Chapter-15 Records and Information Collection | Nepal Income Tax Reference Guide- Including Amendment for FY 2083-84

81. To maintain records of documents

(1) Each person who is liable to pay tax pursuant to this Act shall, in Nepal, set up and maintain the following necessary documents, in addition to the documents required to be maintained in the format or type as prescribed by the Department, or to be certified or authenticated by audit or in any other manner:-

(a) Necessary information and documents supporting the income returns or any other documents required to be submitted including invoices to the Department pursuant to this Act,

(b) Documents assisting to assess the tax payable by that person,

(2) Except as otherwise specified by the Department by issuing a notice in writing, the documents referred to in this Section shall be safely retained for five years from the date of expiration of the concerned income year.

(3) If any document referred to in sub-section (1) is not in the Nepali or English language, the Department may, by issuing a notice in writing, require the concerned person to submit the translated version of such document in the Nepali language done, at that person's own cost, by a recognized translator under the law in force.

(4) The Department may, upon prescribing the standards and procedures, may make necessary arrangements regarding maintenance through electronic means and to keep the documents required to be kept under sub-section (1) through electronic means.

(5) Notwithstanding anything contained in Sub-section (4), the Department may, by publishing a notice, require a taxpayer specified in such notice to:

(a) compulsorily issue invoices through electronic means and integrate with the Department’s Central Billing Monitoring System (CBMS); or

(b) issue electronic invoices using the billing system provided by the Department.

(6) The Department shall formulate and implement a working procedure relating to the security and reliability of the software or device for issuing invoices through electronic means.

81A. Prohibition on depositing amount for business transactions in personal bank account

No person shall deposit any amount received through cash, cheque, QR code or any other electronic means for business transactions in a personal bank account.

Any person must deposit in a bank account opened in the name of a business transaction any cash, cheque, QR code, or any amount received through any other electronic means in respect of such business transactions. Amounts related to business transactions may not be deposited in a personal bank account. Violation of this provision results in a fee of five thousand rupees or two percent of the total amount, whichever is higher, per monitoring instance under Section 119A(3) of the Act.

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.

82. Powers of Department to obtain information

(1) The officer of the Department may do the following in order to implement this Act:-

(a) To have full or unhindered access to any premises, places, documents or properties situated in Nepal, subject to the laws in force,

(b) To obtain any portion of or duplicate copy of the document, including an electronic copy of the documents to which there is access pursuant to clause (a),

(c) If the concerned officer thinks that the document to which there is access pursuant to clause (a) is evidence that could be necessary to assess the tax liability of any person pursuant to this Act, to take such document in that officer's custody, and

(d) If any person having access to any document, who is requested to provide a duplicate copy of such document, does not provide it, and the officer thinks that such document is kept in any property in any form, to take such property in own custody in order to have access to such document.

(2) No officer shall be entitled to exercise the powers referred to in sub-section (1) without having authority in writing from the Department. If, in entering any premise or place in exercise of the powers referred to in sub-section (1) by any officer, the possessor of such premise or place or the person having access to any concerned document or property requests to see the authority of the Department, such officer shall show such authority to them.

(3) If any officer of the Department who enters any premise or place in exercise of the powers referred to in sub-section (1) so requests, the possessor of such premise or place or the person having access to any concerned document or property shall provide all proper facilities and assistance for the effective exercise of the powers.

(4) The Department may hold in its custody the document or property taken in its custody pursuant to clause (c) or (d) of sub-section (1) until the following time:-

(a) In the case of any document taken in custody pursuant to clause (c) of sub-section (1), until the time the document is required to assess the tax liability of any person or for any other action pursuant to this Act, and

(b) In the case of any property taken in custody pursuant to clause (d) of sub-section (1), until the time when access to the document in question is gained and it is taken in custody.

(5) The person whose document is taken in custody pursuant to sub-section (4) may inspect such document and may obtain a copy of or copy down a portion of such document at that person's own cost within office hours and under supervision as prescribed by the Department.

(6) Notwithstanding any provision made on privilege or public interest in respect of having access to the documents required for the implementation of this Act, the provisions contained in this Section shall apply in that respect.

Explanation: For the purposes of this Section, "possessor" means, in respect of any premise or place, a person having ownership of that premise or place, the manager of the premise or place or any other person remaining there.

82A. Power to Obtain Information or Particulars

For the implementation of this Act, the Department may, through electronic means, obtain information or particulars relating to the financial transactions of any person residing or operating in Nepal under the prevailing laws; such person’s customers; employees; service recipients; members; or any other person who possesses facts, information, or records relating to such person.

83. Power to obtain information by notice

(1) The Department may, by giving a notice in writing, order any person with or without liability to pay tax pursuant to this Act to do as follows:-

(a) To submit any information specified in the notice within the time specified in the notice, also by preparing any document,

(b) To be present at the Department at the place and time specified in the notice before the officer of the Department for inspection on the tax related matters of that person or any other person,

(c) To submit, for the purpose of inspection, any document mentioned in the notice that is under that person's control at the time when that person is examined pursuant to clause (b).

(2) Any person who is to be examined pursuant to clause (b) of sub-section (1) shall have the right to have legal or other representation during such examination.

(3) Notwithstanding any provision made on any privilege or on public interest in respect of having access to the documents required for the implementation of this Act, the provisions contained in this Section shall apply in that respect.

84. Governmental secrecy

(1) Any officer and other employee of the Department shall maintain secrecy of all documents and information that come to that person's custody or knowledge in the course of carrying out duties pursuant to this Act.

(2) Notwithstanding anything contained in sub-section (1), any officer of the Department may disclose the document or information referred to in sub-section (1) to the following persons as follows:-

(a) To the extent that it is necessary to carry out the duty of that officer pursuant to this Act,

(b) If it is so ordered by any court or tribunal in respect of administrative review or action pursuant to this Act,

(d) If it is necessary to disclose for the purposes of any other financial law,

(e) If it is necessary for any person in the service of the Government of Nepal for any acts relating to revenue or statistics, before such a person,

(f) If it is necessary in the course of carrying out duties, before the Auditor General or any person authorized by the Auditor General, or

(g) Before the competent authority of the government of any country with which the Government of Nepal has concluded an international agreement, to the extent as provided for in such agreement in that respect.

(3) Any person, court, tribunal, body or official who obtains any document or information pursuant to sub-section (2) shall keep such document or information secret except to the minimum extent required.

Rule 26(1): Any person who has paid all tax payable under the Act up to a certain date may file a petition with the Department, along with the documents mentioned in Section 96(2) of the Act, requesting a certificate thereof.

Rule 26(2): After receiving a petition under sub-rule (1), the Department must check whether the petitioner's tax calculation is arithmetically correct, and after having any tax, fees, interest, and advance withholding tax amounts remaining unpaid as per the tax return filed and deposited, on the basis of proof of tax payment, the Department must provide such person with a tax clearance certificate.

If any person with a legal obligation to pay tax under the Act requests a tax clearance certificate, and such person has filed the income return required to be filed under the Act and paid the required tax, fees, interest, and advance withholding tax amounts, a tax clearance certificate must be provided to such person. However, if it appears that any person requesting a tax clearance certificate has any outstanding returns or amounts remaining to be paid under the Act, a tax clearance certificate must not be provided to such person until the outstanding returns or tax amounts are paid. Before providing a tax clearance certificate to any person, if a revised tax assessment has been made up to the income year for which the tax clearance certificate was requested, and if an order has been given to pay additional tax under such tax assessment, and if no petition for review or appeal has been filed at any body regarding such tax assessment or a decision has already been made on such petition, the person must be made to pay the tax amount to be paid under such tax assessment. However, a tax clearance certificate must be provided on the basis of the income return filed up to the income year for which the person requested the tax clearance certificate.