The interest, fees and penalties as per VAT act are described below:
Interest for not depositing VAT on time:
As per Sec. 26 of VAT Act, if a person fails to deposit the payable amount of VAT within the prescribed time period, interest shall be levied on such amount from the due date to the date when it is actually paid. The rate of interest is 15% per annum. Here, part of the month is also considered as a whole month.In case of excess of Input VAT over output VAT during any period, the interest shall not be levied.
Additional Fees for not paying VAT on a due date.
As per Sec. 19(1), where a person fails to deposit the payable amount of VAT within the due date (which is within 25 days of the end of tax period), additional fee of 10% per annum shall be levied on such payable amount.
Additional fees is not applicable if a person has excess input VAT credit than its output VAT .Moreover, interest on additional fees is not levied.
Additional Fees may be waived by the Director General on a certain circumstances in case a person files an application citing the reasons that the payable VAT could not be paid as a result of circumstances beyond control.
Penalties for not filing VAT return on time:
As per sec.18 of VAT Act, where a registered person fails to submit the VAT return within the due date, then higher of the following shall be charged as penalties:
- 0.05% per day of applicable VAT or
- 1,000 per tax period.
For more information, please refer http://www.ird.gov.np