Value-added tax
1. Concept of indirect tax
2. What is VAT
3. Concept of supply
4. Concept of taxable amount (tax-base)
VAT examples
Bhava Nath Dahal
2
3
4
5
6
7
8
9
10
Example of VAT collection
Registered person recovers VAT on its supply of goods and services
1. Tax invoice
Abbreviated tax invoice
Tax invoice
2. Supplier name
7. Goods or service
3. Regd. No.
4. Invoice no.
5. Buyer
6. Buyer PAN
8. Qty, Rate, Amt.
9. Discount
10. Taxable amt.
11. VAT
12.13%
13. Date
Example of VAT collection
Registered person recovers VAT on its supply of goods and services
1. Tax invoice
Abbreviated tax invoice
Tax invoice
2. Supplier name
7. Goods or service
3. Regd. No.
4. Invoice no.
5. Buyer
6. Buyer PAN
8. Qty, Rate, Amt.
9. Discount
10. Taxable amt.
11. VAT
12.13%
13. Date
VAT 13%
Supply
Cash-discount
Credit
Payment
Payment
Bad-debt
Bankrupcy
No-consideration
Waiver
13
VAT attractive points
Recovery
by taxpayer
WH?
Each option, each points
Payment
to State
Recovery
by State
VAT attractive points
Supply of goods or services in Nepal
Supply (of Goods or Services) in Nepal–
1. Sale or purchase (delivery of Goods or Services) within territory of Nepal
2. Import (of Goods or Services) into Nepal
3. Export (of Goods or Services) from Nepal
Supply is:
1. Sales (of Goods or Services)
2. Transfer (of Goods or Services)
3. Exchange (of Goods or Services)
तपाईं हामीलाई
झुक्याउने साना
शव्द र साना कु रा
हुन है!
Sale or purchase (of Goods or Services) within territory of Nepal
Registered person recovers VAT from the buyer
at the Single rate of 13%
of Taxable-amount of
Supply of Goods or Services within Nepal
Registered Person
Unregistered Person
Sale or purchase (of Goods or Services) within territory of Nepal
Registered person
Types of registration: three types
1. Compulsory registration
2. Voluntary registration
3. Temporary registration
Whatever type of registration,
once registered is Registered
person unless Deregistration
Compulsory registration threshold
1. Goods supply – Turnover (higher of sale or purchase of VAT-attractive goods)
more than Rs.50 lakh in last 12-months
2. Service supply – Turnover more than Rs.20 lakh in last 12-months
3. Goods and Service both supply – Turnover more than Rs.20 lakh in last 12months
4. Business Import more than Rs.10,000 at a time.
Turnover for the purpose of threshold
Last 12-months
Higher of sale or purchase of VAT attractive goods
Example day: 2078 Ashadh 22
Last-month end on Nepali calendar: 2078 Jeth 31
Last 12- months: 2077 Ashadh 1 – 2078 Jeth 31
VAT-attractive
VAT-exempt
Total
Sales
40 Lakh
40 Lakh
80 Lakh
Purchase
55 Lakh
30 Lakh
85 Lakh
Turnover
Sale or purchase (of Goods or Services) within territory of Nepal
How to register
1. Application by taxpayer to Tax-officer
2. Verification of documents by Tax-officer
3. Registration decision and issuance of
Registration certificate
When to apply for registration
1. Compulsory registration – within 30-days
from the date of threshold
2. Voluntary – as when opt by taxpayer
3. Temporary – case to case conditional
Example day: 2078 Ashadh 22
Threshold day: 2078 Jeth 31
Application deadline: 2078 Ashadh 30
Decision deadline: 2078 Srawan 29
Recovery of VAT on Supply of Goods or Services
Goods: All the tangible items of supply
Services: All the items of supply other than goods
Goods:
1. Trading goods
2. Land, building, towers, road
3. Furniture, machinery, plant (new or used)
4. Pen, pen-cap, ink,
5. kabad, read-papers, used cloth
What after registration?
•Display (by both registered person and un-registered person)
• Display of registration certificate, tax officer certified copies
in each branch and commercial departments.
• Display of tax-plate including each branch and commercial
departments.
•Issuing tax invoice
•Recovery of VAT
•VAT Accounting and records
•VAT Reporting/self-assessment
•VAT payment
Recovery of VAT on Supply of Goods or Services: Taxable-amount
Registered Person recovers VAT at single rate of
13% of Taxable –amount of Supply of Goods or
Services in Nepal.
Supply:
1. Sales – consideration of cash or cash
equivalent (CBD, COD, Credit)
2. Exchange – consideration other than cash
or cash equivalent
3. Transfer – no-consideration
Market price is the
tax-base (with few
exceptions)
Recovery of VAT on Supply of Goods or Services: Taxable-amount
Market price Rs.80
Discount - none
Example E1: AB company sales 300 Kg of sugar
at Rs. 80 per Kg.
Tax-invoice
SN Particulars
Quantity Rate
1
300 Kg
Sugar
[Name, specification, dimension, model, batch, standard or
whatever information that links the items of supply]
Sub-total
Less: Trade-discount
[discount, less, concession, commission, trade-discount or
whatever named that reducing the total amount of price]
Rs.
80/kg
Amount Rs.
24,000
24,000
0
Taxable-amount
24,000
Add: VAT @ 13%
3,120
Total
27,120
Recovery of VAT on Supply of Goods or Services: Taxable-amount
E-2: AC company sales 300 Kg of sugar at Rs. 80 per Kg.
If purchase is more than 200 Kg, quantity discount will be
5% of purchase.
Tax-invoice
SN
1
Particulars
Sugar
Less: Quantity discount
[whatever named]
Quantity
Rate
Discount – qty 5%
Amount Rs.
315
- 15
300
Sub-total
Less: Trade-discount
Taxable-amount
Add: VAT @ 13%
Total
Market price Rs.80
80
24,000.00
24,000.00
24,000.00
3,120.00
27,120.00
Recovery of VAT on Supply of Goods or Services: Taxable-amount
E-2: AC company sales 300 Kg of sugar at Rs. 80 per Kg.
If purchase is more than 200 Kg, quantity discount will be
5% of purchase.
Tax-invoice
SN
1
Particulars
Sugar
Less: Quantity discount
[whatever named]
Quantity
Rate
Discount – qty 5%
Amount Rs.
315
- 15
300
Sub-total
Less: Trade-discount
Taxable-amount
Add: VAT @ 13%
Total
Market price Rs.80
80
24,000.00
24,000.00
24,000.00
3,120.00
27,120.00
Recovery of VAT on Supply of Goods or Services: Taxable-amount
E-2: AC company sales 300 Kg of sugar at Rs. 80 per Kg.
If purchase is more than 200 Kg, quantity discount will be
5% of purchase.
Tax-invoice
SN
1
Particulars
Sugar
Less: Quantity discount
[whatever named]
Quantity
Rate
Discount – qty 5%
Amount Rs.
315
- 15
300
Sub-total
Less: Trade-discount
Taxable-amount
Add: VAT @ 13%
Total
Market price Rs.80
80
24,000.00
24,000.00
24,000.00
3,120.00
27,120.00
Recovery of VAT on Supply of Goods or Services: Taxable-amount
E -3: AD company sales 300 Kg of sugar at Rs. 80 per Kg.
If purchase is more than 200 Kg, quantity discount will be
5% of purchase. Transportation cost agreed Rs.1,000.
SN
Particulars
Tax-invoice
Quantity
1
Sugar
Quantity
All benefits Less:
(- 15
kg) discount
All burden (cost to the buyer) is transportation (+1000)
2
Transportation
Sub-total
Less: Trade-discount
Taxable-amount
Add: VAT @ 13%
Total
Rate
315
-15
300
Discount – qty 5%
Amount Rs.
80
LS
Market price Rs.80
24,000.00
1,000.00
25,000.00
25,000.00
3,250.00
28,250.00
Recovery of VAT on Supply of Goods or Services: Taxable-amount
E -4: AE company sales 300 Kg of sugar at Rs. 80 per Kg. If purchase is
more than 200 Kg, quantity discount will be 5% of purchase. Buyer
obtains 5% reputation and recurring bonus on the price. Transportation
cost agreed Rs.1,000.
SN
1
2
Particulars
Sugar
Less: Quantity discount
Tax-invoice
Quantity
Rate
315
-15
300
LS
Transportation
Sub-total
Less: Trade-discount
[reputation & recurring bonus at 5% of Rs.24,000]
Taxable-amount
Add: VAT @ 13%
Total
Amount Rs.
80
24,000.00
1,000.00
25,000.00
1,200.00
23,800.00
3,094.00
26,894.00
Recovery of VAT on Supply of Goods or Services: Taxable-amount
E-5: AF company transfers 300 Kg of sugar having market price
of Rs. 80 per Kg to its subsidiary. Subsidiary will pay
transportation cost of Rs.1,000.
Transfer
is
supply
Tax-invoice
SN Particulars
1 Sugar
[transfer to subsidiary]
Transportation by the subsidiary itself
Sub-total
Less: Trade-discount
Taxable-amount
Add: VAT @ 13%
Total
Quantity
300 Kg
Rate
Amount Rs.
Rs. 80/kg
24,000
24,000
0
24,000
3,120
27,120
Taxable-amount: effect of taxes
E - 6: AG company transfers 300 Kg of Molasses having market price of
Rs. 80 per Kg to its subsidiary. Excise duty rate is 5%. Subsidiary will pay
transportation cost of Rs.1,000.
Tax-invoice
SN
Particulars
1
Molasses
2
Excise-duty @5%
Sub-total
Less: Trade-discount
Quantity
Rate
30080
Amount Rs.
24,000.00
1,200.00
25,200.00
-
Taxable-amount
25,200.00
Add: VAT @ 13%
3,276.00
Total
भाङ्ग पेल धतुरो
पेल
28,476.00
खै ले मेरो तीन
पाथी तेल
Taxable-amount: non-trading goods
E - 7: AH Co. delivers paper-waste at Rs. 5,000 a month and plasticwaste Rs.3,000 a month.
AH Co.
SN
1
2
Tax-invoice
Buyer’s name: Waste-collector
Buyer’s PAN: Particulars
Quantity Rate Amount Rs.
Paper-waste
LS
5,000
Plastic-waste
LS
3,000
Sub-total
8,000
Less: Trade-discount
Taxable-amount
8,000
Add: VAT @ 13%
1,040
Total
9,040
भाङ्ग पेल धतुरो
पेल
खै ले मेरो तीन
पाथी तेल
Recovery of VAT
Registered person recovers VAT on its supply of goods and services
1. Tax invoice
Abbreviated tax invoice
Tax invoice
2. Supplier name
7. Goods or service
3. Regd. No.
4. Invoice no.
5. Buyer
6. Buyer PAN
8. Qty, Rate, Amt.
9. Discount
10. Taxable amt.
11. VAT
12.13%
13. Date
Recovery of VAT on Supply of Goods or Services: Taxable-amount
Items as example
Quantity Rate (mkt.) Amount Rs.
E8:Goods
(specification, dimension, size, type, brand, model Units
no.)/ Service (details)
Less: qty dis.
Supply-associated services:
Certifications
Lab. test
Packaging
Transportation
Other (self or 3rd party's)
Supply-associated taxes:
Excise-duty
Other duties (Federal, provincial or local)
Sub-total
Less: trade-discount
Taxable-amount
VAT @ 13%
Total
(say 10%)
2100
(100)
2000
Rs.100
200,000
1,000
2,000
1,000
10,000
1,000
1,000
2,000
1,000
10,000
1,000
2,000
5,000
220,000
20,000
200,000
26,000
226,000
Taxable-amount: Barter/exchange simple issue
E - 9: AJ Furniture exchanged 15 units of chair with BJ’s 20 Chinese
chairs. Regular selling price to other buyers is Rs. 4000 and Rs.3000
respectively.
BJ
AJ Furniture
Tax-invoice
Buyer’s name: BJ
Buyer’s PAN: -
Tax-invoice
Buyer’s name: AJ Furniture
Buyer’s PAN: -
Qty. Rate Amount Rs.
SN Particulars
Qty. Rate Amount Rs. SNParticulars
Chairs
Chairs
1 In exchange with
20 3000
60,000
In exchange with
1
15 4000
60,000
AJ’s 15 chairs
BJ’s Chinese 20
Sub-total
60,000
chairs
Less: Trade-discount
Sub-total
60,000
Taxable-amount
60,000
Less: Trade-discount
Add: VAT @ 13%
7,800
Taxable-amount
60,000
Total
67,800
Add: VAT @ 13%
7,800
Total
67,800
Taxable-amount: Partial consideration
E - 10: AK Furniture sold 15 units of chairs to BK’s personal use. Regular
selling price to other buyers is Rs. 4000, however supplies to BK was at
Rs.1,000 each.
AK Furniture
Tax-invoice
Buyer’s name: BK
Buyer’s PAN: -
SN Particulars
1
Chairs
Sub-total
Less: Trade-discount
Qty. Rate Amount Rs.
15 4000
60,000
60,000
-
Taxable-amount
60,000
Add: VAT @ 13%
7,800
Total
67,800
VAT 13%
Supply
Cash-discount
Credit
Payment
Payment
Bad-debt
Bankrupcy
No-consideration
Waiver
36
Taxable-amount: Other than market price – Wood Sec. 12A
Log wood (Sec.12A) – Higher of selling price or governmental royalty
Sold to member of community forest – no VAT
Personal use of own wood – no VAT
=====No-tax invoice, just collection and deposit
Example-11
Seller type
Remarks
Selling price
National forest
Sales,
auction, Royalty
(provincial government) transfer or other
Community forest
way of transfer to Taxable-amt
VAT@13%
3rd party
Private forest
Total
Recoverable
i
400,000
500,000
500,000
65,000
Ii
500,000
500,000
500,000
65,000
iii
600,000
500,000
600,000
78,000
565,000
565,000
678,000
465,000
565,000
678,000
Taxable-amount: Other than market price – Notified/price-published items
Notified goods sold to person other than in supply-chain - Sec.14(6)
Notified goods : The goods notified under Sec. 14(6) by Director General of Inland
Revenue Department for publication of selling price [mainly negative-externalities as
controlled items].
Currently - Liquor, cigarette and recharge chard for mobile are notified goods.
Notified goods cannot be sold without publishing the price.
Self-rate published item: Goods on which Producer publishes the price. The impact
is as similar as Notified goods.
•If factory sells to registered person, selling
price will be Rs. 20,000.
Ex-factory price
Rs. 20,000
Distributor's price
Rs. 20,400
•If factory sells to unregistered person,
selling price for the VAT purpose will be Rs.
Whole-seller's price
Rs. 21,000
22,000 as taxable value.
Retail price/consumer price
Rs. 22,000
•If whole-seller sells to unregistered
person, selling price for the VAT purpose
‘to registered person in the
will be Rs. 22,000 as taxable value.
supply-chain’
Taxable-amount: Notified goods
Irrespective of position of supplier
in
Supply-chain
(producer,
distributor, whole-seller, retailer):
E-12 Lamsal Ltd. is registered person selling
liquor. Rana Ltd. produces and sells liquor at The Taxable-amount will be same.
the above published selling price. The pricing
for VAT purpose will be Rs. 22,000.
Consumer level Tax Invoice
Particulars
Qty.
Rate
Amount Rs.
Liquor
1 cartoon
Rs. 22,000
Rs. 22,000
Taxable amount
Rs. 22,000
Add: VAT @ 13%
Rs. 2,860
Total
Rs. 24,860
Less: discount
Rs. 2,000
Net amount
Rs. 22,860
Timing of supply – Sec. 6
E-13 AA Ltd.
Date of agreement: 2077/12/6
Date of Purchase order: 2078/1/15
Date of delivery: 2078/3/27
Date of billing: 2078/3/28
Date of payment: 2078/5/4
Earliest date: ?
What is delivery?
EXW (handed over in the shop or in warehouse)
CIP (handed over to the first carrier)
DDP (handed over to the agreed place of buyer)
What is Consideration?
Consideration Vs. Advance payment
CBD/on-account pmt. Vs. advance/mobilization
Supply:
1. Sale, Exchange or transfer
2. Agreement for sales,
exchange or transfer
3. Permission for sales,
exchange or transfer
?
Earliest date:
2078/3/27
Timing
ofSupply
Supply:
Timing of
(sales real-?,
agreement
-?, or Permission-?)
Earliest
of:
Earliest
of:
1.
Invoicing
timing
1. Delivery
Invoicing timing
(?) (including
2.
timing
or (?)
instalment due)
2. milestone
Delivery timing
3.
timing
3. Consideration
Consideration timing
(?)
Timing of supply – Sec. 6 (Taxable-amt.)
E-14 BB Ltd. entered into an agreement
on 2078 Ashadh 28 for sale of 14,000
chairs to National conference hall at Rs.
5,000 each. The factory is shutting down
since Ashadh 15 due to flood in labors’
village. Transportation of raw material
has stopped due to land-sliding since
Ashdh 21.
1. Due to payment before budget yearend, National conference pays Rs. 1
Crore in 2078 Ashadh 31.
2. Company delivers 2,000 chairs from
its stock on 2078 Srawan 5.
3. Co. delivers 6,000 chairs on 2078
Bhadra 28.
4. Co. delivers 4,000 chairs on 2078
Mansir 20 and deal terminated.
Supply:
1. Supply:
Agreement for sales: 2078/3/28
(nothing having value)
1. Sale, Exchange or transfer
2. 2078/3/31 – Consideration-first for
2.Rs.1
Agreement
sales, as
Crore – notfor
mentioned
exchange
or transfer
advance,
so supply
of Rs.88,49,558 +
Rs.11,50,442.
3.VAT
Permission
for sales,
exchange
or transfer
3. 2078/4/5
– delivery-first
?
3. 2078/4/5 – delivery-first
2,000*Rs.5,000-Rs.
88,49,558
Timing
ofSupply
Supply:
Timing of
(sales real-?,
= Rs.11,50,442
VAT
149,558
= 13,00,000
agreement
-?, or
Permission-?)
Earliest
of:
4. 2078/5/28
– delivery-first
Earliest of:
1. Invoicing timing
6000*Rs.5000=
3,00,00,000
+ 39,00,000
1.
Invoicing
timing
(?)
2. Delivery timing (including
5. 2078/8/20
– delivery-first
or (?)
instalment due)
2. milestone
Delivery
timing
4,000*Rs.5,000
= 2,00,00,000
VAT 26,00,000
3.
timing
3. Consideration
Consideration
timing
(?)
Timing of supply – Sec. 6 (Taxable-amt.) Supply:
E-15 CC Ltd. entered into an agreement 1. Agreement for exchange: 2078/1/28
(nothing having value)
on 2078 Baisakh 28 for exchange of 10
chairs (price Rs. 10,000 each) with DD 2. Case (i), is similar to Example – 9
Furniture- 5 modern tables (price Rs.
3. Case (ii), for CC- delivery-first Rs.
20,000 each).
100,000 and consideration-first for DD
Cases to be addressed:
4. Case (iii), for DD – delivery-first Rs.
i. Both parties deliver all agreed items
100,000 and consideration-first for CC.
on 2078/3/28.
ii. CC Ltd. handed over chairs on 4. Case (iv), For DD – delivery-first for
2078/3/28.
Rs.40,000 and Consideration-first for
iii. DD Furniture handed over tables on CC on 2078/3/28.
2078/3/28.
5. Case (v), For CC – delivery-first for
iv. DD Furniture handed over 2 tables Rs.10,000 and consideration-first for
DD.
on 2078/3/28.
v. CC Ltd. handed over 1 chair on
2078/3/28
Practically possible?
Timing of supply – Exceptions
(Taxable-amt.)
Telecom
operator
invoicing/payment
–
date
Telecom operator (not business)
1. Pre-paid
2. Post-paid
of 3. PSTN
4. Digital payment
5. Inter-operator
6. Other
Installment payment/Milestone payment:
Earliest of:
i. Date of payment of installment or
ii. Due date of installment.
Instalment/milestone
1. Instalment – due date and payment
date
2. Milestone – concept of milestone
Taxable-amount– Used-goods
What is used-goods?
Who is used-goods dealer?
What are VAT accountings?
How much is taxable-amount?
Taxable-amount– Used-goods
What is used-goods?
Who is used-goods dealer?
What are VAT accountings?
How much is taxable-amount?
Taxable-amount– Used-goods
PurchaseSelling at loss?
Used-goods
Taxable amount = Selling
priceon
before
VAT – cost
VAT
purchase
Taxable
amount
is ZERO
inclusive
of VAT
Ex-16
Rs.80,000
Ex- 17
80,000
Ex- 18
80,000
Ex-19
80,000
Rs.10,400
10,400
0
10,400
Repair cost
Rs.10,000
10,000
10,000
10,000
VAT on repair
Rs.1,300
1,300
1,300
300
Selling Price
Rs.120,000
100,000
100,000
100,000
Rs.18,300
0
8,700
0
Taxable Amount
VAT@13%
Rs.120,000 – (80,000+10,400+10,000+1,300)
Rs.120,000 – 101,700
46
Taxable amount – Foreign currency
Three-points theory of Foreign currency
transactions in tax-accounting
1. Transaction date
2. Forex source always NRB
3. Selling or buying rate:
a. Receiving FC - buying Rate
b. Paying FC – selling rate
Taxable amount – Foreign currency
Ex-20 Chaubagain Ltd. sold goods worth US$ 50,000 to a foreign contractor working
in Nepal. Forex rate:
Forex Rate
On date of supply:
On date of payment of US$ 20,000:
On the date of full settlement:
NRB Rate Rs.
120.00
118.12
119.10
According to Rule 21, invoice issued on foreign
currency needs to converted into NPR taking foreign
exchange rate of Nepal Rastra Bank.
In this case, Taxable amount is Rs.120×50,000 = Rs.
6000,000
1. Date is: date of supply
2. Forex source is: NRB
3. Selling or buying is: Buying Rate
Own Bank Rate Rs.
119.72
118.06
119.30
Three-points theory of Foreign currency
transactions in tax-accounting
1. Transaction date
2. Forex source always NRB
3. Selling or buying rate:
a. Receiving FC - buying Rate
b. Paying FC – selling rate
Taxable amount – free items
Ex-20 Seragain Ltd., acquiring price Rs.
300 per unit and selling price Rs. 360 per
unit:
a. Receives 2,000 units free goods and
delivers free to whole-sellers
b. Receives 2,000 units of free goods and
sold them
c. Permits quantity discount of 2,000 units
d. Permits complementary of 2,000 units.
Gift/complementary/quantity
-discount/model/free-goods
or similar
1. Free receiving and free gifting
2. Free receiving but regular sales
3. Purchased/manufactured and
free gifting
Rule 24:
1. Free receiving and free gifting –
recording of the stock details
2. Stock records
3. Stock records and definedscheme of free
Taxable amount – free items
Ex-21 Aapagain Ltd. gifts its equipment
costing Rs. 15 Crores and having market
price Rs. 6 Crores to Nepal Army
Construction Division. What shall be the tax
impact.
[Income tax? Value added tax?]
Gift/complementary/quantity
-discount/model/free-goods
or similar
1. Free receiving and free gifting
2. Free receiving but regular sales
3. Purchased/manufactured and
free gifting
Rule 24:
1. Free receiving and free gifting –
recording of the stock details
2. Stock records
3. Stock records and definedscheme of free
Abbreviated tax invoice
Taxable-amount: VAT inclusive price
1. Retailer obtains permission from tax-officer for
‘Abbreviated tax invoice’ – Rule 18.
2. Consumer-centric business (Rule- 14B): menu
price – Exhibition, sales-outlet, hotel-restaurant,
show-room – tag-price, menu-price, shelve-price
Tax invoice
Abbreviated
Consumer price
Forex price
Taxable amount – import of goods
Transaction Value concept (TV-concept)
नेपाल बाहिरको एक
पैसा छु ट् न नहुने
नेपालहित्रको एक पैसा
पनन नहुने (unloaded
1. Transaction value for Customs duty (non-territorial cost in NPR): at terminal)
a. Cost paid or payable to foreign vendor:
b. Transit cost – international transportation
c. Transit cost – international insurance
d. Transit cost – other cost till the customs frontier
2. Customs duty – the first duty on TV
3. Excise duty, pollution duty, road maintenance duty or other duty
on (TV + Customs duty)
4. Taxable amount for VAT (TV + customs duty + other duties)
5. VAT @ 13%.
INCOTERMs
ठूलो सामान जापानबाट हकन्नु छ
हिरगञ्ज ल्याइदे िन्नुस् (DAT),
गोदामै पुगरे हलनोस् (EXW),
अहिसको गोदामै ल्याइदे िन्नुस् तर
िन्सार हतनुनस् (CIP)
पोटन सम्म ल्याइदे िन्नुस (FAS)
जिाजसम्म ल्याइदे िन्नुस (FOB),
कलकत्ता ल्याइदे िन्नुस् (CIF),
िन्सार पहन उसैलाई हतदे िन्नुस्
(DDP)
CIP, 2020 to Shankhamul, Kathmandu, Nepal
Taxable amount on import of goods
Cost paid or payable to foreign vendor USD 20,000×120
[FC ×NRB selling rate of forex on the date declaration]
Transit cost [same conversion rule]
a. International transportation
b. International insurance
c. Other cost till the customs frontier
d. Transaction Value for customs duty purpose
Customs duty (30%)
Excise duty (10%)
Other duty
Taxable-amount for VAT
VAT @ 13%
Rs.2400,000
Rs.300,000
Rs.200,000
Rs.100,000
Rs.3,000,000
Rs.900,000
Rs.3900,000
Rs.390,000
Rs.210,000
Rs.45,00,000
Rs.585,000
VAT on import of goods
As declared
Cost paid or payable to foreign vendor
[FC ×NRB selling rate of forex on the date declaration]
Transit cost [same conversion rule]
a. International transportation
b. International insurance
c. Other cost till the customs frontier
d. Transaction Value for customs duty purpose
US$40,000×120
$50,000×120
Rs.4800,000
Rs.6,000,000
Rs.300,000
Rs.200,000
Rs.100,000
Rs.5,300,000
Rs.300,000
Rs.200,000
Rs.100,000
Rs.6,500,000
Customs duty (20%)
Modified rate will be the basis
for all taxes and duties
Excise duty (10%)
Other duty
Taxable-amount for VAT
VAT @ 13%
As modified
Rs.1300,000
Rs.7800,000
Rs.780,000
Rs.220,000
Rs.88,00,00
Rs.1,144,000
Taxable amount on import of service – Sec. 8(2)
Cost paid or payable to foreign vendor USD 20,000
Reverse-charging date is earliest of:
a. Service (or milestone) completion date
b. Payment date
Taxable-amount USD 20,000×120
[FC ×NRB selling rate of forex on the reverse-charging date]
VAT at 13%
Rs.2400,000
Rs. 312,000
Reverse-charging
system of VAT
Reverse-charging system of VAT
Payment of VAT on purchase by the buyer directly to the tax-officer is reverseBuyer
charging system of VAT. In two (or three) cases, buyer requires to pay VAT at 13%
of taxable-amount directly to the tax-officer under reverse-charging system of VAT
are:
a. Importation of service – Sec. 8(2)
Importation of service
b. Business construction using VAT-unpaid invoices – Sec. 8(3) – Sec. 8(2)
Business construction
using
VAT-unpaid
invoices – Sec. 8(3)
Supplier
Reverse-charging
system of VAT
Tax-officer
Taxable amount on Business construction – Sec. 8(3)
• Business construction – building, factory, road, dam, stadium, shed etc.
• ‘Total construction cost’ more than Rs. 50 lakh
• Taxable-amount is VAT unpaid cost excluding interest during construction and legal cost.
• Example:
• Total construction cost
Rs. 70,00,000
Less:
1. VAT paid cost
40,00,000
2. Municipal legal cost
200,000
3. Interest during construction
300,000
Taxable-amount
VAT under Reverse-charging system
2500,000
Rs. 325,000
Payable monthly
Computation monthly
Debit Note
Credit Note
Instrument = Document (Formal)
Instrument issued by a person debiting to another person without any payment is
Debit Note. Similarly, the instrument issued by a party crediting another party of the
transaction without any payment is Credit Note.
Reversal of issued tax-invoice
Invoice ref.
Debit or Credit Note will be used
in the case of any adjustment of
issued tax-invoice:
Invoice ref.
 Goods return
 Price renegotiation
Invoice ref.
 Correction of mistakes in the
issued tax-invoice
Invoice ref.
Summary
Types of taxable – amount
Tax invoice
Abbreviated
Consumer price
Forex price
1. Sales – regular, quantity discount, trade discount, supplyassociated burdens, supply-associated taxes and duties
2. Transfer – no-consideration
3. Partial consideration
4. Exchange – regular, one-sided, odd-value
Timing of supply
5. Wood, Notified-goods, price-published goods
1. Earliest rule
6. Used-goods
2. Instalment, milestone
7. Foreign currency supplies
3. Telecom special
8. Free – items
4. Exchange special
9. Non-delivery taxable-amount- Consideration only, Invoice
only
5. Notified-goods
10. Import of goods and services
11. Business construction more than Rs. 50 lakh
VAT Records – We learnt
1. Tax invoice: Regular invoice, abbreviated tax
invoice, foreign currency tax invoice, consumer
level tax invoice, insurance tax invoice (#6 nos.)
2. Debit note or credit note (#2 nos.)
3. Stock ledger on (#3 nos.):
a. Sales, transfer, exchange
b. Used-goods record
c. Free goods stock record
4. Books (#3 nos.)
a. VAT sales book
b. Credit note book
c. Debit note book
5. Reverse-charging records (#2)
1.
2.
3.
4.
5.
Tax invoice (#6)
Notes (#2)
Stock ledger (#3)
Books (#3)
Reverse-charging (#2)
=====
(#16)
1. Tax-plate
2. Registration certificate