This Act is made to consolidate and amend the law relating to the Income Tax. It was enacted by Parliament in the first year of the reign of His Majesty the King Gyanendra Bir Bikram Shah Dev. It is enforced throughout Nepal and also applies to the resident person in any place outside Nepal.
Income Tax Act 2058
This Act defines “Income” as the income earned by any person from employment, profession or investment and the total amount of that income calculated under this Act.
Under this Act, Taxes are classified under 2 different categories namely Direct and Indirect Tax.
- Direct tax is that tax which is really paid by a person on whom it is legally imposed. Some of the direct taxes are income tax, property tax, interest tax, death tax, vehicle tax etc.
- Indirect tax is that tax which is imposed on one person but paid partly or wholly by another. Some of the indirect taxes are sales tax, entertainment tax, passenger tax, hotel tax, export and import duty, excise duties, VAT etc.
This Act has provided the definition of Person withholding advance tax, Payment from which tax is withheld finally, Incapacitated person, Debt claim, Investment insurance, Income sent abroad and many more. This Act has also provided a different chapter for Computation of Tax where it has mentioned computation of Income from business, income earned from employment and income earned from Investment.
