Exemption for Service Providers: International air transport service providers who are yet to be registered under the Value Added Tax Act, 2052, but register for VAT and pay the VAT collected or collectible on transactions from Kartik 1, 2080 BS (October 18, 2023), by Ashoj end, 2082 BS (mid-October 2025), will have the interest, penalties, and additional fees waived.
b. Exemption for Ticket Sellers: For individuals involved in buying and selling international air tickets, whether VAT registered or not, if they pay the VAT collected or collectible on transactions from Kartik 1, 2080 BS (October 18, 2023), by Ashoj end, 2082 BS (mid-October 2025), they will not be required to pay interest, penalties, and additional fees. Additionally, any outstanding tax, interest, penalties, and additional fees due before Kartik 1, 2080 BS (October 18, 2023) will also be waived.
7. Provision for Tax Exemption for Taxpayers whose Tax was Determined Without Income Returns (Section 28)
a. Facility to File Income Returns: Individuals who did not submit income returns and whose tax was revised by the concerned tax office in the past under Section 101 of the Income Tax Act, 2058, can now submit their income returns for that income year and pay the corresponding tax by Poush end, 2082 BS (mid-January 2026), even if they have already paid the tax after the revised assessment or still have pending returns.
b. Tax Audit and Re-assessment: The concerned tax office can conduct a tax audit and re-assess the tax for the income returns received or to be received under Sub-section (1) by Ashadh end, 2083 BS (mid-July 2026). The limitation periods under Sub-section (4) of Section 20 of the Value Added Tax Act, 2052, and Sub-section (3) of Section 101 of the Income Tax Act, 2058, will not apply to such tax assessments.
c. Previous Orders Ineffective: In cases where a revised tax assessment is made after an audit under Sub-section (2) based on the tax return filed under Sub-section (1), any previous revised tax assessment order issued by the tax office will not be enforced.
8. Special Provision Regarding Non-Resident Persons Providing Electronic Services in Nepal (Section 29)
For a non-resident person providing electronic services in Nepal who registers and complies with the tax provisions as per Section 16 of the Financial Act, 2081, and Section 10B.1. of the Value Added Tax Act, 2052, the provision of Sub-clause (5) of Clause (kd) of Section 2 of the Income Tax Act, 2058, will not apply. This provides clarity for electronic service providers.
9. Special Provision for Waiver of Income Tax Interest and Fees (Section 30)
If a resident entity in Nepal, with an interest in another resident entity whose ownership has been changed and taxed under Sub-section (1) of Section 57 of the Income Tax Act, 2058, has outstanding tax due to a revised tax assessment based on such ownership change, the interest and fees related to that revised tax assessment will be waived if the entity pays the determined tax amount by Ashadh end, 2082 BS (mid-July 2025).
10. Special Provision for Income Tax Exemption for Public and Private Vehicles (Section 31)
For the purpose of writing off public or private vehicles that are more than twenty years old or are inoperative, the income tax and interest due before the fiscal year 2081/82 will be waived if the income tax for the fiscal years 2081/82 and 2082/83 is paid by Poush end, 2082 BS (mid-January 2026). This will facilitate the management of old and inoperative vehicles.
