<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111156/636cd90a9c7e80680e092e77jpeg.jpg" alt="" width="640" height="497"/>Almost two decades have passed since the <a href="http://archive.nepalitimes.com/news.php?id=7600#.YFb5li2B3-Y" target="_blank" rel="noopener noreferrer">Income Tax Act</a> came into effect in Nepal. But complications abound for taxpayers, even if they have paid their taxes on time and have a legitimate claim to overpaid tax refund.The Act provides for taxpayers who register more than the liable tax amount to be refunded by the government. The taxpayer is supposed to receive the refund amount within 60 days of application.However, barring exceptional cases, this rarely happens. The contradiction in implementation is an interesting one—a government that fines <a href="http://archive.nepalitimes.com/news.php?id=11068#.YFb5ri2B3-Y" target="_blank" rel="noopener noreferrer">the taxpayer</a> for delayed tax payment itself does not pay back the refund.When approached on the matter, a government officer responded by saying that it is not possible to refund from the ongoing fiscal year's budget, and thus the amount could only be refunded in the upcoming year.This is a common rhetoric heard in the tax offices, whenever a taxpayer approaches the government for a refund, even if the request is made within the stipulated 60 days.The Federation of Nepalese Chamber of Commerce Industries (FNCCI) tax expert and entrepreneur, Ashok Kumar Todi says, “It is very, very difficult to get a refund. Actually, it is almost impossible.”The Income Tax Act 2058 underlines that <a href="http://archive.nepalitimes.com/news.php?id=6342#.YFb5lC2B3-Y" target="_blank" rel="noopener noreferrer">the taxpayer</a> must pay the due amount for the running year based on estimates within the Nepali months of Poush (December-January), Chaitra (March-April) and Asar (June-July). If the total estimated amount is 100% then the taxpayer has to pay 40% in advance in the month of Chaitra and the remaining 30% in the month of Asar.In addition, if the paid tax based on an estimate is less than the actual amount, then the taxpayer is liable to be fined. If such tax is paid on installment in theory, and if it so happens that the estimate is greater than actual, then the over-paid amount should be refunded easily.Income Tax Act Clause 113 and Income Tax Rules number 36, both say that the tax must be refunded. However, in practice, the overpaid tax amount is being withheld by the tax officers, without any explanation.“The overpaid tax amount must be refunded, but in practice, it is not happening,” confirms tax expert Bhavanath Dahal who says that Gyanendra Shah while still king of Nepal had received a refund for overpaid taxes for his Soaltee Hotel— but only after it was vetted by the Cabinet. There are a few other exceptions in which the taxpayers got their overpaid tax refunded, but the processes were mostly cumbersome.Tax expert and entrepreneur Todi says that the tax administration should return the overpaid tax at least within the current year. However, in practice, the overpaid tax is passed on the next fiscal year under the heading of ‘government reserve’.This process repeats itself year after year, leading to the overpaid tax amount being transferred to the next fiscal year on a continuous basis—at the cost of entrepreneurs.“We pay taxes by taking loan from banks, and the overpaid tax amount just gets accumulated in the government reserve fund. It is impossible to get a refund,” ays a businessman who requested anonymity.A high level Tax System Review Commission six years ago recommended improvement in the refund process, but it was never enforced. Internal Revenue Department (IRD) officers themselves admit that returning the income tax is very difficult.IRD spokesperson Arjun Dhakal says the tax amount overpaid by the taxpayer cannot be directly paid back by the IRD itself as the applications are forwarded to the Finance ministry.“The process to get the overpaid income tax back is a very lengthy and difficult one and as a result, there are very few instances of taxes actually being refunded,” he admits.Entrepreneurs say that the total amount that the government owes to taxpayers as overpaid tax refund has now accumulated to astronomical amounts. Even IRD Tax Refund Department director Devnarayan Poudel has no idea how much it is.The IRD has introduced a new process to ease the refund of overpaid taxes, regarding which a circular has been sent to the tax office, but entrepreneur Todi is skeptical.According to law, if the tax officer makes an overestimate of the tax to be paid then the taxpayer can go to the Revenue Judiciary of Nepal and the taxpayer will get back the amount overpaid. But that is only in paper.Anyone choosing the path of litigation ends up losing even more. In order to process the litigation for administrative review, the overpaid tax payer has to deposit one-fourth of the disputed amount. If the taxpayer is still not happy with the administrative review, one can deposit 50% of the disputed amount and file a lawsuit to the Revenue Judiciary for further review.The caveat however, is that it may take several years before a settlement is reached by the Revenue Judiciary. As a result, a large amount of taxpayer’s deposit is accumulated in the government reserves.Even if the court rules in favour of the taxpayer, by the time the decision comes through, the taxpayer would have been seriously overburdened with the loan and interest. On the other hand, if the taxpayer loses the lawsuit, the government will charge the individual or the firm, an interest on the disputed amount since the beginning or the initial date of the filing of the lawsuit and the disputed amount will not be deducted.“In some cases, even if the taxpayer has won, the government has refused to return the disputed amount along with interest,” says Arun Raut, a tax expert.FNCCI Chair Shekhar Golcha, however, says that even though the process of getting back overpaid taxes is difficult, it is not impossible. According to him, since the overpaid tax amount from the previous year is adjusted in the tax payable the next year, it is automatically sorted out.He says that last fiscal year the total claim amount for overpaid tax refund was Rs6.67 billion, but the IRD refunded only 57% of that amount. In the earlier fiscal year the amount to be refunded was Rs3 billion of which Rs2.26 billion was refunded.Even so, tax expert Dahal says the non-refund has affected Nepal’s business environment. He says: “It is the right of the taxpayer to get a refund of his overpaid taxes. But the problem is not limited to this. It is a systemic problem.”

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Taxing process of fund reclaiming in Nepal

<img width="1050" height="696" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101144/636a25c89c7e80680e0439dfjpeg.jpg" alt=""/>The Supreme Court’s verdict on Wednesday requiring the Malaysian company Axiata and Ncell Nepal to pay billions capital gains tax on their purchase of Nepal’s largest private telecom provider Ncell will end a <a href="http://archive.nepalitimes.com/blogs/thebrief/2016/06/03/taxing-time-for-ncell/" target="_blank" rel="noopener">controversy</a> that has dragged on for three years, but is expected to further chill <a href="https://archive.nepalitimes.com/regular-columns/Comment/making-nepal-fdi-friendly,853" target="_blank" rel="noopener">Nepal’s foreign investment climate</a>.A full bench of the apex court headed by Chief Justice Cholendra Shumsher Rana decided after two days of hearings that Reynolds Holdings Ltd was a shell company and the real owner of <a href="http://archive.nepalitimes.com/blogs/thebrief/2016/05/16/the-tax-in-question/" target="_blank" rel="noopener">Ncell</a> was <a href="http://archive.nepalitimes.com/blogs/thebrief/2015/12/21/axiata-buys-80-stake-in-ncell/comment-page-1/" target="_blank" rel="noopener">Axiata</a>, and it was liable to pay the tax along with Ncell Nepal.Justices Rana, Mira Khadka, Bishwambhar Prasad Shrestha, Ananda Mohan Bhattarai and Tanka Bahadur Moktan were deliberating on a public interest litigation writ filed by former secretary and advocate Dwarika Nath Dhungel and six others that Ncell Nepal and Axiata were responsible to pay capital gains tax when they bought the company from the <a href="http://archive.nepalitimes.com/article/interview/Nepal-very,1104" target="_blank" rel="noopener">Swedish-Finnish telecom company TeliaSonera</a> in 2016.When TeliaSonera sold Reynolds Holdings shares in Ncell to Axiata for over $1 billion, Nepal’s Large Tax-payers’ Office had said Reynolds owed the government Rs35 billion in taxes and demanded it pay the amount and fines to a total of Rs61 billion.Ncell Nepal refused to pay that full amount, and transferred only Rs21 billion capital gains tax. After this, the writ was filed, and the Supreme Court on Wednesday also rejected a case filed by Ncell.The case became controversial after two foreign investors traded ownership of a Nepal-based telecom company. Since TeliaSonera has already left Nepal, the Court found that the buyer is liable to pay capital gains tax if the seller did not.Senior advocate Surendra Bhandari says that it is international practice that the seller has to pay capital gains tax on any sale of assets, but says the Supreme Court is right in assessing that the seller was allowed to leave the country without paying tax and to put the onus on the buyer.Wednesday decision now sets a precedent for the buyer to also be responsible for paying capital gains tax. Officials at the Internal Revenue Service say that although the country’s treasury will benefit from the tax payment, there has been no investigation into why the seller was allowed to get away without paying taxes, and fears that the case will have negative repercussions on future investment.Eighty percent of Ncell’s ownership is with Reylonds Holding registered in the British Virgin Islands and 20% with Niraj Govinda Shrestha. Ncell’s main promoter was Reynolds Holding through TeliaSonera’s office in Norway.According to Nepal’s tax laws, TeliaSonera’s sale of Ncell to Axiata had a capital gains tax liability of Rs35 billion. Axiata had written to the Internal Revenue Office before the sale if it was liable to pay capital gains tax in Nepal, but there was no reply from its director at the time, Chudamani Sharma.After that the tax controversy got mired in politics, with various party leaders and former CIAA chief <a href="https://archive.nepalitimes.com/regular-columns/Legalese/parliament-and-court-plays,822" target="_blank" rel="noopener">Lokman Singh Karki</a> vying for underhand deals that would let the guilty go free. Says advocate Bhandari: “The Supreme Court decision seems to be driven by the logic that any buyer should first inquire about the liabilities of the seller before any purchase.”However, other retired revenue officials say it is unfair to blame Axiata, and ask it to pay capital gains tax that should have been paid by TeliaSonera. He says the really guilty party here are the politicians who allowed TeliaSonera to leave without paying taxes, and this will dim Nepal’s investment climate just before an Investment Summit planned for next month, and after <a href="https://www.nepalitimes.com/here-now/to-davos-with-hammer-and-sickle/" target="_blank" rel="noopener">Prime Minister KP Oli’s visit to Davos</a> with the message that <a href="https://www.nepalitimes.com/editorial/crony-communism/" target="_blank" rel="noopener">Nepal was open for business</a>.The Surpeme Court verdict has also exposed a loophole in Nepal’s tax laws that allows shell companies to get away without paying taxes. TeliaSonera had its dividends frozen in Nepal by the Large Tax-payers’ Office, but the Supreme Court allowed the company to repatriate its profits.   According to the <a href="https://www.nepalitimes.com/latest/nepalis-in-tax-havens-swiss-banks-money-laundering/" target="_blank" rel="noopener">Nepal Leaks exposes</a> by the Centre for Investigative Journalism and the International Consortium of Investigative Journalists, Ncell owners had used the company to launder money as foreign direct investment. Ajeya Raj Sumargi, a businessman close to the former Maoist party and Birendra Mahato of the Federal Socialist Forum Nepal and brother of billionaire overseas Nepali Upendra Mahato were implicated in documents leaked through the Panama Papers about tax havens.The verdict this week opens the door for Nepal to tax FDI that is coming in from offshore tax havens.   Read also: <a href="https://archive.nepalitimes.com/regular-columns/Comment/making-nepal-fdi-friendly,853" target="_blank" rel="noopener">Making Nepal FDI friendly,</a> Shyamal K Shrestha<a href="http://archive.nepalitimes.com/news.php?id=962#.XFwMylUzaUk" target="_blank" rel="noopener">Fight for FDI</a>, Ashutosh Tiwari<a href="https://archive.nepalitimes.com/article/from-nepali-press/Ncell-has-complied-to-all-obligations,3047" target="_blank" rel="noopener">"Ncell has obliged to all obligations"</a>

Supreme Court weighs in on Ncell tax dispute

Who is accountable for teacher-student relationships?

Of the nearly 19 million eligible voters in next week’s election in Nepal, an estimated 5 million are abroad and cannot cast their ballots. Many others within Nepal must travel to their home districts, and might decide not to because of the cost.
Flights into Kathmandu these days are full of global Nepalis returning just to vote, but almost as many are leaving for overseas jobs. Most of those coming or going are in the 20-40 age group, and a majority want Nepal to see a change in leadership.
Bangladesh held an election this month in which citizens overseas could vote by mail.&nbsp;
“Bangladesh made maximum use of technology not just for campaigning but also for polling itself. We could have also managed this, so people within Nepal did not have to travel to their home districts to vote,” says Mohna Ansari, former head of Nepal’s National Human Rights Commission who was an election observer in Bangladesh.
A 3-day holiday has been declared so people can travel to their home constituencies to cast ballots. Even if there was not enough time to manage ballots for overseas Nepalis, it could have been done for Nepalis within Nepal.
Former Chief Election Commissioner Bhojraj Pokharel reckons that physical voting in countries with a large Nepali diaspora would have been a logistical nightmare, but in the PR system, using electronic voting machines or paper ballot could have been piloted in some places. It is not possible to manage the entire voting process until we introduce the internet voting system.
“First of all, there needs to be political will to bring the policy and be ready to undertake that level of investment and it is not a one-time cost,” Pokharel says. “A government formed by the GenZ could have atr least issed an ordinance ensuring this right, piloted out-of-country voting where possible, which could have built pressure for the future Parliament and the government. It would have given people hope. It is a lost opportunity.”
All major political parties called for voting rights for global Nepalis in their manifestos, but these very leaders blocked legislation allowing it despite a 2017 Supreme Court ruling out of fear that it would be anti-incumbent.&nbsp;
<h2>Why so late?</h2>
Bangladesh delivered election results in just one day, but the final results of Nepal's last local polls in 2022 including that of Kathmandu constituencies took nearly a month.
Acting Chief Election Commissioner Ram Prasad Bhandari said this week that the results of the First-Past-The-Post (FPTP) ballot counting would “likely” be published within 24 hours of the poll closing at 5PM on 5 March. But many are skeptical.
“I wonder if we lack the capacity or know-how to announce results as quickly as possible,” says Mohna Ansari.
Former Chief Election Commissioner Pokharel says manual ballot paper counting in Nepal is inherently slow because of the large numner of political parties and/or candidates on the ballot, the counting mechanism, the political behaviour of the candidates/parties and some managerial issues during counting.
“Our present policy is to count all the ballot papers at the returning officers' officies, located at the district headquarters. It requires collecting ballot boxes safetly first. This takes time, and there have been cases of ballot boxes being damaged or stolen during transport. In a few highly difficult, geographically remote polling centres, we use a helicopter or transport. But sometimes, accommodating the party and candidates' representatives remains challenging,” explains Pokharel. A solution could be counting ballots at the very booths where they are cast.
Another reason for the delay is simply the number of political parties, and the need for each ballot paper to be examined by booth representatives for consensus. In close races, the smallest difference can lead to tense situations, further delaying results, even though counting centres are protected by metal fencing so there is no disruption.
After this, then it is the turn of Proportional Representation (PR) ballots to be counted. Weeks pass by the time the results of candidates and parties are tallied and verified. But the most common delay is because election officers think ballot counting is a nine-to-five job.&nbsp;
“The efficiency of poll station officers is most important, and they are incentivised for this,” says Ansari, adding that counting can even start within an hour after voting closes.
In remote areas, local resources could be mobilised to make counting quicker, but there is a crisis of trust, adds Ansari.&nbsp;
That could be easily solved with electronic voting which the EC implemented in the 2008 polls but discontinued because political parties felt the machines could be hacked or manipulated.

Nepalis Select Who To Elect

On Saturday, Iran retaliated with missile strikes on Abu Dhabi, Dubai, Bahrain and Qatar, a region where there are an estimated 2 million Nepalis working to send money home. In addition, thousands of Nepalis were preparing to board flights to Kathmandu from West Asian cities this weekend to vote in the 5 March election. Many are said to be stranded at various aviation hubs. A Qatar Airways flight from Doha took off just before the air space was closed, while Air Arabia and Kuwait Airways have diverted or cancelled flights. Nepalis in the West Asian region said things were relatively calm where they were, although some heard loud explosions at about noon local time. In Dubai, some thought they were Ramadan fireworks.&nbsp; In Kuwait, nearly 2,000 Nepalis working in the US military base as security guards and cleaners were evacuated before the strikes. In Bahrain where the US Fifth Fleet naval base is located and which was hit by two Iranian missiles, workers contacted by Nepali Times said the situation was under control and the authorities had told everyone to stay indoors and not use highways. The conflict also coincided with the beginning of Nepal’s trekking and mountaineering season, and tourists were either on their way or planning to leave European and North American cities for Himalayan hikes. Most of them transit through Doha, Dubai or Kuwait and all three airports are closed. Turkish Airlines flights via Istanbul are still operating.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260228130212_ab5e132d56da1df6a3fb1b6919648f845a168ad2c51d79f7587fb85a6e913b97.png" data-media-id="editor_0" data-image-id="20260228130212_ab5e132d56da1df6a3fb1b6919648f845a168ad2c51d79f7587fb85a6e913b97" data-rendition-name="original" width="1864" height="826" loading="lazy" alt="Qatar and UAE airspace closed"> <figcaption>Qatar and UAE airspace closed. Credit: Flightradar24</figcaption> </figure>  However, the main impact for the world could be a spike in the price of petroleum products if the strategic Strait of Hormuz is blocked. China relies on Iranian oil for their refineries, and Nepal could be affected indirectly if the economies of its neighbours are hit. Nepal imports all its diesel, petrol, LPG and aviation fuel from India which sources it mainly from the Gulf, and until recently from Russia. Petroleum makes up 25% of the value of all imports, and that is more than Nepal earns from all its exports. Saudi Arabia this year overtook the UAE as the main destination for Nepali workers, with the number now totalling 400,000. There are said to be as many in the UAE, and another 350,000 in Qatar. There are another 100,000 mostly women in Kuwait, and 50,000 each in Oman and Bahrain.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260228130220_d24ae633ff84f283835434becdb2f1351f84c415ce87ca34378bd4e2669661b3.jpg" data-media-id="editor_1" data-image-id="20260228130220_d24ae633ff84f283835434becdb2f1351f84c415ce87ca34378bd4e2669661b3" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="West Asia Iran conflict"> <figcaption>Iran retaliated with missile strikes on Abu Dhabi, Dubai, Bahrain and Qatar on Saturday.</figcaption> </figure>  Nepal receives nearly $11 billion a year in remittances from overseas Nepalis (not counting India) through official channels, although the total is said to be much more. &nbsp;This makes up more than a quarter of Nepal’s GDP equivalent — one of the highest proportions in the world. More than half of the overseas remittances to Nepal comes from its workers in the Gulf, and it is the mainstay of the country’s economy. Nepalis in Saudi Arabia, Qatar and the UAE alone send home more than $3 billion a year, much of that helping support their families back home. An average Nepali worker in the Gulf sends home nearly $2,500 a year, and this is spent mainly for household supplies, children’s education and healthcare. There are also an estimated 7,000 Nepali caregivers and healthcare workers in Israel, and most of them are women. The Nepal Embassy has asked Nepalis in Israel to take caution and move to bomb shelters.

West Asia war and Nepalis

&nbsp;The BBC documentary <a href="https://www.youtube.com/watch?v=Idv4mMGHPLk&amp;t=173s">Shot Like Enemies: Inside Nepal’s GenZ Uprising</a> set off a frenzied debate in the public sphere, highlighting how sensitive international coverage of the country still is for Nepalis despite the national media doing its job. The investigative report focussed on the massacre outside Parliament on 8 September that led to the collapse of the government and paved the way for the election on Thursday.&nbsp; There was praise from supporters of the film and scathing criticism. Raw clips and leaked conversations showed how deliberately the protesters were shot in cold blood. Others saw a sinister conspiracy behind the release of what they regarded as a one-sided documentary just a week before the election. News in the foreign media of the election from Nepal was eclipsed this week by the war in West Asia. Nepali Times brings this selection of readings from the international press. For the complete articles go online or type in the links.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260303110320_be0e1078a3563f9433e73af614fc24db7fb0d42560c88d9522a8b17e944a3e3f.jpg" data-media-id="editor_1" data-image-id="20260303110320_be0e1078a3563f9433e73af614fc24db7fb0d42560c88d9522a8b17e944a3e3f" data-rendition-name="original" width="759" height="412" loading="lazy" alt="international coverage of Nepal elections"> </figure>  Read the <a href="https://www.aljazeera.com/features/2026/3/2/balen-shah-rapper-mayor-nepals-next-prime-minister">full story</a> here.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260303110320_493b9bca6cd984aa0d846ee577a3ef5aadc11086f6387c6b5b3f6d1c21b087a6.jpg" data-media-id="editor_3" data-image-id="20260303110320_493b9bca6cd984aa0d846ee577a3ef5aadc11086f6387c6b5b3f6d1c21b087a6" data-rendition-name="original" width="636" height="678" loading="lazy" alt="international coverage of Nepal elections"> </figure>  Read the <a href="https://www.thehindu.com/news/national/nepali-parties-promise-big-ahead-of-polls-however-concerns-remain/article70688498.ece">full story</a> here.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260303110320_b813313c898a1addf207ee663210ae8ebc0cd2f47ba8fb088530c445a733896b.jpg" data-media-id="editor_5" data-image-id="20260303110320_b813313c898a1addf207ee663210ae8ebc0cd2f47ba8fb088530c445a733896b" data-rendition-name="original" width="625" height="582" loading="lazy" alt="international coverage of Nepal elections"> </figure>  Read the <a href="https://www.bbc.com/news/articles/cgqgl3j5nj4o">full story</a> here.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260303110320_b643581c73d3e4babef9e1f89414b33864c2807a5488cd1c0d2de6d34755a42c.jpg" data-media-id="editor_7" data-image-id="20260303110320_b643581c73d3e4babef9e1f89414b33864c2807a5488cd1c0d2de6d34755a42c" data-rendition-name="original" width="701" height="813" loading="lazy" alt="international coverage of Nepal elections"> </figure>  Read the <a href="https://www.atlanticcouncil.org/dispatches/will-nepals-long-standing-nonalignment-survive-the-first-election-after-its-gen-z-uprising/">full story</a> here.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260303110320_934a42f754451d7354407413f3eaa0fd8fff798122f7e419fdaef82dfe1895ab.jpg" data-media-id="editor_9" data-image-id="20260303110320_934a42f754451d7354407413f3eaa0fd8fff798122f7e419fdaef82dfe1895ab" data-rendition-name="original" width="631" height="759" loading="lazy" alt="international coverage of Nepal elections"> </figure>  Read the <a href="https://news.mongabay.com/2026/02/in-nepal-polls-political-parties-root-for-mega-infrastructure/">full story</a> here.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260303110320_b5152c5addd7c988a4eb2bbd1dfbec78ea0113677792bf986b622dacbd9d2463.jpg" data-media-id="editor_11" data-image-id="20260303110320_b5152c5addd7c988a4eb2bbd1dfbec78ea0113677792bf986b622dacbd9d2463" data-rendition-name="original" width="961" height="803" loading="lazy" alt="international coverage of Nepal elections"> </figure>  Read the <a href="https://scroll.in/article/1090389/nepals-election-is-referendum-on-its-future-and-democracy-in-south-asia">full story</a> here.

taxpayer-money

Taxing process of fund reclaiming in Nepal

Supreme Court weighs in on Ncell tax dispute

Who is accountable for teacher-student relationships?

Nepalis Select Who To Elect

West Asia war and Nepalis

International commentary on Nepal election