withholding taxes wht

8/12/2019 Withholding Taxes Wht

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Your house owner comes to you to receive apayment of rent of Rs. 100,000.

You withhold Rs. 10,000 and pay him incash/cheque Rs. 90,000

You will deposit Rs. 10,000 in the respectiveIRO/TSO within 25th of next month along withthe details of such payments

Rs. 10,000 is WHT that you are required towithhold while making payments.


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In certain payments, the payer (withholder) isrequired to withhold some amount (Payment* Rate) and make the payment of balance tothe recipient (withholdee). This requirementis Withholding of Tax and the amount is WHT

People normally use the term TDS torepresent the Withholding Taxes

TDS means Tax Deducted at source.


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Income Tax Act, 2058 has made mandatoryrequirement to withhold tax at the time ofpayment in the following Sections: Sec 87- Withholding of Tax by Employer

Sec 88- WHT at the time of payment of Service Fees& Investment Return

Sec 88Ka- WHT while making payment of WindfallGain

Sec 89- WHT while making Contract Payments Sec 95 Ka- Advance Tax Withholding in specific

requirement


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Sec 88 covers the WHT Rate for following: Service Fee

Commission or Sales Bonus

Interest

Rent Payment Against Natural resources

Royalty

Retirement Payments

Other returns Dividend

Gain on Investment Insurance


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You have hired a consultant for tax advisoryservice. The fee of each enquiry is Rs. 30,000.You have received one such invoice of Rs.30,000. How much will you pay to yourconsultant in Cash? Is it Rs. 25,500 or 29,550?

First look at the invoice you have received. If its aVAT Invoice, deduct TDS @ 1.5 and pay Rs. 29,550.If its not, withhold Rs. 4,500 (@15 ) and make thepayment of Rs. 25,500 It means the rate of TDS for Service Fee is 15 inall cases except in case of VAT Invoice when it is1.5 .


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Service Fee is: Fee for any service received Commission Meeting Allowance Management Fee

Technical Service Fee You have received a memo from Company

Secretary to make payment of Meeting Fee toyour Directors. The allowance for a meeting is Rs.2,000 for each presence of a director. What is the

rate of WHT? Not Required- Articles in Newspaper, SettingQuestions and Checking Answers and payment toEmployee


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The rate is 15% except for the commissionpaid by resident MANPOWER AGENCIES tonon-resident when it is 5%.

Not Required: Payment to Employees

The staffs working at Marketing Division foryour company are entitled to sales bonus

w.r.t. the sales target met. Such sales bonusfor Mr. Ravi is Rs. 200,000 for the year2069/70. What is the amount of WHT?


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The rate is 15% in all cases Not Required:

Payment to Employees

Royalty defined by Clause Kaka of Sec 2 of IncomeTax Act, 2058 (5-subclauses)

Payment for Natural Resources defined by ClauseSha of Sec 2 of Income Tax Act, 2058 (2-

subclauses)


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The rent is 10% in all cases including that forLease payment of Aircrafts.

Rent defined by Clause Sa of Sec 2 of Income TaxAct, 2058 (5-subclauses)


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The rate is 15% in all cases except when all thefollowing cases are satisfied when tax is withheld @5%: Payment by resident B/FI, entity issuing debentures, orlisted company to a natural person against deposit, bond,debenture- when the interest have source in Nepal and is

not related to business You are from GIZ. You have placed the amount in call

account in a bank. What should be the rate of WHT sothat you would not be required to complain?

WHT not required while making payment to ResidentB/FI, Mutual Fund, and in payment up to Rs. 10,000by Micro finance, rural development bank, Post OfficeSaving Banks and Cooperatives specified in Sec 11 (2)based on rural areas


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You have had retirement saving in CIT. At thetime of retirement, CIT told you that total amountaccrued to you is Rs. 15,00,000 including yourcontribution and the interest on thecontribution. What amount will you expect toreceive?

You have made saving for retirement in anUnapproved Retirement Fund. Your Contributionis Rs. 20,00,000. The Fund informed you that

total amount before WHT to be paid to you is Rs.22,00,000. What amount will you expect toreceive?


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The first case is of Payment from ARF. CIT, EPF and other retirement funds approved by

IRD are approved retirement Funds.

The WHT rate is 5% of Gain amount in case of

payment from ARF. Gain is:

Actual Payment 15,00,000Less:

Higher of Following (750,000)50 of Payment 750,000Rs. 500,000 500,000

750,000TDS= 5 of 750,000


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15% Mr. Hari Kumar is entitled to Gratuity at the

time of retirement. The amount of suchGratuity is Rs. 15,00,000. What is the amountof WHT?

Special case for any accrual of RetirementBenefit & Medical Facilities-

No such taxation for accrual of Retirement Benefittill Chaitra 18, 2058 & Medical facilities up to Rs.180,000


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Benefit from Mutual Fund- 5% Dividend- 5%

Not required while making payment to Mutual Fund

Gain on Investment Insurance- 5% of Gain

Gain is calculated as you have calculated inthe case of Unapproved RF.


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Windfall Gain defined- Lottery, gift, Baksis,jitaury

WHT Rate- 25%

Not Required for: National and International Prizes up to Rs. 5 Lakhs

for contributions in literature, culture, journalism,sports, technology and public administration


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Contract means: Supply of Goods or Human Resources; Contract related to installation, construction or establishment of

tangible asset or structure; or Arrangements prescribed by IRD as Contract; If the Contract related to installation, construction or

establishment of tangible asset or structure includes serviceelement as well. The service is also a part of contract payment

WHT Rate- 1.5% for Payments above Rs. 50,000 You have to go back to last 10 days to ensure that you

have not make cumulative payments in last 10 days andtoday of Rs. 50,000. If it exceed Rs. 50,000.. Deduct WHT@ 1.5% on all payments of last 10 days and the paymentmade today where WHT is not withheld


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Repair of Aircraft- 5% Other Contracts/ Agreements- 5%

Insurance Premium to Non Resident InsuranceCompany- 1.5%

In other cases- at the rate specified by IRD


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You are an employee of Mercantile ExchangeLtd. Ram Prasad is a person dealing inCommodity Future Market. He makes gain ofRs. 200,000 from Commodity Future Market.

What is the amount of WHT? It is 20,000 (@10% of Gain) to be deducted by

person operating Commodity Future Market Service


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You are finance manager of a share broker.Mr. Ayodhya Prasad had purchased 100,000Kitta shares of Himalayan Bank Ltd at Rs.1500 each on Ashad 25, 2065. He sold all the

shares at Rs. 1800 each on Shrawan 25,2070. What amount will you withhold as Tax? 5% of Gain in case of Resident Natural Person 10% of Gain in case of OTHERS Withholding by THE SHARE BROKER

No such taxation for Capital Gain of MutualFund


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You are finance manager of a AgriculturalTrading (P) Ltd. Mr. Ayodhya Prasad, ashareholder of the company, has sold 100,000Kitta shares of the company on Shrawan 25,

2070 at Rs. 1500 each (Cost: Rs.100). Whatamount will you withhold as Tax & When? 10% of Gain in case of Resident Natural Person

15% in all OTHER CASES

TAX to be withheld by the Company, the share of whichhas been disposed, when the shareholder asks forDa.Kha. Of shares under Companies Act

No such taxation for Capital Gain of Mutual Fund


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No Tax Withholding for: Sales of Land for less than Rs. 30 Lakhs

Sales of Private Building for Less Than Rs. 30 Lakhs

Private building: Building+ Area occupied by the

building (Area shall not be more than 1 ropani) Sales of building owned continuously for 10 years

or more and where you have resided for 10 years ormore either continuously or intermittently

Transfer within 3 generation Otherwise thanthrough sales


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Ownership More than 5 years- 2.5% of Gain Ownership Less Than 5 Years- 5% of Gain

Tax to be withheld by Malpot Karyalaya,where you have to declare the gain in a formdeveloped by IRD


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You have withheld tax on the specifiedpayments above.. What shall you do afterwithholding the amount? Ensure the PAN Number of the Withholdee

(Receiver) Log in to E-TDS Option Fill up the E-TDS form for all payments made

during the months attracting WHT Submit the E-TDS Return for verification within 25th

of Next Month (What if you follow EnglishCalendar?) Pay the WHT deducted within 25th of Next Month


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You have made payment of Rs. 30,000service fee without withholding tax (fullinvoice value). Will you require to submit TDSReturn and make TDS Payment? Yes..

Even if you have not withheld tax, It is deemed thatyou have withheld tax at the time while you madethe payment of service fee.


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You have not paid WHT within the date specifiedin Slide 25.. What is the implication? There is a penal provision to make you comply the

requirement of the Act Either you comply theprovisions or pay fees & Interest

Fees for non-submission of Return: 1.5% p.a. ofWHT amount under such returnfor WHT u/s 87,88, 88Ka & 89

1.5% p.a. of Base amount to withhold tax under

such return for WHT u/s 95Ka Interest on delay in deposit of WHT:

15% p.a. of WHT amount for which there is delay indeposit


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You have to issue WHT Certificate within 25thof Next Month for withholding of Tax Made inany month

The certificate shall clearly disclose WHT

amount and payment amount

Practical Issue:

The date of deposit of WHT along with the

Deposit Voucher Number is also provided tothe Withholdee so that it would be helpful toclaim Advance Tax


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Dividend- Paid by Resident Company Rent- Not related to Business and received by Natural Person Gain on Investment Insurance- Paid by Resident Company Gain on Payment from URF- Paid by Resident Company Interest- Received by Natural Person & Exempt Organization:

Paid by resident B/FI, entity issuing debentures, or listedcompany to a natural person against deposit, bond, debenture-when the interest have source in Nepal

Payment after WHT to Non Resident persons All Retirement Payments Meeting Allowances Part Time Lecture Allowances

Windfall Gain Benefit paid by Mutual Fund


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Book Income Net of WHTExample?????


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ANY QUESTIONS?THANK YOU!!!

withholding taxes wht

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