Section 25: Tax May Be Refunded

1) The following amounts recovered as tax shall be refunded if an application for refund is submitted within three years from the date of the transaction:

(a) If a foreign country grants, on the basis of reciprocity, a tax exemption facility to diplomats of Nepal whom the Government of Nepal, Ministry of Foreign Affairs, has granted diplomatic recognition or to diplomatic facility-enjoying persons serving in a regional or international mission or organisation, the amount of tax paid within Nepal by any diplomat of such a country, regional or international mission or organisation to the extent of consumption by such a person,

(a1) Tax amount paid by a mission with diplomatic privilege upon recommendation of the Ministry of Foreign Affairs, Government of Nepal in the purchase of goods or services taxable in Nepal,

(a2) Tax amount paid by the United Nations Organisation, its member and specialised agencies in the purchase of taxable goods and services within Nepal in the course of operation of activities in pursuance of its objective.

(b) Tax amount paid by an international organisation to which the Ministry of Finance, Government of Nepal has granted the tax exemption facility,

(c) Tax amount paid in carrying out a project conducted in Nepal under a bilateral or multilateral agreement to which the Ministry of Finance, Government of Nepal has given permission for tax exemption,

(d) Any tax amount recovered by mistake.

1a) Notwithstanding anything contained in sub-section (1), the tax amount paid by a diplomatic agency or diplomat in the purchase of taxable goods or services, tax paid in the purchase of less than 106ten thousand rupees at one time shall not be refunded.

1b) If the price of any consumable goods or service purchased is paid through electronic mode of payment pursuant to the prevailing laws, ten percent of such payment shall be refunded to his or her bank account under the procedure prescribed by the Department as a cash incentive.

2) The tax amount to be refunded under clause (d) of sub-section (1) shall only be refunded to the person bearing the actual burden of tax.