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Kathmandu Thursday August 09, 2001 Shrawan 25, 2058.
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Income
Tax Bill '58 tabled
By Satyendra
Timilsina
KATHMANDU, Aug 8 -
The Income Tax Bill 2058 (2001 AD) that was registered at the Parliamentary Secretariat
during the nineteenth session of the Parliament, which could not proceed due to disruption
by the opposition, has been tabled in the Parliament for debate.
The proposed income
Tax Act 2058 will replace the existing Income Tax Act 1974 after the Parliament’s
approval. The new Act is intended to govern all income tax matters, which will prevail in
case of conflict with any other Acts and regulations. The Act will also be accompanied by
rules providing administrative details and harmonized interpretation.
The bill aims at
broadening the tax base, implementing full fledged self-assessment system, ensuring
simplicity, and bringing uniformity and transparency in tax administration. The proposed
Act has attempted to tax all those activities that contribute toward the creation of
wealth, the sources of which has been divided into three categories: employment, business
and investment. Likewise, tax business income and the agricultural income above the limit
as provided in the Acts related to land administration would be taxable considering such
agricultural activities as business.
The Income Tax Bill
has proposed to charge tax on the net gains that are derived by subtracting total losses
from total gains. The unrelieved losses for the actual income year and those from a
previous income year can be carried forward forever.
The proposed Income
Tax Act has also revised the existing appeal system on tax issues. With the new provision,
it has been made mandatory for taxpayers to file objection at the Inland Revenue
Department before appealing to the Revenue Tribunal.
Other important
features of the Income Tax Bill is the provision of tax credit facility to the individual
tax payers. The tax payers who have to undergo medical treatment is entitled to receive 15
per cent of the total medical expenditure in tax credit. If the tax credit exceeds the
total tax payable then it is carried on as the tax credit for the next year.
The tabled bill
proposes to tax capital gains, which are received from the disposal of business assets or
liabilities. It also aims to tax those gains that come from the disposal of non-business
assets of an investment, which are regarded as chargeable. An entity is liable to pay tax
separately from its beneficiary, it is also a provision of the bill.
Furthermore, with
the amendment, the proposed Act will allow banks to carry back losses for 5 years before
the carry forward rule applies. Similarly, the proposed Income Tax Act has differentiated
retirement savings as approved and unapproved, of which the unapproved retirement savings
will be taxed.
In case of misfiling
of the income tax returns, penalty from 50 per cent to 100 per cent has been proposed in
the bill.
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