TDS and VAT

The most common words in the world of Chartered

Accountancy.
 TDS

• Definition of TDS
• History of TDS
• Examples of TDS
• TDS Rates
• Praticability
• Open Discussion
 Definition of TDS

• TDS is tax deducted at source

• Source means source of income
• Why the concept of TDS came? Lets discuss on it.
• Prompt revenue on government. As per recent data almost 40% of revenue
comes from tds to government.
 History of TDS

• Whatever we have discussed earlier, the same problem was felt in india in
the early 1930s. Thus it was introduced by the india income tax act 1922.
Thus Nepal has also been following the same since income tax 2058.
 Example of TDS

• BRSS/AR/FJN bills its client a bill of 50000+vat totals to 56500 but it only
gets payment of 49250+6500. and the revenue of which we have to pay
25%, have already paid 1.5% thus we can deduct those when the party does
ETDS of it
 TDS Rates

• Is deducted when a withholding agent is a resident person of Nepal, and pmt is not exempt, and pmt has
source in Nepal.
• Interest by bank to natural person-6%
• Interest by bank to entity-15%
• Natural person or entity when pays interest to bank-no tds
• Service provided to vat registered-1.5%
• To vat non registered-15%
• Transport vat registered(1.5%) unregistered (2.5% and reverse vat)
• Rent 10% (shall be written in agreement) commission 15%
 TBC…

• Retirement payment 15% bt if pmt is by Gon and ARF 5%

• Windfall gain(25%) , upto 5 lacs national prize gained through notable contributions to country
is exempt, bt gon can also exmept full amount by publishing in Nepal gazette
• WHT on contract 1.5% if pmt exceeds 50000( 50000 shall be counted on a pmt of past 10 days)
• WHT return shall be submitted within 25 days from end of respective month whre it is deducted
• If WHT agent fails to submit tax within 25 days, then if withholdee pays within another 25 days
no fine shall be levied.
• Final withholding payment to know, eg dividend
 Praticability of TDS

• ETDS
• Anu 10
• Transfer of credit
And so on , Please add and correct me.
 VAT

• Is a consumption based tax assessed on value added in each stage of

production process of goods and service
• A indirect tax.
 Example of VAT

• BRSS/AR/FJN if the audit fee is 50000, bills the client 50000+13%.

 Moving on to other topics

• I want to know why the system of vat was introduced, will ask to some and
will get convinced.
 Rate of vat

• 13%
• Zero rated.
• Exempt
 Registration in vat

• Goods 50 lacs or more turnover

• Services 20 lacs or more
• Goods and service both,20 lacs or more
• Turnover means purchase or sales whichever is higher
 About board and its colour

• Shall be of 30 cm length and 10 cm width

• For those who have registered in vat- Green colour stating registered name and pan
no.
• Those who deals in vatable goods but havenot crossed the limit for registration- Yellow
• Those who deal in exempt goods- white
• This board shall be kept in conspicuous place where everybody can see
• Fine shall be levied NRs. 2000 each time
 More

• Partial tax credit- 40% vat only be claimed on four wheelers passenger
carrying vehicle(logic)
• Proportionate tax credit.
• Input tax credit cannot be claimed on (alcohol, alchohol and alcohol mixed
beverages, entertainment expenses, petrol for vehicle) yesma ni discuss
garum,
• Soft beverages? Food from hotel?? Petrol??
 Practibility

• Have to submit vat return on self assessment

• Zero return shall also be submitted.
• Shall have to submit purchase and sales register in CBMS for company
whose turnover exceeds 50 lacs or ??? Confused
• The company whose turnover exceeds 5 crore in a year, shall have to
submit, every month, transactions whether sales or purchase of each party
which exceeds taxable amount of 1 lacs,
Please add some more.
 Please correct me
Thanks all for your cooperation throughout the time.