Kathmandu, July 17
With the commencement of the fiscal year 2023/24, the government has implemented various tax-related arrangements that were announced previously.
These arrangements encompass changes in tax policies, rates, and regulations that will impact individuals, businesses, and other entities during the fiscal year.
As per the revised provision in the Income Tax Act 2002, individuals who earn more than Rs 5 million annually will be charged 39 per cent income tax. This change took effect on July 17. Previously, individuals earning above Rs 2 million were charged 36 per cent income tax.
The government has also introduced a luxury tax for the first time. Through this, the government has imposed a 2 per cent tax on services provided by high-end hotels, restaurants and resorts.
In addition, the government has also imposed a luxury tax at the rate of 2 per cent on precious metals worth more than Rs 1 million.
According to the government’s budget announcement, the same tax rate will be applied to imported alcohol as well as to items such as diamonds, pearls, and gold jewellery embedded with stones or made of precious metals, provided their value exceeds Rs 1 million.
Similarly, a 5 per cent tourism fee has also been implemented from July 17 on foreign tour packages sold by travel agencies.
Likewise, it has been arranged that one per cent of the amount charged by the recruitment agencies from the person going for foreign employment must be deposited as foreign employment service fee. This will make foreign employment more expensive.
The government has also increased taxes on bringing foreign currency through business process outsourcing and software programming for businesses abroad. As per the provisions of the Economic Act, a 10 per cent tax will be levied, which marks a significant increase compared to the previous rate of 1 per cent tax.
The 100 per cent tax exemption given to agricultural businesses in Nepal in the last fiscal year has been removed from this year. Before that, agricultural businesspeople were given a 50 per cent discount on the 20 per cent tax. This will be followed in fiscal year 2023/24.
Similarly, the 50 per cent discount on tax on income received by exporting goods produced in Nepal has been removed in the past. According to this, now the businesses that export goods have to pay 16 per cent income tax.
The 5 per cent tax levied in the past on interest received by people from deposits in banks, financial institutions and cooperatives has been increased to 6 per cent.
Income generated from YouTube and TikTok is also being taxed. A person who does not operate a business has to pay a 5 per cent tax on payments received in foreign currency. Before people only had to pay a 1 per cent tax.
