Section 65 : Retirement payments

1) For purposes of computing retirement payment income earned by any natural person from the interest based on contribution held in any approved retirement fund or retirement payment from the Government of Nepal, the following provisions shall apply:-

a) Retirement payments made by the fund for the interest in the fund have to be included in the income and

b) Notwithstanding anything contained in clause (a), if such payment is made in a lump sum, the payment to be set by subtracting fifty percent of the paid amount or five hundred thousand rupees, whichever is higher, from the amount so paid shall be deemed as the profit made by the person from the disposal of his non-business taxable assets.

2) For purposes of computing the profit made by any natural person from the interest in any retirement fund that has not obtained approval, the following provisions shall apply:-

a) Where a resident person has made the payment, tax shall be imposed on the beneficiary in that amount as withholding of tax finally, and

b) Where a non-resident person has made the payment, that amount has to be included in computing the income of the beneficiary.

Explanation: For purposes of this Section, “profit made from the interest in any retirement fund that has not obtained approval’ means if retirement payments made from a retirement fund which has not obtained approval to a beneficiary natural person for his interest in the fund exceed the amounts of retirement contributions paid by that person to that fund for his interest in the fund, the amount to the extent of such excess.

Provided that payment made from any non-contributory fund shall not be considered as benefit from an interest held in the retirement fund not approved.