132. Power to obtain expert's service
The Government of Nepal or the Department may obtain the service of the concerned expert for acts related to tax auditing; and the provision on governmental secrecy mentioned in Section 84 shall also apply to such expert.
133. Departmental action to be taken
If the liability of a taxpayer increases or decreases because of a tax assessment made with recklessness, the Director General may institute departmental action to punish the concerned officer who has made such tax assessment or has not made the amended tax assessment within the time-limit referred to in sub-section (3) of Section 101, in accordance with the law in force relating to the service conditions of that officer.
The Director General may initiate departmental proceedings against such officer for punishment pursuant to the prevailing law governing the officer's terms of service, i.e., the Civil Service Act and Regulations.
134. Identity card of officer
Each officer shall hold the identity card as prescribed and shall show such identity card to anyone who requests to see it in the course of carrying out duties.
Rule 28: Identity card of officer: The format of an officer's identity card shall be as per Schedule 1 of the Income Tax Regulations, 2059.
Every officer of the Department must carry an identity card in the format prescribed by Rule 28 of the Income Tax Regulations, 2059.
135. Powers of a court of law to be vested
For the purposes of this Act, the Department shall have the powers vested in a court under the law in force in the matters of summoning the presence of the concerned person, recording of statements, examining evidence and compelling production of documents.
136. Not to be responsible for an act done in good faith
Notwithstanding anything contained elsewhere in this Act, no officer shall be personally responsible for any act done in good faith in carrying out duties.
Provision has been made that no officer shall be personally liable for any action taken in good faith in the course of making a tax assessment or performing duties. Notwithstanding anything written in other sections of this Act, such as Section 133 and Section 126(1), if an officer has acted in good faith, that officer shall not be personally liable.
136A. Provision for prize and informant's expenses
(1) A person who provides information along with evidence that any person has evaded, or attempted to evade, all or any portion of the tax liability may be awarded a prize equal to twenty percent of the tax amount assessed on the basis of the evidence submitted by that person, from the amount of tax recovered on the basis of such information, upon the decision of the Director General.
(2) If there are more than one person entitled to the prize pursuant to sub-section (1), the prize amount shall be provided on a pro rata basis.
(3) Notwithstanding anything contained in sub-section (1), a person who gives information on revenue leakage may be provided immediately with informant's expenses of up to ten thousand rupees, pursuant to the procedures specified by the Department, on the basis of the truthfulness of the information provided.
(4) The name, surname and address of the person providing information pursuant to sub-sections (1) and (3) shall be kept confidential.
Example 32.3.1: Suppose ABC Company has submitted its income return for income year 2080/81 to the relevant office. On the basis that ABC Company submitted its income return without including in its income the sum of Rs. 10,00,000 received as an insurance claim, Deshbhakta Nepal provided written information to the Director General of the Department that the company had concealed income. Based on investigation by the office, a tax assessment was made and collected on the basis of evidence: tax at the rate of 25 percent amounting to Rs. 2,50,000; penalty under Section 120(b) of the Act amounting to Rs. 2,50,000; and interest under Section 119 amounting to Rs. 20,000, totalling Rs. 5,20,000. In this situation, the Director General may decide to award Deshbhakta Nepal a reward equal to 20 percent of the tax collected, i.e., Rs. 1,04,000.
Informant reward (Sec 136A): a person who supplies information WITH evidence that someone evaded (or attempted to evade) tax may be awarded 20% of the tax actually assessed and collected on the basis of that evidence, by the Director General's decision; if several informants qualify, the reward is shared pro rata. A revenue-leakage informant may also receive up to Rs. 10,000 immediately. The informant's name, surname and address are kept confidential
137. Power of the Government of Nepal to give order or direction
The Government of Nepal may give necessary order or direction to the Department in order to make tax administration effective.
It is the Department's duty to comply with such directions. Such directions must be received through the Ministry of Finance, which is the ministry to which the Department is accountable.
138. Power to frame rules
The Government of Nepal may frame necessary rules in order to carry out the objectives of this Act.
Provision has been made for the Government of Nepal to make and issue the necessary regulations in the course of implementing the Act. Accordingly, the Income Tax Regulations, 2059 have been made and issued. Subject to the Income Tax Regulations, 2059 issued pursuant to Section 138 of the Act, the Department may also make and issue directives, provided they are not inconsistent with the Act and the Regulations. The Income Tax Directive, 2066 is a directive issued by the Department pursuant to this provision. To the extent that a directive issued by the Department is inconsistent with the Act and the Regulations, it shall automatically become inoperative. Any departmental public circular inconsistent with such a directive shall also become inoperative. The interpretations and examples contained in a directive shall have the same status as a public circular. It is the duty of every taxpayer to comply with it and the responsibility of the Department to implement it.
The Government of Nepal may, by publishing a notice in the Nepal Gazette, make necessary additions, deductions or amendments to any Schedule of the Act other than Schedule 1 (tax rates). No amendments or additions may be made to any other Schedule without publishing a notice in the Gazette.
Notwithstanding anything in the prevailing law, no act other than the annual Finance Act, which amends the Income Tax Act to impose, assess, increase, decrease, exempt or remit tax, may make any amendment, change or other provision regarding the tax provisions of this Act. Amendments to the Income Tax Act, 2058 can only be made: (1) through the Finance Act; (2) through an Act specifically made to amend the Income Tax Act, 2058; or (3) through a Some Nepal Laws Amendment Act. This is intended to enhance the stability and predictability of income tax provisions and provides an opportunity for all stakeholders to understand Nepal's income tax system through a single codified Act.
Rule-making & amendment of the Act (Sec 138): GoN may frame Rules to implement the Act (the Income Tax Rules, 2059); the Department may issue Directives & public circulars consistent with the Act/Rules (the Income Tax Directive). GoN may amend Schedules OTHER than Schedule 1 by Nepal Gazette notice.
Crucially, the Act's TAX provisions can be amended ONLY through
(1) the annual Finance Act,
(2) an Act made specifically to amend the Income Tax Act, or
(3) a Some Nepal Laws Amendment Act - giving the income-tax system stability and predictability.