Tax-Concession-under-Income-Tax-Act-2058-152625

Tax Concession under Income Tax Act, 2058. Applicable for FY 2079/80

# concessions# incometax# students# members

Concessions under section 11 of Income Tax Act, 2058(Applicable for FY 2079-80)
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Agricultural income  - Not registered as a firm, company, partnership or corporate body. rom a land referred to in clauses (d) (land prescribed for industrial activities) and (e) (land prescribed for agro-industrial activities) of section12 of the act relating to land, 2021 - 11(1)No Tax
Proviso to 11(1) - Registered as a firm, company, partnership or a corporate body - business of Dehydrating Vegetables, Cold storesNo Tax
Certain Income derived by Co-operative Societies registered under Co-operative act 2074, Rural co-operative (Agriculture and forest based income). Also available on dividend distributed by such societies. includes income from agricultural inputs except those operated with mechanical power. - 11(2)No Tax
Interest income on deposit from Rural Microfinance, Rural Development Banks, Hulak Bachat bank, Co-operatives as per section 11(2) - 11(2A)Exempt upto 25,000
Concession to special industry operating throughout the year. Other concessions as per this section shall also be allowed.a) For Resident Natural Person required to pay tax at 30% - 1/3rd of applicable tax rate shall be exempt. i.e. 1%, 10%, 20%, 20%,  24% shall be applicable tax rates according to slab. b) For Entity - 20% of tax shall be exempt. For a company at 25%, effective tax rate will be 20%. 
Concession based on Direct Employment to Nepali citizens throughout the year for special industry and Information technology industry. Additional 10% available if 33% are amongst women, dalits, or disabled. For e.g. - 200 Nepali citizens are employed by a special industry throughout the year - The applicable rate of tax (25%) will be 18% and 16% if 33% are amongst women, dalits, disabled. 10%(For 100+), 20%(for 300+), 25%(for 500+), 30%(for 1000+)
Concessions to special industry on the basis of Area as per Schedule 10 of Industrial Enterprises Act. Applicable for 10 years from the date of start of commercial production or transaction. Special Industries on Karnali province or hilly areas of Far-western province providing direct employment to 100+  Nepali citizens - No tax for 15 years. e.g. tax rate of a special industry providing employment to 200 Nepali citizens in Karnali province is exempt for 15 years.  If such industry was on Bhojpur (Under-developed) - 2% for 10 years.Under-developed अति अविकसित  (90% exempt). undeveloped अविकसित (80% exempt). less developed कम विकसित (70% exempt). 
On the basis of Direct Employment and Capital Investment - Special industry and Tourism Industry (except casino) being established (Only new special industry) with capital investment of more than 1 billion Rupee(1 arba) and providing direct employment to more than 500 individuals throughout the year. Exception - For existing industries, to gain the exemption, 25% increase in capacity + Capital investment upto 2 arba + employment to more than 300 individuals (no need to be nepali citizens). The exemption shall be available only on the income from increased capacity.No tax for 5 years from the date of start of commercial transaction. 50% for next 3 years, and normal tax afterwards. 
Industry Established on SEZs- Situated at himali or hilly districtsNo tax for 10 years from start of Commercial transaction. 50% thereafter
Industry Established on SEZs - Situated at other than himali or hilly districtsNo tax for 10 years from start of Commercial transaction. 50% thereafter
Industry Established on SEZs - Distribution of dividendNo Dividend distribution tax upto 5 years from the date of start of commercial transaction. 50% exempt for next 3 years, normal rates afterwards.
Foreign Investment in SEZs - income generated as service fee or royalty for technology transfer, or management service fee for management services by foreign investors in SEZs50% exempt
Person involved in exploration and extraction of minerals, petroleum products, natural gas and fuel and starts commercial operation by BS 2080 Chaitra end.No tax for upto 7 years. 50% for next 3 years. Normal tax afterwards.
Entity established in zoological, geological, Bio tech park and IT Park engaged in Software development or, data processing or, Cyber Cafe or, Digital Mapping50% exempt
Person or entity having license to generate, transmit or distribute electricity shall be provided concession if the commercial operation commences before BS 2083 Chaitra end. Provisions shall be applicable for electricity generated from solar, wind or bio electricity. If a person has started commercial production before the commencement of this section, the concession at the time of starting of commercial production by such person shall be applicable. i.e. this provision applies only to newly formed hydro power projects.100% tax exemption for the first 10 years. 50% tax exemption for the next 5 years. 100 % tax exemption for the first 15 years and 50 % tax exemption for the next 6 years shall be provided to reservoir-based and semi reservoir-based hydropower projects with a capacity higher than 40 MW completing financial closure within Chaitra end, 2085.
Income Earned from export from a source in Nepal.For Resident Natural Person - If tax is chargeable at 20%, 25% of that tax shall be exempt i.e. 15% shall be the effective rate. If chargeable at 30%, 50% shall be exempt, i.e. effective rate shall be 15%. The effective slab rate for an individual shall be 1%, 10%, 15%, 15% , 18%.  For an Entity - 20% of tax shall be exempt. Additional 50% exemption shall be available for production based industry of a natural person or an entity after claiming deduction under this section. For a person operating special industry the effective slab rates shall be 1%, 10%, 7.5%, 7.5%, 9%. For an Entity taxed at 25%, effective rate shall be 8%.(11(2)(kha) - 20% exempt, Additional 20% exempt under this section and an additional exemption of 50% under this section)
Entities constructing and operating ropeway, cable car, Sky Bridge, roads, bridges, tunnel, railway, and airports, trolley buses, and trams - up to 10 years from the date of commercial operation.Tram Trolley Bus - 40% (Normal Rate is 25%. effective tax rate is 15%). Construction and Operation of Ropeway, Cablecar, sky bridge  - 40% exemption. (Normal Rate is 25%. effective tax rate is 15%). Entities constructing and operating roads, bridges tunnel, railway, and airports - 50% exempt. (Normal Rate is 25%. effective tax rate is 12.5%)
Income of Manufacturing Industry, tourism service industry and hydropower generation, distribution and transmission industry listed in the capital market and entities mentioned in section 11 (3Ga)15% exempt
Industry established in least developed and undeveloped areas producing brandy, wine, cider from fruitsExemption of 40% and 25% respectively
Royalty from export of intellectual property by a person25% exemption
Income from Sale of Intellectual property50% exempt
Industry Related to Tourism or airlines company operating international flights with a capital investment of more than 1 arba from the date of start of commercial transaction5 years - No tax. next 3 years 50% exemption. Normal rates afterwards.
Industry Related to Tourism or airlines company operating international flights with a capital investment of more than 3 arba from the date of start of commercial transaction. Not Available to existing industry10  years - No tax. next 5 years 50% exemption. Normal rates afterwards.
Industry Related to Tourism or airlines company operating international flights with a capital investment of more than 5 arba from the date of start of commercial transaction. Not Available to existing industry15 Years - No Tax
Special Industry or industry related with tourism - Capitalizes the accumulated profit for expansion of capacity of industry. Tax on distribution of Dividend on such capitalization. Not Available to existing industryExempt
Conversion of private to public company with more than 50 crores paid up capital. This concession shall not be available if such company is to be incorporated as a public company as per section 12 of companies act.10% of tax on such company shall be exempt for 3 years from the date of such conversion. 
income of Domestic tea production and processing industry, Dairy industry, Garments industry from their operations.50% exempt
Health institutions operated by a community-based organization20% Exempt
Micro Entrepreneurial industryNo tax for upto 7 years. If operated by a female entrepreneur, for upto 10 years.
Entities involved in construction or operation of public infrastructure and to be transferred to the GON (BOT projects) or involved in the construction of hydropower house and its generation and transmission.20% exemption
Special industries in operation after establishment in or relocation to Industrial area and industrial gram. Applicable from the date of production50% for 3 years , 25% for next 5 years, Normal rates afterwards.
Entities engaged in supply of raw materials or auxiliary raw materials produced in Nepal to Special industries20% exempt
Income derived by startup business as prescribed by IRD having annual turnover up to Rs 1 Crore based on innovative knowledge, skills, technology and methods.No tax for the first 5 years.
Relocation of Special industries in KTM to outside KTMNo tax upto 3 years. 50% exempt for next 2 years
Industry engaged in the manufacture of new products by using only used materials that have a direct impact on the environment as its raw materials50% exempt for the first 3 years. 25% for the next 2 years.
Industry engaged in the manufacture of medical vaccines, oxygen gas and sanitary padNo tax for 5 years. 50% exempt for the next 2 years
Industries established within Ashadh end 2082, with the objective of production and assembly of electric vehicles.40% income tax will be exempted for 5 years from the date of starting the transaction.
Industries established within Ashadh end 2082, with the objective of production of agricultural equipment.No tax for 5 years from the date of starting commercial transaction
Important points :
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Only one benefit is allowed under section 11 for one income. In case of special industry, one other benefit can be claimed after availing the benefit of 11(2)(kha). For multiple business of a person eligible for concessions under this section, each business shall be treated as a separate entity.
“Special Industry” means agro and forest based industries, mineral based industries or manufacturing/ production based industries as specified in Sec 15(2) of Industrial Enterprises Act, 2073 except: 
• Those producing cigarette, bidi, cigar, chewing tobacco, gutka, paan masala or similar other products using tobacco as basic raw material, and/or 
• Those producing alcohol, beer or similar other products. 
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“Least Developed”, “Undeveloped”, and “Underdeveloped” Areas are prescribed in Schedule 10 of Industrial Enterprises Act, 2076. 
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RABIN POUDEL

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Agricultural income - Not registered as a firm, company, partnership or corporate body. rom a land referred to in clauses (d) (land prescribed for industrial activities) and (e) (land prescribed for agro-industrial activities) of section12 of the act relating to land, 2021 - 11(1)	No Tax
Proviso to 11(1) - Registered as a firm, company, partnership or a corporate body - business of Dehydrating Vegetables, Cold stores	No Tax
Certain Income derived by Co-operative Societies registered under Co-operative act 2074, Rural co-operative (Agriculture and forest based income). Also available on dividend distributed by such societies. includes income from agricultural inputs except those operated with mechanical power. - 11(2)	No Tax
Interest income on deposit from Rural Microfinance, Rural Development Banks, Hulak Bachat bank, Co-operatives as per section 11(2) - 11(2A)	Exempt upto 25,000
Concession to special industry operating throughout the year. Other concessions as per this section shall also be allowed.	a) For Resident Natural Person required to pay tax at 30% - 1/3rd of applicable tax rate shall be exempt. i.e. 1%, 10%, 20%, 20%, 24% shall be applicable tax rates according to slab. b) For Entity - 20% of tax shall be exempt. For a company at 25%, effective tax rate will be 20%.
Concession based on Direct Employment to Nepali citizens throughout the year for special industry and Information technology industry. Additional 10% available if 33% are amongst women, dalits, or disabled. For e.g. - 200 Nepali citizens are employed by a special industry throughout the year - The applicable rate of tax (25%) will be 18% and 16% if 33% are amongst women, dalits, disabled.	10%(For 100+), 20%(for 300+), 25%(for 500+), 30%(for 1000+)
Concessions to special industry on the basis of Area as per Schedule 10 of Industrial Enterprises Act. Applicable for 10 years from the date of start of commercial production or transaction. Special Industries on Karnali province or hilly areas of Far-western province providing direct employment to 100+ Nepali citizens - No tax for 15 years. e.g. tax rate of a special industry providing employment to 200 Nepali citizens in Karnali province is exempt for 15 years. If such industry was on Bhojpur (Under-developed) - 2% for 10 years.	Under-developed अति अविकसित (90% exempt). undeveloped अविकसित (80% exempt). less developed कम विकसित (70% exempt).
On the basis of Direct Employment and Capital Investment - Special industry and Tourism Industry (except casino) being established (Only new special industry) with capital investment of more than 1 billion Rupee(1 arba) and providing direct employment to more than 500 individuals throughout the year. Exception - For existing industries, to gain the exemption, 25% increase in capacity + Capital investment upto 2 arba + employment to more than 300 individuals (no need to be nepali citizens). The exemption shall be available only on the income from increased capacity.	No tax for 5 years from the date of start of commercial transaction. 50% for next 3 years, and normal tax afterwards.
Industry Established on SEZs- Situated at himali or hilly districts	No tax for 10 years from start of Commercial transaction. 50% thereafter
Industry Established on SEZs - Situated at other than himali or hilly districts	No tax for 10 years from start of Commercial transaction. 50% thereafter
Industry Established on SEZs - Distribution of dividend	No Dividend distribution tax upto 5 years from the date of start of commercial transaction. 50% exempt for next 3 years, normal rates afterwards.
Foreign Investment in SEZs - income generated as service fee or royalty for technology transfer, or management service fee for management services by foreign investors in SEZs	50% exempt
Person involved in exploration and extraction of minerals, petroleum products, natural gas and fuel and starts commercial operation by BS 2080 Chaitra end.	No tax for upto 7 years. 50% for next 3 years. Normal tax afterwards.
Entity established in zoological, geological, Bio tech park and IT Park engaged in Software development or, data processing or, Cyber Cafe or, Digital Mapping	50% exempt
Person or entity having license to generate, transmit or distribute electricity shall be provided concession if the commercial operation commences before BS 2083 Chaitra end. Provisions shall be applicable for electricity generated from solar, wind or bio electricity. If a person has started commercial production before the commencement of this section, the concession at the time of starting of commercial production by such person shall be applicable. i.e. this provision applies only to newly formed hydro power projects.	100% tax exemption for the first 10 years. 50% tax exemption for the next 5 years. 100 % tax exemption for the first 15 years and 50 % tax exemption for the next 6 years shall be provided to reservoir-based and semi reservoir-based hydropower projects with a capacity higher than 40 MW completing financial closure within Chaitra end, 2085.
Income Earned from export from a source in Nepal.	For Resident Natural Person - If tax is chargeable at 20%, 25% of that tax shall be exempt i.e. 15% shall be the effective rate. If chargeable at 30%, 50% shall be exempt, i.e. effective rate shall be 15%. The effective slab rate for an individual shall be 1%, 10%, 15%, 15% , 18%. For an Entity - 20% of tax shall be exempt. Additional 50% exemption shall be available for production based industry of a natural person or an entity after claiming deduction under this section. For a person operating special industry the effective slab rates shall be 1%, 10%, 7.5%, 7.5%, 9%. For an Entity taxed at 25%, effective rate shall be 8%.(11(2)(kha) - 20% exempt, Additional 20% exempt under this section and an additional exemption of 50% under this section)
Entities constructing and operating ropeway, cable car, Sky Bridge, roads, bridges, tunnel, railway, and airports, trolley buses, and trams - up to 10 years from the date of commercial operation.	Tram Trolley Bus - 40% (Normal Rate is 25%. effective tax rate is 15%). Construction and Operation of Ropeway, Cablecar, sky bridge - 40% exemption. (Normal Rate is 25%. effective tax rate is 15%). Entities constructing and operating roads, bridges tunnel, railway, and airports - 50% exempt. (Normal Rate is 25%. effective tax rate is 12.5%)
Income of Manufacturing Industry, tourism service industry and hydropower generation, distribution and transmission industry listed in the capital market and entities mentioned in section 11 (3Ga)	15% exempt
Industry established in least developed and undeveloped areas producing brandy, wine, cider from fruits	Exemption of 40% and 25% respectively
Royalty from export of intellectual property by a person	25% exemption
Income from Sale of Intellectual property	50% exempt
Industry Related to Tourism or airlines company operating international flights with a capital investment of more than 1 arba from the date of start of commercial transaction	5 years - No tax. next 3 years 50% exemption. Normal rates afterwards.
Industry Related to Tourism or airlines company operating international flights with a capital investment of more than 3 arba from the date of start of commercial transaction. Not Available to existing industry	10 years - No tax. next 5 years 50% exemption. Normal rates afterwards.
Industry Related to Tourism or airlines company operating international flights with a capital investment of more than 5 arba from the date of start of commercial transaction. Not Available to existing industry	15 Years - No Tax
Special Industry or industry related with tourism - Capitalizes the accumulated profit for expansion of capacity of industry. Tax on distribution of Dividend on such capitalization. Not Available to existing industry	Exempt
Conversion of private to public company with more than 50 crores paid up capital. This concession shall not be available if such company is to be incorporated as a public company as per section 12 of companies act.	10% of tax on such company shall be exempt for 3 years from the date of such conversion.
income of Domestic tea production and processing industry, Dairy industry, Garments industry from their operations.	50% exempt
Health institutions operated by a community-based organization	20% Exempt
Micro Entrepreneurial industry	No tax for upto 7 years. If operated by a female entrepreneur, for upto 10 years.
Entities involved in construction or operation of public infrastructure and to be transferred to the GON (BOT projects) or involved in the construction of hydropower house and its generation and transmission.	20% exemption
Special industries in operation after establishment in or relocation to Industrial area and industrial gram. Applicable from the date of production	50% for 3 years , 25% for next 5 years, Normal rates afterwards.
Entities engaged in supply of raw materials or auxiliary raw materials produced in Nepal to Special industries	20% exempt
Income derived by startup business as prescribed by IRD having annual turnover up to Rs 1 Crore based on innovative knowledge, skills, technology and methods.	No tax for the first 5 years.
Relocation of Special industries in KTM to outside KTM	No tax upto 3 years. 50% exempt for next 2 years
Industry engaged in the manufacture of new products by using only used materials that have a direct impact on the environment as its raw materials	50% exempt for the first 3 years. 25% for the next 2 years.
Industry engaged in the manufacture of medical vaccines, oxygen gas and sanitary pad	No tax for 5 years. 50% exempt for the next 2 years
Industries established within Ashadh end 2082, with the objective of production and assembly of electric vehicles.	40% income tax will be exempted for 5 years from the date of starting the transaction.
Industries established within Ashadh end 2082, with the objective of production of agricultural equipment.	No tax for 5 years from the date of starting commercial transaction