Chapter-14 Tax Administration and Authentic Documents

72. Department

(1) The Department shall be responsible for the implementation and administration of this Act.

(2) The Government of Nepal may, by a notification in the Nepal Gazette, establish large taxpayer offices, medium level taxpayer offices or inland revenue offices under the Department and prescribe their working areas, in order to render assistance in fulfilling the responsibility of the Department mentioned in sub-section (1). The offices of which working areas have been so specified shall remain as organs of the Department.

(3) The Department may have the following officers and other employees:-

(a) Director General,

(b) Deputy Director General, Chief Tax Administrator, Director, Chief Tax Officer, Tax Officer and other officers in the required number, and

(c) Other employees.

(4) The Director General may carry out the following functions, subject to the direction given by the Government of Nepal:-

(a) To exercise any of the powers conferred on the Department pursuant to this Act,

(b) To so delegate the powers referred to in clause (a) as to be exercisable by any other officer, subject to sub-sections (5) and (6), and

(c) To so specify that all or any of the powers referred to in clause (a), except the power to issue public circular pursuant to Section 75, to specify the document referred to in Section 77, to hold any reviewable decision or otherwise affect it pursuant to sub-section (5) of Section 115, to accept or reject fully or partly the matters contained in an application made by any person pursuant to sub-section (7) of Section 115, to make addition by adding offence pursuant to Section 129, or to grant authority to any officer pursuant to Section 82, may be exercised by any officer employee of the civil service.

(5) The Deputy Director General, Chief Tax Administrator, Director, Chief Tax Officer and Tax Officer who acts as the Chief of Office may carry out the following functions, subject to the direction given by the Government of Nepal or the Director General:-

(a) To exercise the powers conferred on the Department pursuant to this Act, other than the power to issue public circular pursuant to Section 75, to specify the document referred to in Section 77, to hold any reviewable decision or otherwise affect it pursuant to sub-section (5) of Section 115, to accept or reject fully or partly the matters contained in an application made by any person pursuant to sub-section (7) of Section 115, to make addition by adding offence pursuant to Section 129, and

(b) To so delegate such powers as to be exercisable by any other officer of the Department, subject to sub-section (6).

(6) Any other officer of the Department except the Director General, Deputy Director General, Chief Tax Administrator, Director, Chief Tax Officer or Tax Officer who acts as the Chief of Office may carry out the following functions:-

(a) To exercise any powers delegated to that officer out of the powers conferred on the Department, except the following powers:-

(1) To issue public circular pursuant to Section 75, to specify the document referred to in Section 77, to hold any reviewable decision or otherwise affect it pursuant to sub-section (5) of Section 115, to accept or reject fully or partly the matters contained in an application made by any person pursuant to sub-section (7) of Section 115, to make addition by adding offence pursuant to Section 129, or

(2) To grant authorization to any officer pursuant to Section 82 or issue a notice pursuant to Section 109.

(b) That officer shall not be entitled to re-delegate any power delegated to him.

Since the term 'Department' means the Inland Revenue Department as defined in the Act, the overall responsibility of administering income tax rests with the Inland Revenue Department under the Ministry of Finance, Government of Nepal. Under this Department, Large Taxpayer Offices, Medium Taxpayer Offices, Inland Revenue Offices, and Taxpayer Service Offices have been established as integral subordinate parts of the Department. Since these offices are subordinate parts and auxiliaries of the Department, even though the Act states that all matters related to income tax administration are performed by the Department, tasks performed by subordinate offices are also deemed to be performed by the Department.

Tax administration (Sec 72): the Inland Revenue Department (under the Ministry of Finance) administers the Act; Large/Medium Taxpayer Offices, Inland Revenue Offices & Taxpayer Service Offices are its sub-organs (their acts = the Department's acts).

The Director General may delegate powers to officers, EXCEPT these non-delegable DG-only powers: issuing public circulars (Sec 75), prescribing documents/formats (Sec 77), staying a reviewable decision (Sec 115(5)), accepting/rejecting an administrative-review application (Sec 115(7)), and adding/charging an offence (Sec 129)

73. International agreements

The Income Tax Act, 2058 grants the Government of Nepal the authority to enter into agreements with the governments of other countries for the avoidance of double taxation and the prevention of fiscal evasion. Due to trade between two countries, technology transfer, and capital investment by persons of one country in another, a resident of one country may have sources of income in another country, resulting in tax being levied both in the country of residence and in the country where the income arises. This creates a situation where the same income of a single person is taxed twice. To provide relief from such situations, double tax avoidance and fiscal evasion prevention agreements are concluded between different countries. Section 73 of the Act provides for agreements that cover not only the avoidance of double taxation and the prevention of fiscal evasion but also mutual assistance in tax administration.

Example 15.2.1: Assume that Dr. Rajendra Jha is a senior eye surgeon resident in Nepal. In fiscal year 2080/81, he provided services for four months as an independent professional at a hospital in Banaras, India, and received service fees of Rs. 10,00,000. The Nepal-India double tax avoidance agreement provides that income received by a person providing surgical services as an independent professional in a country where he is not a resident, for services rendered for fewer than 183 days, is not taxable in the source country. In this situation, Dr. Rajendra Jha is not required to pay income tax in India on the income received for eye surgery services. Had there been no such agreement between the Government of Nepal and the Government of India, he would have been required to pay tax in India on the income received there and also include that income in Nepal's tax base, thus creating double taxation on the same income.

Where a double tax avoidance agreement has been concluded, assistance in tax collection is also provided. A person who earns income in a country but leaves for another country without fulfilling the tax liability under that country's income tax legislation does not escape that liability.

Example 15.2.2: Assume that a person named Amir Hussain operated a hotel business in India in fiscal year 2079/80 as a resident of India. He was required to pay Rs. 10,00,000 in tax for operating the business in India. Without filing the tax return in India, he left the country and became a resident of Nepal from fiscal year 2080/81. He also operates a business as a resident of Nepal. Since the double tax avoidance and fiscal evasion prevention agreement between the Government of Nepal and the Government of India includes a provision on assistance in tax collection, if India's competent authority writes to the Director General of Nepal's Inland Revenue Department requesting collection of Amir Hussain's outstanding tax liability in India, the Director General of the Inland Revenue Department must, under this section, provide assistance in collecting that tax.

Where the competent authority of a country with which Nepal has concluded a double tax avoidance and fiscal evasion prevention agreement sends a request for tax collection, the Department must issue a written notice specifying a deadline to the Nepal-resident person who has a tax liability in the treaty country, requiring that person to deposit the amount for onward remittance to the treaty country.

(1) If any income of any person is taxable pursuant to this Act or the laws in force and the same income is also taxable in a foreign country, the Government of Nepal may conclude an international agreement with the foreign country for the avoidance of double taxation.

(2) This sub-section shall be applicable if, pursuant to any international agreement concluded with Nepal, the competent authority of the other country requests the Department to collect in Nepal the amount payable by any person who is in arrears of that amount pursuant to the taxation law of that other country.

(3) If sub-section (2) is applicable, the Department may, for the purpose of sending that amount to that competent authority, issue a notice in writing to the person who is in arrears of tax and require that person to pay such amount to the Department within the date mentioned in that notice.

(4) This sub-section shall be applicable if any international agreement contains a provision under which Nepal has to exempt income or payment or has to apply the reduced tax rate to income or payment.

The rates under a country's income tax law and the rates under the treaty may differ for certain types of income. Where the treaty rate is lower than the rate under the Act, or where the treaty provides for an exemption in the source country for a particular person's income, the treaty provisions must be followed in relation to the country with which the agreement has been concluded.

Example 15.2.3: Assume that Dr. Lee from China taught at Nepal's Bhrikuti Medical College and earned Rs. 10,00,000. The double tax avoidance agreement signed between the Government of Nepal and the Government of China provides that income earned by a professor from one country who is engaged in teaching in the other country is exempt from tax in that other country for a period of two years. Accordingly, the Act provisions do not apply in this situation; the treaty governs, meaning Dr. Lee is not required to pay tax in Nepal on the income received from Bhrikuti Medical College.

Example 15.2.4: Assume that the governments of Nepal and Qatar have concluded a double tax avoidance agreement providing that interest income earned by a resident of one country from lending in the other country is taxable at 10 percent. Nepal's Act provides that interest income received by persons other than resident natural persons is subject to 15 percent advance tax withholding, and for non-resident persons, this 15 percent withholding is the final tax. In fiscal year 2080/81, Jakir Hussain, a resident of Qatar, invested Rs. 1,00,00,000 in the Karnali Hydropower Company of Nepal and received Rs. 10,00,000 as interest income. Under Nepal's Act, tax at 15 percent amounts to Rs. 1,50,000; however, under the Nepal-Qatar agreement, only Rs. 1,00,000 (10 percent) is payable. Since a double tax avoidance agreement exists, only Rs. 1,00,000 at 10 percent is payable on Jakir Hussain's interest income.

(5) If sub-section (4) is applicable, any of the following entities shall not be entitled to enjoy tax exemption or tax deduction facility:-

(a) An entity that is considered as a resident of the other party of the agreement for purposes of the agreement, and

(b) Where fifty percent or more of the vested ownership of that entity is owned by natural persons or by entities in which no natural person has any interest and, for purposes of the agreement, those persons or entities are residents of neither the other country party to the agreement nor Nepal.

While sub-section (4) provides that treaty provisions govern where the treaty prescribes a lower tax liability than the Act, sub-section (5) provides that sub-section (4) shall not apply to certain entities. To qualify for treaty benefits, the entity must be a resident of either the contracting state or Nepal. For example, where a double tax avoidance agreement exists between Nepal and Qatar, for a Qatari company to access treaty benefits under this section, at least 50 percent of its shareholders must be persons who are residents of Qatar under Qatari tax law, or residents of Nepal. A Qatari company where 60 percent of shares are held by residents of a country other than Qatar or Nepal cannot claim the tax concession under this section.

Explanation: For the purposes of this Section, "international agreement" means any treaty or agreement containing the following provisions, concluded with any foreign government and applicable to Nepal:-

(a) To avoid double taxation and prevent fiscal evasion, or

(b) To render reciprocal administrative assistance in the implementation of tax liability.

The principal objectives of double tax avoidance agreements are:

(1) elimination of double taxation - ensuring the same income of a single person is not taxed in two countries;

(2) reduction of the tax burden - where the treaty rate is lower than the rate in the Act, the tax burden is reduced by virtue of the agreement;

(3) reduction of tax uncertainty - the tax rate is fixed according to the nature of income under the treaty, and even if the host country's income tax law is amended to prescribe a higher rate, the treaty provision prevails; and

(4) reduction of tax evasion - agreements include provisions for exchange of information relating to transactions of residents of the contracting countries.

Example 15.3.1: Assume that Mr. Peter is a resident of the United Kingdom. In fiscal year 2080/81, he earned income by working as a telephone operator at Nepal's embassy in London. Under Section 67(6)(i) of the Act, income received from the Government of Nepal constitutes Nepal-source income, and Mr. Peter's income is therefore taxable under Nepal's Act. The United Kingdom's income tax law provides that where a UK-resident person receives income from any government service, the United Kingdom taxes it. In this situation, Mr. Peter's income would be taxed in both countries. If a double tax avoidance agreement were concluded between the Government of Nepal and the Government of the United Kingdom, that agreement would clearly specify in which country government service income is taxable, providing relief from double taxation.

Example 15.3.3: Assume that Mr. Habib is a resident of Pakistan. He developed computer software for banking operations. He entered into an arrangement under which ABC Bank of Nepal may use the software exclusively for five years, with an annual royalty payment of Rs. 1,00,00,000. Nepal's Act prescribes a 15 percent tax rate on royalty payments. Since the income tax law is amended from time to time and the rate on royalties may change, Mr. Habib may continuously face uncertainty about his royalty tax rate. Since Mr. Habib is a Pakistani resident and a double tax avoidance agreement exists between Nepal and Pakistan, even if Nepal amends the Act to increase the royalty rate, the treaty rate remains effective for Mr. Habib. Under the Nepal-Pakistan double tax avoidance agreement, the royalty rate cannot exceed 15 percent.

Example 15.3.4: Assume that a company located in Mauritius is engaged in the sale of motorised vehicles and has permanent establishments in both Nepal and Kuwait. Mauritius prescribes a 20 percent tax rate on business income, Nepal prescribes a 25 percent rate, and Kuwait's rate is 15 percent. The price per vehicle sent by the Mauritius company to Nepal is Rs. 8,00,000, while the same type of vehicle is sent to Kuwait at Rs. 7,00,000. This indicates that the company has made a transfer pricing arrangement to shift value from Nepal to Mauritius. Since a double tax avoidance agreement exists between Nepal and Mauritius, Nepal's competent authority may request from Mauritius's competent authority an exchange of information regarding the prices at which the company transfers goods to its other permanent establishments. Mauritius must then provide the requested information.

Among the various published models, the OECD Model and the UN Model are the most widely used. The principal differences between the two models are as follows:

(1) the UN Model contains 29 articles while the OECD Model has 31;

(2) the OECD Model provides that a construction-related permanent establishment requires more than one year of activity, while the UN Model provides for permanent establishment status where activity exceeds six months;

(3) the UN Model explicitly provides for a service permanent establishment where services are provided for more than 183 days;

(4) the UN Model incorporates the Force of Attraction Rule in computation of permanent establishment income;

(5) the OECD Model provides that income of shipping and air transport enterprises is taxable only in the country where effective management is located, while the UN Model offers two alternatives;

(6) the OECD Model specifies dividend tax rates of 5 percent or 15 percent based on shareholding, while the UN Model does not expressly specify the rate;

(7) the OECD Model provides for a 10 percent interest rate in the source country, while the UN Model leaves it to bilateral negotiation;

(8) the OECD Model provides that royalties are taxable only in the country of residence of the recipient, while the UN Model also taxes royalties in the source country;

(9) the OECD Model removed Article 14 (Independent Personal Services) as a separate article, while the UN Model has retained it; and

(10) following the 2008 revision, the OECD Model expanded the scope of exchange of information to include banking information.

(11) The persons, taxes, definitions, country of taxation by income type, applicable rates, and other matters covered in the OECD Model and the UN Model are set out in the following articles:

The Government of Nepal has, to date, concluded double tax avoidance and fiscal evasion prevention agreements with 11 countries. In concluding these agreements, Nepal has followed the provisions of both the UN Model and the OECD Model. Nepal's first double tax avoidance and fiscal evasion prevention agreement was signed with the Government of India in 1987.

Countries with which the Government of Nepal has concluded double tax avoidance agreements:

Principal features of Nepal's double tax avoidance agreements:

(1) among the 11 countries, the agreement with Norway also covers capital;

(2) Nepal's agreements provide that the site of a construction, installation, or assembly project constitutes a permanent establishment;

(3) Nepal has concluded agreements providing that a permanent establishment is deemed to exist where a person provides technical, professional, or consulting services through employees or otherwise;

(4) Nepal has adopted the Force of Attraction Rule under some agreements;

(5) most of Nepal's agreements specify that income of shipping and air transport enterprises is taxable in the country of residence;

(6) Nepal has concluded agreements providing that interest paid to the government or central bank of a contracting country is not taxable in the source country;

(7) income earned by an athlete or artist is taxable in the country where the income is earned, but where payment is made from public funds, the income is not taxable in the source country;

(8) all agreements except the agreement with India include capital gains provisions;

(9) all agreements include a provision that income earned by a teacher or professor engaged in teaching in another country is exempt from tax in that other country for a specified period;

(10) all agreements provide that royalty income is taxable at a uniform rate of 15 percent in the source country;

(11) all agreements provide that tax paid in the source country may be credited against income tax payable in the country of residence, capped at the effective rate of Nepal's income tax on that income (the Ordinary Credit Method); and

(12) the Nepal-India agreement includes provisions on tax collection assistance.

Tax rates on dividend, interest, and royalty income under Nepal's double tax avoidance agreements:

Note: For countries where different dividend tax rates are listed, the rate varies based on the percentage of capital investment held by the beneficial owner. However, where the dividend tax rate under Nepal's Income Tax Act is lower than the rate specified in the agreement, the lower domestic rate applies. Under current arrangements, even where a higher rate is specified in the agreement, a resident entity must withhold tax on dividends at 5 percent.

Tax Residency Certificate: To claim benefits under a double tax avoidance agreement, tax residency must be established. A person who cannot prove tax residency is not eligible to claim benefits under a double tax avoidance agreement. Where a taxpayer requests a Tax Residency Certificate under a double tax avoidance agreement, the relevant office must issue the certificate in the format prescribed in Schedule 11 of the Income Tax Regulations.

International agreements / DTAA (Sec 73): GoN may conclude double-tax-avoidance & fiscal-evasion-prevention treaties (73(1)).

Treaty OVERRIDE: where the treaty rate is lower than the Act's rate, or the treaty exempts income in the source country, the TREATY prevails (73(4)) - e.g. interest at 10% under the Nepal-Qatar treaty instead of 15% under the Act; a visiting professor exempt for 2 years.

Collection assistance (73(2)/(3)): on a treaty partner's request, the Department issues notice and collects a defaulter's foreign tax in Nepal.

Anti-treaty-shopping / LOB (73(5)): treaty benefits are DENIED to an entity not genuinely resident in a contracting state - i.e. where 50% or more of its ownership is held by persons resident in neither Nepal nor the treaty partner.

Main models: UN Model & OECD Model (Nepal uses both); Nepal has DTAAs with 11 countries (first with India, 1987)

74. Taxpayer's rights

(1) The taxpayer shall fulfill the duties referred to in this Act.

(2) In the context of paying tax pursuant to this Act, the taxpayer shall have the following rights:-

(a) The right to be treated with honour,

(b) The right to receive information on tax related matters pursuant to the laws in force,

(c) The right to have an opportunity to furnish proofs in defence on tax related matters,

(d) The right to appoint a legal practitioner or auditor for defence, and

(e) The right to have tax related secret matters inviolable except as otherwise mentioned in this Act.

Explanation: For the purposes of this Section, "taxpayer" means a person on whom tax is imposed and collected as mentioned in Section 3.

Persons with a legal obligation to pay tax under the Act, i.e., persons with taxable income, foreign permanent establishments in Nepal remitting income abroad, and persons receiving amounts subject to final withholding, have the right to receive tax-related information from the Department or the concerned office, to submit defence or evidence in tax-related matters, and to engage a lawyer or auditor for their defence in tax-related transactions or cases. Similarly, the Act guarantees that tax administration will treat taxpayers with respect, and that tax-related or other information, returns, or documents of taxpayers at the Department or the office or submitted by taxpayers to those bodies are inviolable and confidential except in prescribed circumstances.

75. Public circular

(1) In order to bring about uniformity in the implementation of this Act and simplify tax administration and give guidelines to the officers of the Department as well as the persons affected by this Act, the Department may issue written public circulars, accompanied by explanations, on the provisions made in this Act.

(1a) The interpretation made by the Department pursuant to Sub-section (1) shall be final.

(2) The Department may publish and transmit the circulars issued pursuant to sub-section (1) in the website of the Department or a newspaper of national level or other electronic means for the information of the public.

(3) The Department shall be compelled to take action according to the circular issued pursuant to sub-section (1) unless and until such circular is revoked.

In order to bring uniformity in the implementation and interpretation of this Act, to facilitate tax administration, and to provide guidance to officers of the Department as well as other persons affected by this Act, the Department may issue written public circulars with explanations of the provisions of this Act. Such issued circulars may be published and broadcast through the Department's own website, national-level newspapers, or other electronic media for the information of the general public. Employees under the Department are bound to comply with and take action in accordance with any circular issued by the Department until the Department revokes it. However, public circulars issued by the Department are not binding on stakeholders. If any person finds the provisions or interpretation made in any public circular unsatisfactory, that person must pursue available legal remedies.

76. Advance ruling

(1) If any person makes an application in writing to the Department for the removal of any confusion as to the application of this Act to any arrangement proposed or accepted by that person, the Department may issue its version by an advance ruling as prescribed, by notifying the person in writing.

(2) Notwithstanding anything contained in sub-section (1), the Department shall not be entitled to issue an advance ruling referred to in sub-section (1) on any matter of confusion that has occurred in the implementation of this Act if such matter is sub judice in the court or has already been decided by the court.

(3) If any person acts as follows prior to the issuance of an advance ruling pursuant to sub-section (1), the Department shall be compelled to implement this Act as per that ruling until the ruling issued to that person remains valid:-

(a) If the full and actual statements of the matter related to that ruling are presented to the Department, and

(b) If the arrangement corresponds to the point mentioned in the application made by that person for the ruling.

(4) If the public circular issued pursuant to Section 75 and the advance ruling issued pursuant to sub-section (1) are mutually contradictory, priority shall be given to the matters mentioned in the advance ruling in the case of the person to whom such ruling has been issued.

(5) Prior to the issuance of the advance ruling pursuant to sub-section (1), the Department may give an opportunity to the applicant to furnish further statements, if any, in person or through a representative.

(6) The Department shall be compelled to take action according to any advance ruling issued pursuant to sub-section (1) unless and until such ruling is revoked.

Rule 22(1): A person requesting an advance ruling under Section 76 of the Act must file a petition with the Department in the format prescribed by the Department.

Rule 22(2): After receiving a petition under sub-rule (1), the Department must make a decision on the matter within forty-five days.

Rule 22(3): If an advance ruling is not received from the Department within the period under sub-rule (2), the petitioner may file a petition for administrative review before the Department under Section 115 of the Act or file an appeal before the Revenue Tribunal under Section 116(4).

Rule 22(4): Before making a decision under sub-rule (2), the Department may, if it deems necessary, have the matter examined by officers and other experts.

A person seeking an advance ruling must:

(a) file a written petition with the Department in the prescribed format to resolve their doubts;

(b) present a complete and accurate description of the matter on which they have doubts;

(c) submit any incomplete information requested by the Department in time; and

(d) not seek an advance ruling in matters where a tax liability has already arisen or has already been extinguished from any action taken, or in matters that are pending before a court or have already been decided by a court.

The Department must:

(a) not issue an advance ruling if the matter is pending before a court or has already been decided by a court;

(b) give the petitioner an opportunity to appear in person or through a representative and present any incomplete information before issuing the ruling; and

(c) make a decision on the matter within forty-five days and give written notice of the decision to the concerned person.

Legal status of an advance ruling:

(a) So long as an advance ruling issued to any person remains in force or is not revoked, the Department is generally bound to implement such order in accordance with it for the person in question. However, the advance ruling is not binding on the person to whom it was not issued, and if any person finds an issued advance ruling unsatisfactory, that person may pursue available legal remedies including administrative review.

(b) If public circulars issued under Section 75 of the Act and an advance ruling issued to any person conflict with each other, the provisions mentioned in the advance ruling shall apply in the case of the person to whom the advance ruling was issued.

(c) An advance ruling applies only to the person to whom it was issued and only in the context for which it was issued. If the person or context is different, the provisions of the advance ruling do not apply.

77. Format of documents

(1) The Department may, from time to time, so specify the mode of submission and formats of necessary documents, statements including income returns, tax deduction statements and formats of records, as well as notices, information and details required under this Act and the rules framed under this Act for the effective implementation of this Act.

(2) The Department shall make available the formats referred to in sub-section (1) in the Department and in any other places specified by the Department and through any other means.

(3) The Department may so prescribe that information, return or documents to be submitted by any person to the Department shall be submitted through electronic means.

Documents and returns to be used by any person with a legal obligation to pay tax when registering, withholding advance tax, making tax payments, claiming tax credits, or filing income returns for purposes of the Act, or to be filed with the Department or the office, have been prescribed along with their formats. Under Section 77(3) of the Act, applications for Permanent Account Number, withholding tax returns, estimated tax returns, and income returns may be filed electronically.

78. Permanent account number

(1) The Department shall, subject to this Act, issue a permanent account number to any person for the purpose of identifying that person.

Provided that an entity may provide such permanent account number upon completion of the procedure under this Act upon approval from the Department. The taxpayer receiving the permanent account number issued as such shall not operate transactions of import and export until the period as prescribed by the Department.

(2) The Department may order any person to mention his or her permanent account number in any income return, statement, version or other document to be used for purposes of this Act.

(3) The Department may specify the circumstances where any person has to show or mention his or her permanent account number.

(4) Notwithstanding anything contained in sub-section (1), the person referred to in sub-section (3) shall obtain a permanent account number prior to making any transaction.

(4a) A person making transactions by obtaining a permanent account number pursuant to sub-section (4) shall update such registration details as specified by the Department in the biometric system within the prescribed period.

(5) Notwithstanding anything contained in sub-sections (1), (2), (3) or (4), no person shall be free from tax obligation for the reason that the person has not obtained a permanent account number.

Rule 23(1): Any person who has not yet obtained a Permanent Account Number and wishes to earn assessable income, or who is required to take a Permanent Account Number as prescribed by the Department, or who is required to withhold tax under Chapter 17 of the Act, must file a petition with the Department before earning such income or withholding tax.

Rule 23(2): Any other person who is not required to obtain a Permanent Account Number and has not yet obtained one may also file a petition with the Department to obtain a Permanent Account Number.

Rule 23(3): After receiving a petition under sub-rule (1) or (2), the Department shall provide the petitioner with a certificate of Permanent Account Number.

Rule 23(3A): A person who has obtained a Permanent Account Number must update the information stated in the notice published by the Department in the Department's biometric system within the period prescribed by the publication of the notice.

Rule 23(4): A taxpayer conducting business with a Permanent Account Number must issue sequential numbered invoices stating their name, address, and Permanent Account Number.

Rule 24(1): In cases where the details mentioned in the permanent account number certificate obtained by any person are altered, the person shall provide information thereof to the Department within fifteen days from the date of such alteration.

Rule 24(2): Upon receiving information pursuant to Sub-rule (1), the Department shall make necessary amendments to the permanent account number.

Rule 24A: A taxpayer shall submit the details of the bank account opened in the name of the business to the Department as determined by the Department.

Rule 25: In cases where the place of transactions of any person changes, the person shall provide information thereof to the Department.

78A. Suspension of permanent account number

(1) The Department may suspend the permanent account number in any of the following circumstances:-

(a) If the transaction is left,

(b) In the case of an entity, if it is closed, sold or transferred or such entity ceases to exist by any other reason,

(c) In the case of an natural person ownership, if such owner dies, and

(d) In the case of registration by mistake.

(2) The procedure for the suspension of the permanent account number shall be as prescribed.

Rule 23A(1): A person or entity wishing to suspend a Permanent Account Number under Section 78A(1) must file a petition with the Department within thirty days of the date on which the circumstances requiring suspension of the Permanent Account Number arose, stating the reasons.

Rule 23A(2): When filing a petition under sub-rule (1), the income return and tax up to that period must have been filed.

Rule 23A(3): After examining the petition received under sub-rule (1), if the grounds are found reasonable, the Department must, within thirty days of the date of filing the petition, notify whether the number has been suspended or, if it is not to be suspended, notify accordingly.

Rule 23B(1): If any person who has obtained a certificate of Permanent Account Number loses the Permanent Account Number certificate or it is destroyed in any way, such person must apply to the Department for a duplicate of such certificate.

Rule 23B(2): Within three days of receiving an application under sub-rule (1), the Department must provide the petitioner with a duplicate of the registration certificate of the Permanent Account Number.

79. Service of documents

(1) Any document required to be given or delivered to any person pursuant to this Act shall be deemed to have been given or delivered to that person in the following circumstances:-

(a) Where it is sent to the fax, email or such other electronic medium at the address of that person,

(b) Where it is delivered by hand to whom it has to be delivered individually or to his or her representative or staff and, in the case of an entity, to the manager or the representative or staff assigned by the manager, or

(c) Where it is sent by a registered post to the residential, office, business or other address of the person to the extent known.

(2) Any document signed, encrypted or encoded through computer technology, or written with the name and designation of the competent authority of the Department indicated therein, and issued, served or given pursuant to this Act shall be deemed to have met the formal requirements.

(3) If a document cannot be served pursuant to sub-sections (1) and (2), information thereof may be given by broadcasting or publishing a notice of the related order by radio, television or a newspaper of national circulation in the name of the concerned person. Information so given shall be deemed to have been received by the concerned person.

80. Defective documents:

(1) Any document issued under this Act shall not be deemed defective in the following circumstances:-

(a) Where it is consistent with this Act substantially, and

(b) Where the person who is addressed in the document is normally indicated in the document.

(2) If any document issued by the Department pursuant to this Act contains any error and the error does not give rise to any dispute as to the interpretation of this Act or the fact of any specific person, the Department may make amendment in the document for the purpose of rectifying such error.