TDS stands for tax deducted at source. Any company or person doing a financial transaction that is subject to TDS payment is required to deduct tax at source i.e while making the transaction.
The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deducted.
| S.N | # Nature of Transaction FY 2020-21 FY 2019-20 | FY 2077/78 | FY 2076/77 |
|---|---|---|---|
| i. | Interest income from the deposit under ‘Micro Finance Program’, ‘Rural Development Bank’, ‘Postal Saving Bank & Cooperative (u/s-11(2)) in rural areas is exempted from tax | No change | Up to Rs 25,000 |
| ii. | Windfall gains | No change | 25% * |
| iii. | Payment of rent except for house rent to a natural person and except provided in the serial number (iv) & (v) below, made by resident person** | No Changes | 10% |
| iv. | Payment for vehicle hire to VAT-registered person | No Changes | 1.5% |
| v. | Payment for freight or rental payment against the lease of carriage vehicle relating carriage of goods
i. Against non VAT invoice ii. Against VAT Invoice |
No changes | 2.5% |
| vi. | Profit and gain from the transaction of commodity future market | No Changes | 10% |
| vii. | On returns to be distributed by Mutual Fund: –
Natural person: |
No Changes | 5% |
| viii. | On Dividend paid by the resident company and partnership firm – To Resident person – To Non-resident Person | No Changes | 5% for both |
| ix. | On payment of gain from investment insurance | No change | 5% |
| x. | On payment of gain from unapproved retirement fund | No Changes | 5% |
| S.N | Nature of Transaction | 2072/2073 | 2073/2074 |
|---|---|---|---|
| A. | Interest income from deposit up to Rs 10000 under ‘Micro Finance Program’, ‘Rural Development Bank’, ‘Postal Saving Finance Program’, ‘Rural Development Bank’, ‘Postal SavingBank’ & Co-Operative (u/s-11(2) in rural areas) | Exempt from tax | Exempt from tax |
| B. | Wind fall gains from Literature, Arts, Culture, Sports, Journalism,Science & Technology and Public Administration amountreceived up to 5 lacs | Nil | Nil |
| Windfall gains | 25% | 25% | |
| C. | Payment of rent by resident person having source in Nepal | 10% | 10% |
| D. | Payment of Rent by Resident person having source in Nepal if the Bill raised is VAT bill | 1.50% | 1.50% |
| E.. | Profit and Gain from Transaction of commodity future market | 10% | 10% |
OTHER IMPORTANT POINTS FOR TDS IN NEPAL THAT ARE WORTH REMEMBERING
– In case of Disposal of Interest on entity as per section 37 (2Kha), company registrar shall update the register only after receiving the evidence for payment of TDS applicable on capital gain from such disposals. (New)
– Infrastructure tax at the rate of Rs.5/ltr is levied in addition to all applicable taxes on import of petrol, diesel, and aviation fuel. (New)
– Any person and entity licensed to operate casino during the F.Y. 2073/74 shall be liable to pay 30 million rupees as royalty, furthermore, person operating the same business only using modern machines and equipment shall be liable to pay 7.5 million rupees as royalty. (New)
– In case of disposal of land and building by person other than mentioned in section 95(ka), Malpot office during the registration shall collect advance tax equal to 10% of gain on such disposal. (New)
– Presumptive Tax Rates has been changed as follows: (New)