Section 4 : Computation and rate of tax

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1) The amount of tax required to be paid by any person referred to in Section 3 for any income year shall be equal to the total amount of tax required to be paid by such person in the capacity of any one person or more than one person mentioned in clauses (a),(b) and (c) of that Section.

2) In computing the tax required to be paid by any person referred to in clause (a) of Section 3, it shall be computed by applying the related rates mentioned in Schedule 1 to the taxable income of that person. In so computing the tax, it shall be computed by deducting the amount that is adjustable in tax and claimed by that person pursuant to Section 51 or 71 or both the Sections.

3) Notwithstanding anything contained in Sub-section (2), the tax payable by a resident natural person referred to in clause (a) of Section 3, who has fulfilled all of the following requirements, shall be equal to the total amount of tax deducted pursuant to Section 87 from the payments made by the employer to such a natural person in that income year:

a) Only the income of any employment having a source in Nepal is included in the income of that income year,

b) All employers have become non-resident persons in that income year, and there is only one employer at one time, and

c) The employer has made a claim for the adjustment of tax for the medical expenses and retirement contribution paid by him and not of the expenses for donation under Section 12.

4) Notwithstanding anything contained in Sub-section (2), the tax payable in any income year by a resident natural person referred to in clause (a) of Section 3, who has fulfilled all of the following requirements, shall be equal to the amount mentioned in Sub-section (7) of Section (1) of Schedule –1:

a) That person has only income earned from his business having source in Nepal in that income year,

1a1) Not claimed for tax adjustment for medical expenses under Section 51 and for advance tax deduction under Section 93,

b) The income earned from the business that does not exceed two hundred thousand rupees and the turnover of the business that does not exceed two million rupees,

2c)………………………………………….

34a) Notwithstanding anything contained in sub-section (2), the tax to be paid by an individual referred to in clause (a) of Section 3 who has met the following conditions on the basis of transaction in any income year shall be equal to the amount calculated according to the rate prescribed in sub-section (17) of Section 1 of Schedule- I:

a) That person has income only from the source of occupation in Nepal in that income year,

b) The annual turnover of the occupation is more than twenty lakh rupees and less than fifty lakh rupees,

2c)………………………………….

d) Income not for consultancy and expertise service to be provided by doctors, engineers, chartered accountants, legal professionals, sportspersons, actors, consultants, or individuals.

5) In computing the tax required to be paid by any foreign permanent establishment referred to in clause (b) of Section 3, it shall be computed by applying the related rates mentioned in Sub-section (6) of Section 2 of Schedule I to the income sent abroad by such establishment in that income year.

6) The amount of tax required to be paid by the person referred to in clause (c) of Section 3 shall be equal to the total amount computed by applying the rates mentioned in Sections 87,88,88A. and 89 to the amount of each payment liable to final tax deduction received by that person in that income year.

1 Inserted by the Financial Act, 2075(2018).

2 Extreted  from the Financial Act, 2080(2023)

3 Inserted by the Financial Act, 2080(2023)

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Section 4 : Computation and rate of tax

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