Chapter-23 Offences and Punishment | Nepal Income Tax Reference Guide- Including Amendment for FY 2083-84

123. Punishment to one who does not pay tax

A person who does not pay tax by the due date for payment of tax without any reasonable cause shall be punished with a fine of a sum from five thousand rupees to thirty thousand rupees, or with imprisonment for a term from one month to three months, or with both punishments.

124. Punishment to one who submits a false or misleading statement

If any information or statement submitted by any person to the Department is false or misleading because of submission with intention or recklessness, or that information becomes misleading since such person has not mentioned or has removed information of any particular matter or thing from the statement, such person shall be punished with a fine of a sum from forty thousand rupees to one hundred sixty thousand rupees, or with imprisonment for a term from six months to two years, or with both punishments.

Explanation: For the purposes of this Section, "any information or statement submitted to the Department" means any statement submitted in writing to the Department or the officer authorized by the Department in the course of complying with the obligation under this Act, and includes the following:-

(a) Application, notice, details, complaint, statement, or other documents deposited, prepared, given or submitted pursuant to this Act,

(b) Document submitted to the Department or any officer of the Department,

(d) Information provided by any person who has reasonable knowledge of the matter to the Department or any officer through any other person.

125. Punishment to one who obstructs or unduly influences tax administration

(1) Any person who commits the following acts shall be punished with a fine of a sum from five thousand rupees to twenty thousand rupees, or with imprisonment for a term from one month to three months, or with both punishments:-

(a) Obstructing the officer of the Department in the course of carrying out duties pursuant to this Act,

(b) Not acting as per the notice referred to in Section 83, or

(2) Any person who attempts to commit any act referred to in sub-section (1) shall be punished with half the punishment mentioned in that sub-section.

126. Punishment in the event of commission of offence by a person with or without authority

(1) Any authorized person who violates Section 84 shall be punished with a fine of a sum not exceeding eighty thousand rupees, or with imprisonment for a term not exceeding one year, or with both punishments.

(2) If any person who is not authorized under this Act collects tax or any other amount in the name of tax or attempts to collect the same, such person shall be punished with a fine of a sum from eighty thousand rupees to two hundred forty thousand rupees, or with imprisonment for a term from one year to three years, or with both punishments.

Offences & punishment (Chapter 23): criminal sanctions (fine and/or imprisonment) on top of any tax, fee and interest.

Sec 123 non-payment without reasonable cause = fine Rs. 5,000-30,000 and/or 1-3 months' imprisonment.

Sec 124 intentional/reckless false or misleading statement = fine Rs. 40,000-1,60,000 and/or 6 months-2 years.

Sec 125 obstructing a tax officer / ignoring a Sec 83 notice / otherwise obstructing the Act = fine Rs. 5,000-20,000 and/or 1-3 months (an ATTEMPT = half the punishment).

Sec 126 breach of Sec 84 confidentiality by an authorised person = up to Rs. 80,000 and/or up to 1 year; UNAUTHORISED collection of tax (or attempt) = fine Rs. 80,000-2,40,000 and/or 1-3 years

127. Punishment to accomplice

Any person who intentionally aids or abets or advises any other person to commit any offence under this Act, or certifies a false financial or tax account, or gives wrong advice, shall be punished with half the punishment imposed on the offender.

Provided that if such an accomplice is a governmental employee, that person shall be liable to punishment equal to the punishment imposed on the offender.

128. Punishment to one who does not observe the Act

Except as otherwise provided for in this Act, any person who does not observe any provision of this Act or the rules framed under this Act shall be punished with a fine of a sum from five thousand rupees to thirty thousand rupees.

Section 128 provides for punishment of a general nature. This section applies to matters for which specific punishment has not been explicitly prescribed. Where matters defined as offenses in the Income Tax Act have specific punishments as mentioned above, those punishments apply. For violations of the Income Tax Act or the rules made thereunder that are not otherwise addressed, a fine of five thousand rupees to thirty thousand rupees shall apply.

129. Power of Department to issue order to pay fine amount

(1) Notwithstanding anything contained elsewhere in this Chapter, if any person admits in writing, before the commencement of court proceedings, that that person has committed any one or more offences mentioned in this Chapter, except the offence mentioned in Section 126, the Department may order such a person to pay the amount of fine not exceeding the amount of fine imposable for the commission of such one or more offences.

(2) In making the order referred to in sub-section (1), the Department shall set out in such order the offence committed, the amount of fine to be paid and the date for payment of the fine amount.

(3) The order made by the Department pursuant to this Section shall be final and no appeal may be made against it.

Section 129 grants special authority to the Department regarding the collection of penalty amounts. Generally, penalty amounts cannot be collected until an offense is established and the penalty determined by the District Court. However, the Department may collect penalty amounts if, before court proceedings commence, the concerned person admits in writing to having committed offenses other than those under Section 126. The Department may collect the penalty only to the extent admitted by the concerned person, for one or more offenses. The penalty amount to be collected is subject to the upper limit of the penalty for that particular offense. The order to pay the penalty must be in writing, and such order must specify the offense, the penalty amount payable, and the date for payment. The order issued by the Department to collect the penalty is final, and no appeal lies against such order.

The determination and collection of fees and interest is done by the Department as per Section 122, whereas the authority to impose penalties is vested in the District Court under Section 131. The Department may not impose penalties except in the circumstances provided for in Section 129. If any person is subject to fees, interest, and penalties under the Income Tax Act, all of them may be imposed on such person. Fees and interest may be levied by the Department, but penalties are imposed only after the offense is established by the District Court. Payment of fees and interest does not exempt a person from penalties relating to criminal liability for offenses committed.

Accomplice, general & admitted-offence penalties (Sec 127-129):

Sec 127 - an accomplice who aids, abets, advises, certifies false accounts or gives wrong advice = HALF the offender's punishment (but a GOVERNMENT EMPLOYEE accomplice = the FULL punishment).

Sec 128 - any contravention of the Act/Rules with no specific punishment = fine Rs. 5,000-30,000 (residuary).

Sec 129 - if a person ADMITS an offence in writing before court proceedings begin (any offence except Sec 126 unauthorised collection), the Department may order payment of a fine up to the maximum for that offence; the order states the offence, fine & due date and is FINAL with no appeal. Otherwise penalties (unlike fees/interest, which the Department assesses) are imposed only by the District Court (Sec 131)

130. Government of Nepal to be plaintiff

Cases under this Chapter shall be state cases with the Government of Nepal as plaintiff.

131. Investigation and filing of cases

(1) The prescribed officer shall investigate cases related to offences punishable under this Chapter, and the case shall be filed in the concerned District Court within thirty-five days of the completion of such investigation.

(2) In conducting investigation pursuant to sub-section (1), the investigating officer shall seek advice and opinion of the government attorney.

The following procedure must be followed for investigating offenses and filing cases under Sections 130 and 131:

(1) For offenses under Chapter 23 of the Income Tax Act, the Department must file a case with the concerned District Court for punishment. In such cases filed, the Government of Nepal is the plaintiff as per Section 130.

(2) The investigation of punishable offenses is conducted by an officer designated by the Department.

(3) The case must be filed with the concerned District Court within thirty-five days from the date of completion of the investigation.

(4) The investigating officer must seek the opinion and advice of the government attorney during the investigation.

Rule 37: The officer designated by the Department shall investigate cases relating to offences punishable pursuant to Chapter-23 of the Act.