Sec. 2 (Ga) defines “Final Withholding Payment” as the payment like dividend, rent, interest and payment to non-resident person mentioned in sec.92 of the Income tax Act and which is attracting withholding taxes.
Final Withholding payments are not included in the assessable income from business, employment or investment. Further, tax deducted on such payments are not treated as an advance tax while computing the tax liability.
The tax deducted on such payments are known as Final Withholding Taxes. It is a kind of withholding tax which is not creditable against the income tax liability of the payee.
Following are the final withholding payments according to sec.92 (1) of the Income Tax Act, 2058:
- Dividend paid by the resident company or resident partnership firms. The rate of TDS is 5% on it.
- Payment of rent to a natural person other than those operating a business. Also, rental payment made in relation to leasing or land or equipment’s or apparatus attached to such land.
- Payment of gain on investment insurance from a resident person.
- Payment of gain from unapproved retirement fund from a resident person.
- Withholding payments made to a nonresident person u/s 87, 88 and 89 of the Act.
- Payment of interest by a resident bank, financial institution, cooperatives, any other institution issuing debenture or company listed under prevailing law against deposit, bond, debenture or government bond to a natural person (not in connection to operation of business) or an exempt organization.
- All types of Retirement payments along with the payment made by the Government of Nepal and Approved Retirement Fund (except pension received on regular basis).
- Meeting Fees to the extent of Rs. 20, 000 per meeting, occasional lecture fee, payment against setting question paper and checking the answer sheets.
- Windfall gains.
- Payment of transportation rent or vehicle rent to a natural person other than that received by private firm.
- Consideration paid by Mutual Fund to a natural person.
Please refer to http://www.ird.gov.np for more information.
If you want to discuss more about it , discuss in the https://camunchnepal.com/forum/