Payroll Compliance Updates- Nepal
A. Update

Deduction for contribution to Covid Relief Fund is available for the amount deposited in Central Government Fund or State Government Fund. This donation should be allowed deduction without any limit (same as under section 12 (Kha) which says any contribution made by a person during an income year in Prime Minister Relief Fund and National Reconstruction fund can be deducted while calculating taxable income for the income year of the person.

B. Statutory Compliance Release Date: April 04, 2020
C. Effective Date: FY 2076/77
A. Update

As per a notice by the Ministry of Finance, the entire contribution of 31% to SSF to be made by employees as well as employer for the month of Chaitra 2076 (March 14, 2020 to April 12, 2020) will be deposited by Government of Nepal.

B. Statutory Compliance Release Date: March 28, 2020
C. Effective Date: March 14, 2020
A. Update

The tenth amendment of Income Tax Rules, regarding allowable deduction of retirement contribution, has been published in the Nepal Gazette. Allowable deduction of retirement contribution will be the lowest of the following:

  • PF Employee (10%) + PF Employer (10%) + Medical Treatment (1% Employee) + Gratuity (8.33% Employer) + Accident and disability protection scheme (1.4% Employer) + Dependent family protection scheme (0.27% Employer); or
  • Rs. 500,000; or
  • 1/3rd of Assessable Income.

Please find below under "Source" the Gazette and un-official English translation of the same.

Where contribution is made to both Social Security Fund and any other approved retirement fund during a financial year, the newly introduced proviso to Rule 21 of Income tax Rules should be read together with the main provision of this Rule, subject to facts and circumstances of each case.

B. Statutory Compliance Release Date: February 24, 2020
C. Effective Date: July 17, 2019

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