Types of OFFENSE

Non-Compliance Other Offence

(sec. 117 to 121) (sec. 123 to 128)
 Charges / Fees

Amount to be paid upon non fulfillment of any legal obligation or breach of

any legal provision.

Failure to Submit Tax Return 117 (1)

Failure to Maintain Accounts and Records 117 (2)

Failure to Submit Withholding Tax Return 117 (3)

Submission of Falsified Return 120

Abiding and Abetting 121

 117(1). Failure to Submit Return

117 (1) Failure to submit Estimated Tax Return as per

Rs 2,000
(Ka) Section 95(1)

The Estimated Tax Return is to be submitted only once i.e. up to Poush end
as per sec 95(1). Submission of such Return in Chaitra or Ashad does not
relieve a defaulter in paying such fee.
Once the Return is submitted before Poush end for an Income Year, Return
for Chaitra and Ashad end is not required. So, the maximum fee payable
under this Provision by a Defaulter is Rs 2,000.
 117(1). Failure to Submit Return
117 (1) Delay in submission of Advance Tax Collection Return as per 1.5% p.a. of the
(Kha) Section 95A. within 25 days of end of month. amount required to be
withheld by the
withholder for month
and part of the month
Section Nature of Gain Rate of Advance Tax Collecting Agent
95A (1) Transaction in Commodity Future Operator of Commodity Future Market
10 %
Market Service
95A (2) (Ka) Disposal of Listed Securities • 7.5% for Resident Stock Exchange
Natural Person
• 10% for resident entity
• 25% for Others
95A (2) (Kha) Disposal of Unlisted Securities • 10% for Resident Company whose Stocks are being Disposed/
Natural Person Transacted
• 15% for resident entity
• 25% for Others
95A (3) Disposal of Land & Building • 2.5% for ownership of 5 Malpot Karlaya
or more years
• 5% for ownership less
than 5 years
 117(1). Failure to Submit Return

117 (1) Failure or Delay to submit Annual Tax Return as per

(Ga) Section 96(1)

i. If the Taxpayer falls under the category of Presumptive

Taxation as per Section 4(4) Rs 100 per month of Delay

ii. ii. For any Other Tax Payers Higher of

• 0.1% p.a. of Turnover“ per
month of Delay

•Rs 100 per month of Delay

"Turnover" or "Gross Receipts" means Assessable Income derived after the

inclusions of all the amounts to be included in the income and before any
allowed Deductions.
 NOTE:

While calculating the months of Delay, month or part of month from Ashwin end is counted,
however, if the person has obtained extension for submission of Tax as per Section 98, following
cases are possible and treated accordingly,

- If the person files Income Tax Return within the Extended Period i.e. Poush end, then fine is not
chargeable under this provision.

-If the person fails to file Income Tax Return within the Extended time i.e. Poush end, the months
of Default is calculated from Ashwin end and NOT from Poush end.

Refer example 29.2.2

 NOTE:

The term "month" used in any Nepal Act is the month beginning from 1st of Every Nepalese
Calendar Month as defined by Interpretation of Law Act 2010.

To assess the month of Delay, part of a month is also taken as a month.

 117(1). Failure to Submit Return

117 (1) Delay in Submitting Financial Statements by Tax Exempt

(Gha) Organizations
0.1% p.a. of the amount
In case a TEO fails to submit its audited financial
disclosed as Revenue in its
statements within 3 months of the end of the Income
Income Statement
Year
 117(2). Failure to Maintain Accounts and Record

117 (2) In case a person fails to maintain books and records as Higher of,
per section 81
•0.1% of Turnover or
gross receipts during the
year.

•Rs 1,000 per annum

"Turnover" or "Gross Receipts" means Assessable Income derived after the

inclusions of all the amounts to be included in the income and before any
allowed Deductions.
 117(3). Failure to Submit Withholding Tax Return

117 (2) Delay in Submission of WHT Return as per Section 90(1) 2.5% p.a. of the amount
required to be withheld by
In case a withholding agent fails to submit WHT Return the withholder for every
within 25 days of end of the month for the tax withheld. month or part of month of
delay.

Even if TDS amount is deposited within 25 days of next month, fee as per this
provision is charged if the return is not filed.
 120. Submission of Falsified Return

120 Fee for submission of falsified or misleading

Statements
(Ka) In case false or misleading statement is due to a
mistake or error without the taxpayers intention to do 50% of underpayment of Tax
so i.e unknowingly
(Kha) In case false or misleading statement is caused due to
fraudulent activities of the taxpayer knowingly or 100% of underpayment of Tax
recklessly
 121. Abiding and Abetting

120 A person who knowingly or negligently helps, aids or

advises any taxpayer to commit any of the offenses is 100% of underpayment of Tax
also punishable with a fee
 Interest

Financial Compensation for delay in payment.

Shortfall in Deposition of Installment Tax 118

Delay Deposition of Tax Liability 119

 118. Shortfall in Deposition of Installment Tax
118 (1) In case of Installment Tax to be deposited by a person in an Income Year, IF the amount
mentioned below in B is greater than A, Interest as per Subsection 2 is chargeable on the
Difference Amount;

A. Amount of each Installment Tax deposited by the person in the Income Year.
B. 90% of each Installment amount as per Section 3 (ka) and (kha) for the Income Year.
118(2) Interest at the rate of Normal Interest Rate (15%) is chargeable for month or part of the
month till following periods from the due date of submission of Instalment Tax;

(Ka) In case of person determining Tax as per Section 99 (1) (Self- Assessment based Tax
Submission) ; Till the due date of submission of Income Tax Return (the date when the tax
return has to be filed),
(kha) In case of Amended Assessment as per Section 101 by the Department; Till the date
of Notice of Amended Tax as per Section 102 (The date of Assessment Order).

The interest on installment tax is calculated for the period till Aswin end only,
interest for further delay is covered by section 119. So extension as per section 98
has nothing to do with interest under section 118.
 119. Delay Deposition of Tax Liability
119 (1) If a person does not deposit the amount of tax payable till the due date, Interest at the
rate of Normal Interest Rate (15%) is chargeable for month or part of the month of delay
for the amount not deposited.
119 (2) For calculation of Interest u/s 119(1), the extension as per Section 98 is not considered.
For person not submitting Tax within Aswin end, Interest at general rate 15% is chargeable
for the period beginning next day of Aswin end till the date of submission of tax where
part of month is also considered as a month. This interest is chargeable even if extension
is obtained by the taxpayer as per Section 98.
119 (3) A withholder cannot recover the amount of interest chargeable for non-compliance of
Section 90(4) from the withholdee.

A Person requiring to collect Advance Tax cannot recover the amount of Interest
chargeable for non-compliance of Section 95A (8) from the person requiring to pay the
advance tax.
XYZ Ltd.
For FY 2073/74
Estimated Installment Tax Deposited= Rs 11,00,000
Estimated Tax return u/s 95(1) submitted along with second installment
i.e on Chaitra end.
Actual Tax Liability= Rs 12,50,000
Date of Return Filing = Magh 28 2074
Extension u/s 98 obtained till Mangsir end 2074.

Calculate The amount of Interest applicable under Income Tax Act 2058.
 SN Particulars First Installment Second Installment Third Installment
40% 70% 100%

A Actual Tax Liability 5,00,000 8,75,000 12,50,000

B 90 % of Installment to be deposited 4,50,000 7,87,500 11,25,000
Section 118(1)(Kha)

C Actual Deposited Installments 4,40,000 7,70,000 11,00,000

Section 118(1)(Ka)
D=B-C Deficit/Shortfall Amount 10,000 17,500 25,000
Section 118(1)

E No. of Months for Interest due 3 3 3

Till Asoj End
Section 118(2)
F Interst @15% 375.00 656.25 937.50
Section 118(2)

Total Interest u/s 118 1,968.75

Total Interest u/s 119 (1,50,000 x 15% x 4/12 ) 7,500.00

 Penalty / Fine

Punishments for acts against the provisions of the Act.

Failure to Pay Tax 123 Rs 5,000 to 30,000 or Imprisonment upto 3 months

Making a False/Misleading Statement 124 Rs 40,000 to 160,000 or Imprisonment for 6 months to 2 year

Impending or Coercing Tax Administration 125 Rs 5,000 to 20,000 or Imprisonment for 1 to 3 months

Confidentiality Breach by Tax Officer 126 (1) Upto Rs 80,000 or Imprisonment upto 1 Year

Unauthorized Tax Collection 126 (2) Rs 80,000 to 240,000 or Imprisonment for 1 to 3 year

Abiding and Abetting 127 100% of Offender in case of Government Official

and 50% of Offender in case of others

Failure to Comply with the Act 128 Rs 5,000 to 30,000

Thank You

Prepared by : Babin Joshi