Sec. 2- Definitions

Income Tax / Income Tax Act, 2058 (2002) / Preamble- Section 9


(Ka) Withholding Agent” means a person with an obligation to withhold tax pursuant to Chapter 17 while making payments of employment, investment returns, service fees, and contracts or agreements.
(Kha) “Officermeans the Director-General, Deputy Director-General, Chief Tax Administrator, Director, Chief Tax Officer, Tax Officer, and other officer of the Department as specified in Sec. 72.
(Ga) “Final Withholding Payment” means dividend, rent, gain, interest and payments made to non-resident person that are subject to withholding taxes as referred to in Section 92.
(Gha)Retirement Fund” means an entity established only with the objective of accepting and investing retirement fund contributions for the purpose of making retirement fund payments to the entity's beneficiary natural persons or their dependents.
(Nga) Retirement Payment means payment made by a person to:
  1. natural persons in the event of his retirement, or
  2. a dependant of a natural person in the event of his death.
(Cha) “Retirement Contribution” means a payment made to a retirement fund for the provision or future provision of retirement payments.
(Chha) “Incapacitated Person” means an individual who, by reason of mental or physical illness, is incapable of managing their affairs.
(Ja) “Income” means the income earned by any person from employment, business, investment or windfall gain and the term also includes total amount of such incomes calculated under this Act.
(Ja1) “Windfall gain” means income from lottery, gifts, prize, tips (baksis), award for winning (Jitauri), and any similar other payment received suddenly.
(Jha) “Income Year” means the period beginning on Shrawan 1 (July 16 or Mid-July) of a year and ending on the last day of Ashadh (July 15, or mid-July) of the next year.
(Yna) “Gift” means a payment without consideration or a payment with consideration to the extent the market value of the payment exceeds the market value of the consideration.
(Ta)  “Debt Obligation” means an obligation corresponding to a debt claim.
(Tha) “Debt Claim” means the right of a person to receive a payment from another person; and the term includes the right of a person to refund of the amount advanced to another person, deposits made in banks and financial institutions, account receivable, debenture, bills of exchange, bonds, and rights under annuities, financial lease or installment sales.
(Da) “Company” means a company established pursuant to prevailing company law, for the purposes of tax, the following institutions also shall be treated as companies:
    1. Corporate bodies established under current law.
    2. Any unincorporated association, committee, union or society, or registered or unregistered group of persons other than Private firm and partnership, or a trust.
    3. Partnership firm comprising 20 or more partners that are registered or not registered under prevailing law, retirement fund, cooperative, unit trust, joint venture
    4. Foreign companies.
    5. Any other foreign entity prescribed by the Director-General.
(Dha) “Tax” means the tax imposed under this Act; the term also includes the following payments:
  1. Expenses incurred and claimed by the Department in respect of claim over asset and auction sales of a tax debtor pursuant to Sec. 104 (8) (Ka),
  2. Amount payable withholding agent or withholdee pursuant to under Sec. 90 or the amount payable under Sec. 94 in installment or the amount payable by an advance tax collection agent pursuant to Sec. 95Ka or amount payable after tax assessment pursuant to Sec. 99, 100 and 101,
  3. Amounts payable to the Department in respect of tax liability of a third party under Section 107 (2), Section 108 (3) or (4), Section 109 (1), Section 110 (1),
  4. Amounts as referred to in Chapter 22 which are to be paid in respect of fees and interest, and
  5. Fines as referred to in Section 129 which are to be paid on the order of the Department.
(Ana) “Withholdee” means a person who receives or is entitled to receive payments after deduction of tax under Chapter 17 in respect of employment, investment return, service fee, and contract or agreement.
(ta) “Tax Assessment” means assessment of tax to be made under this Act; the term includes the assessment of fees and interest under Section 122.
Provided that the term shall not include that assessment of tax that has been replaced by the amended tax assessment under Section 101.

(ta1) “Turnover (transaction)” means a turn-over equivalent to the total amount to be included under Section 7, 8 or 9 for purposes of computing the income from business, employment or investment during any income year.
(tha) “Non-resident person” mean person other than resident person.
(da) “Non-Business chargeable Asset” means land, building and interest in any entity, or securities, other than the following assets:
  1. Business asset, depreciable asset or trading stock,
  2. Private building of a natural person in the following conditions:
           (ka)    having owned it for ten or more years continuously, and
           (kha)  resided therein for ten or more years continuously or intermittently by such person.
           Clarification: For the purpose of this Clause, “Private building” means a building and lesser or land area occupied by              the building or one ropani of such area occupied by the building.
  1. An interest of a beneficiary in a retirement fund,
  2. Land, Land and Building and private building of a natural person that has been disposed of at a price of less than 1 million rupees, or
  3. Assets disposed of through transfer by any means within three generations, other than sale and purchase.
(dha) “Exempt organization” means the following entities:
  1. Following entities registered with the Department as an exempt organization:
           (Ka)   Social, religious, educational or charitable organizations of a public character established without profit motive,
           (kha) An amateur sporting association formed for the purpose of promoting social or sporting related amenities not                      involving the acquisition of gain by its member,
  1. Political parties registered with the Election Commission.
Provided that, any entity, giving benefit to any person from the assets of, and amounts derived by the entity except in pursuit of the entity’s function as per its objectives or as payment for assets or services rendered to the entity by the person, is not exempt from tax.
(na) “Trust” means an arrangement under which a trustee holds assets.
               Provided that, this term shall not include any partnership or corporate body or any entity referred to in Sub-Clause 3 of Clause (Da).

(Pa) “Trustee” means a natural person, Guthi, or corporate body holding asset in fiduciary capacity either singly or together with other natural persons, Guthis, or corporate bodies; the term includes the following persons:
  1. Executor or administrator of the estate of a deceased person.
  2. Liquidator, receiver, or trustee.
  3. Any person who is protecting, directing, controlling or managing the assets of an incapacitated person in a private or official capacity.
  4. Any person who manages assets under a private foundation or a similar foundation
  5. Any person with a position similar to that of a person referred to in Sub-Clauses (1), (2), (3) and (4).
(Fa) “Long-Term Contract” means a contract as referred to in Section 26 with term more than 12 months.
(Ba) “Relative” means the husband, wife, son, daughter (including adopted son and daughter), father, mother, grand-father, grand-mother, elder or younger brother, sister-in-law (elder or younger brother's wife), elder or younger sister, mother-in-law, father-in-law, elder or younger brother-in-law, elder or younger sister-in-law, uncle, aunt, nephew, niece, grandson, and grand-daughter of a natural person.
(Bha) “Entity” means the following institutions and organizations:
  1. Partnership, trust, or company;
  2. Rural Municipality, Urban Municipality, or District Coordination Committee;
  3. Government of Nepal, Provincial Government or local government
  4. Public International Organization established under any foreign government, or the provincial or local government functioning under such a government, or through a treaty; or
  5. A permanent establishment of the institution or organization referred to in Sub-Clause (1), (2), (3) and (4) that is not situated in the country where it is resident.
(Ma) “Interest in an Entity” means a right, including a contingent right, to receive the income or capital of an entity.
(Ya)  “Disposal” means the disposal, including sale and transfer, of any asset or liability as referred to in Section 40.
(Ra)  “Underlying Ownership” means ownership as referred to below:
  1. In respect to an entity, the ownership created in the entity on the basis of an interest held in it directly or indirectly by any natural person, or by an entity in which no natural person has any interest, through one or more interposed entities.
  2. In respect to an asset under the ownership of an entity, ownership of the asset determined on the basis of the proportionate ownership of persons having underlying ownership of the entity.
(La)  “Lease” means a temporary right of a person to use the assets, other than money, of another person, and the term includes a license, rental agreement, option, royalty agreement, or tenancy.
(Wa) “Natural Person” means an invidual, and, for the purposes of this Act, the term shall also include a Private firm of a natural person that is registered or not, and a couple chosen under Section 50 that is to be treated as a single natural person.
(SHA) “Natural Resource Payment” means the payment of following amounts:
  1. payment for the right to take water, minerals, or other living  or non-living resource from the land; or
  2. amount as calculated on basis of the quantity or value of a living or non-living natural resource and minerals taken in whole or part from the land.
(KSHA) “Market Value” means the normal transaction price of an asset or service transacted between unrelated independent persons in the ordinary course of business dealing.
(Sa) “Rent” means all payments including premium made under a lease of a tangible asset including house rent.
Provided that, the term does not include a natural resource payment and amount received as house rent by a natural person other than that by private firm.

(Ha) “Payment” means the following acts:            
  1. the transfer by one person of an asset or money to another person or the transfer by another person of a liability to the one person;
  2. the creation by one person of an asset that on creation is owned by another person or the decrease by one person of a liability owed by another person,
  3. the provision by one person of services to another person; and
  4. the making available of an asset or money owned by one person for use by another person or the granting of use of such an asset or money to another person,
(Kshya) “Distribution of Profit” means distribution of profits of an entity made under Section 53, including capitalization of profits.
(Tra)  “Unit Trust" means a trust under which arrangements are made for a trustee to hold assets for the benefit of at least 20 persons and for the right of the persons to share in the income or capital of the trust to be divided into units in such a manner that the right is determined by the number of units held.
(GYa) “Employment” includes any kind of past, present or prospective employment.
(KaKa) “Royalty” means any payment made under a lease of an intangible asset; the term includes any payment made for the following purposes:
  1. Use of or right to use a copyright, patent, design, model, plan, secret formula or process or trademark,
  2. Rendering of technical knowledge,
  3. Use of or right to use cinematography film, video tape, sound recording or any other similar medium, and rendering or use of industrial, commercial or scientific experience.
  4. Supply of any assistance ancillary to a matter referred to in Sub-Clause (1), (2), or (3), or
  5. A total or partial forbearance with respect to a matter referred to in Sub-Clause (1), (2), (3), or (4).
Provided that, the term shall not include natural resource payment.
(KaKha) “Investment” means an act of holding or investing one or more assets, but excludes the following:-
  1. The act of holding assets for personal use by the person owning the asset, or
  2. Employment or business.
Provided that, the act of holding non-business chargeable asset is treated as an investment.
(KaGa)  “Investment Insurance” means any of the following insurances:
  1. insurance where the specified event is the death of an individual who is the insured or an associated person of the insured;
  2. insurance where the specified event is an individual who is the insured or an associated person of the insured sustaining personal injury or becoming incapacitated in a particular manner
           Provided that: the insurance agreement is expressed to be in effect for at least five years or without limit of time and             is not terminable by the insurer before the expiry of five years except in special circumstances prescribed in the                     insurance contract;
  1. insurance under which an amount or series of amounts is to become payable to the insured in the future;
  2. Reinsurance of insurance under sub-clause (1), (2) or (3), and
  3. Reinsurance of reinsurance of the insurance of type referred to in sub-clause (4).
(KaGha)  “Dividend” means distribution by an entity.
(KaNga)  “Resident Person” mean the following persons in respect of an income year:
  1. In respect of a natural person:
         (Ka)   Place of habitual abode (normal place of abode) is in Nepal.
         (Kha) Who is present in Nepal for 183 days or more in a period of 365 consecutive days, or
          (Ga)   who is an employee of Government of Nepal deputed by the employer in any foreign country at any time during an income year
  1. Partnership firm.
  2. In respect of a trust, such trust which:
         (Ka)   Is established in Nepal,
         (Kha) The trustee of the trust is a resident person in the income year; or
         (Ga)   The trust is controlled in the income year by a resident person, or by a group of persons including him, directly or indirectly through of one or more interposed entities.
  1. In respect of a company, a company:
         (Ka)   Which is incorporated under the law of Nepal, or
         (Kha) the management of which is effective in Nepal in an income year
      4Ka. Government of Nepal or Provincial government
  1. Rural Municipality, Urban Municipality, or District Coordination Committee
  2. In respect of such entity of a foreign government or a political subdivision of the foreign government, such an entity-
         (Ka) which is established under the law of Nepal, or
         (Kha) the management of which is effective in Nepal in an income year
  1. An institution or entity established under a treaty or agreement, and
  2. A foreign permanent establishment situated in Nepal of a non-resident person.
(KaCha)   “Person” means a natural person or an entity.
(KaChha)  “Manager” means a person who participates in taking managerial decisions of an entity; the term includes the trustee of a trust, and a person having ownership in a foreign permanent establishment.
(KaJa) “Business” means any kind of industry, trade, profession or any other similar kind of business transaction; and the term also includes a past, present or prospective business of a similar kind.
Provided that the term shall not include employment.

(KaJha) “Interest” means the following payments or gains:
  1. Payments, excluding the principal, made under a debt obligation,
  2. any gain realised by way of a discount, premium, swap payment, or similar payment under a debt obligation; and
  3. Amounts as referred to in Section 32 which are to be treated as interest from among amounts paid by a person acquiring assets under annuity or under installment sales, or in consideration of use of any asset under a financial lease.
(KaYna)  “Trading stock” means assets owned by a person that are intended to be sold in the ordinary course of a business conducted by the person, work in progress on such assets, and inventories of materials to be incorporated into such assets. The term excludes asset denominated in foreign currency.
(KaTa) “Business Asset” means an asset used in a business, but excludes trading stock or a depreciable asset of a business.
(KaTha) “Distribution” means the distribution to be made by an entity as referred to in Section 53.
(KaTha1)  "Electronic Medium" means computer, fax, email, internet, electronic cash machine and fiscal printer and also includes any approved medium prescribed by the Department.
(KaDa) “Repatriated Income” means amounts repatriated through bank to a foreign country, or an amount paid through any other means, by a Nepal based foreign permanent establishment of a non-resident person referred to in Section 68.
(KaDha)  “Foreign Income Tax” means a foreign income tax imposed by a foreign country pursuant to Section 69 (8); the term includes final withholding tax imposed by a foreign country.
(KaAna)  “Foreign Permanent Establishment” means an entity referred to in Sub-Clause 5 of Clause (Bha).
(Kata) “the Department” means the Inland Revenue the Department.
(Katha)  “Foreign Currency Asset” means an asset denominated in any foreign currency other than the Nepali rupee.
(Kada) “Permanent establishment" means a place where a person carries on business whether fully or partially, and includes-
  1. a place where a person is carrying on business partially or fully through an agent, other than a general agent of independent status acting in the ordinary course of business as such;
  2. a place where a person has, is using, or is installing substantial equipment or substantial machinery;
  3. one or more places of a country where a person provides technical, business or consultancy services through employee or otherwise for more than 90 days in any 12 months period
  4. a place where a person is engaged in a construction, assembly, or installation project for 90 days or more, including a place where a person is conducting supervisory activities in relation to such a project
(Kadha) “Asset” means any kind of tangible or intangible asset; the term also includes currency, goodwill, technical know-how, property, ownership or interest of a person in a foreign branch, a right to income or to receive income in the future, and any part of any such asset.
(KaNa)  “Associated person” means one or more persons or group of such persons where the relationship between the two is such that one may reasonably be expected to act in accordance with the intentions of the other, and the term includes:
  1. an individual and a relative of the individual or any person or his/her partner,
  2. Foreign Permanent Establishment and the person having ownership over such foreign permanent establishment, and
  3. an entity and a person who either alone or together with an associate or associates, and whether directly or through one or more interposed entities  controls or may benefit from 50 percent or more of the rights to income or contributed capital or voting power of the entity.
Provided that the following persons are not associated persons:
  1. Employee,
  2. Persons prescribed by the Department as “not an associated person”
(KaNa1) “Adjusted Taxable Income” means taxable income of a person for an income year calculated by ignoring reductions referred to in Section 12 and deductions referred to in Section 14(2), Section 17 or 18.
(KaPa) “Partnership” means a firm having than 20 partners whether registered or not registered under prevailing law.
 Provided that the term shall not include a registered or unregistered proprietary firm or a joint venture.

(KaFa) “General Insurance” means any insurance other than investment insurance.
(KaBa) “General Interest Rate” means the annual interest rate of 15 percent.
(KaBha) “Approved Retirement Fund” means a retirement fund approved by the Department pursuant to Sub-Section 1 of Section 63.
(KaMa)  “Service Fee” means any payment to any person, according to the market value, for the service rendered by such a person and the term also includes commission, meeting fee (allowance), management fee, or technical service fee.
(KaYa) “Shareholder” means a person who is a beneficiary of a company.
(KaRa)  “Depreciable Asset” means an asset to the extent to which it is used in the production of income from a business or investment and that is likely to lose value because of wear and tear, obsolescence, or the passing of time.
Provided that the term shall not include any trading stock.

(KaLa) “Beneficiary” means a person who has an interest as specified in Clause (Ma) in an entity.
(KaWa) “Prescribed” or “as prescribed” means prescribed or in the manner prescribed in the rules framed under this Act.
 
(क) "अग्रिम करकट्टी गर्ने व्यक्ति" भन्नाले रोजगारी, लगानी प्रतिफल, सेवा शुल्क तथा ठेक्का वा करार समेतको भुक्तानी गर्दा परिच्छेद- १७ बमोजिम अग्रिम करकट्टी गर्ने कर्तव्य भएको व्यक्ति सम्झनु पर्छ ।
(ख) "अधिकृत" भन्नाले विभागमा रहने दफा ७२ मा उल्लेख भए बमोजिमका महानिर्देशक, उप महानिर्देशक, प्रमुख कर प्रशासक, निर्देशक, प्रमुख कर अधिकृत, कर अधिकृत तथा अन्य अधिकृतलाई सम्झनु पर्छ ।
(ग) "अन्तिम रुपमा कर कट्टी भुक्तानी" भन्नाले दफा ९२ मा उल्लेख भए बमोजिम लाभांश, भाडा, लाभ, व्याज तथा गैर-बासिन्दा व्यक्तिलाई गरिएको करकट्टी हुनुपर्ने भुक्तानी सम्झनु पर्छ ।
(घ) "अवकाश कोष" भन्नाले निकायको हिताधिकारी प्राकृतिक व्यक्ति वा निजको आश्रितलाई कोषबाट अवकाश भुक्तानी प्रदान गर्ने प्रयोजनका लागि अवकाश योगदान रकम स्वीकार गर्ने र सो रकम लगानी गर्ने उद्देश्यले मात्र स्थापना भएको निकाय सम्झनु पर्छ  ।
(ङ) "अवकाश भुक्तानी" भन्नाले देहायका व्यक्तिलाई दिइने भुक्तानी सम्झनु पर्छ :
        (१) प्राकृतिक व्यक्तिले अवकाश लिएको अवस्थामा निजलाई दिइने भुक्तानी, वा 
        (२) प्राकृतिक व्यक्तिको मृत्यु भएको अवस्थामा निजको आश्रीतलाई दिइने भुक्तानी  ।
(च) "अवकाश योगदान रकम" भन्नाले अवकाश भुक्तानीको व्यवस्था वा सोको भविष्यमा गरिने व्यवस्थाको लागि अवकाश कोषमा गरिएको भुक्तानी सम्झनु पर्छ  ।
(छ) "असक्षम व्यक्ति" भन्नाले शारीरिक वा मानसिक अस्वस्थताको कारणले आफ्नो व्यवहार गर्न सक्षम नभएको व्यक्ति सम्झनु पर्छ  ।
(ज) "आय" भन्नाले कुनै व्यक्तिले रिज्गारी, व्यवसाय, लगानी वा अकस्मिक लाभबाट प्राप्त गरेको आय सम्झनु पर्छ र सो शब्दले यस ऐन बमोजिम गणना गरिएको सो आयको कूल रकमलाई समेत जनाउछ ।
(ज१) "आकस्मिक लाभ" भन्नाले चिठ्ठा, उपहार, पुरस्कार, बक्सिस, जितौरी वा अन्य कुनै पनि आकस्मिक रुपमा प्राप्त हुने लाभ सम्झनु पर्छ ।
(झ) "आय वर्ष" भन्नाले