Excise Duty Renewal in Nepal

Introduction to Excise Duty in Nepal

Excise duty is an indirect tax levied on the manufacture, sale and consumption of certain goods in Nepal. The Excise Act 2058 (2002) and Excise Regulation 2059 (2003) govern the imposition and administration of excise duty in the country.

Excise duty applies to a range of products including alcoholic beverages, tobacco products, vehicles, petroleum products and certain luxury items. The rates vary depending on the type of product, ranging from 0% to 100%. The primary objectives of excise duty are to generate revenue for the government and discourage the consumption of harmful or luxury goods.

In Nepal, businesses that manufacture, import, sell or store excisable goods are required to obtain an excise duty license from the Inland Revenue Department. This license needs to be renewed annually to continue operations legally. The renewal process ensures that businesses remain compliant with excise regulations and allows the government to maintain oversight of excisable goods in the market.

The Inland Revenue Department under the Ministry of Finance is responsible for administering excise duty in Nepal. It handles the issuance and renewal of excise licenses, collection of excise revenue, and enforcement of excise laws and regulations. The department works in coordination with other agencies like customs to implement excise policies effectively.

Importance of Excise Duty Renewal

Renewing excise duty licenses is crucial for businesses dealing with excisable goods in Nepal.

Legal Compliance: Renewal ensures businesses remain compliant with Nepal’s excise laws and regulations. Operating without a valid license can lead to penalties and legal issues.

Revenue Generation: Excise duty is a significant source of government revenue. Timely renewal allows for proper collection and accounting of excise taxes.

Market Regulation: The renewal process helps authorities monitor and regulate the production, import and sale of excisable goods in the market.

Consumer Protection: By renewing licenses, businesses demonstrate their commitment to following quality and safety standards for excisable products.

Record Keeping: The renewal process encourages businesses to maintain proper records of their excise-related activities.

Process for Excise Duty Renewal in Nepal

• Step 1: Prepare necessary documents
• Step 2: Calculate excise duty amount
• Step 3: Submit renewal application
• Step 4: Pay renewal fees
• Step 5: Obtain renewed license

The procedure for renewing an excise duty license in Nepal involves several steps:

Step 1: Prepare necessary documents

Gather all required documents including the existing license, tax clearance certificate, and financial statements. Ensure all information is up-to-date and accurate.

Step 2: Calculate excise duty amount

Determine the applicable excise duty based on your product type and quantity. Consult the current excise duty rates published by the Inland Revenue Department.

Step 3: Submit renewal application

File the renewal application at your local Inland Revenue Office. Include all required documents and the calculated excise duty amount.

Step 4: Pay renewal fees

Pay the prescribed renewal fees at the designated bank or through online payment systems if available. Obtain a payment receipt.

Step 5: Obtain renewed license

After verification, collect your renewed excise duty license from the Inland Revenue Office. Keep it safely for future reference and display as required.

Documents Required for Excise Duty Renewal in Nepal

To renew an excise duty license in Nepal, businesses typically need to submit the following documents:

1. Renewal Application Form: A completed and signed application form for excise duty license renewal.
2. Existing Excise License: A copy of the current excise duty license that needs to be renewed.
3. PAN/VAT Certificate: Permanent Account Number (PAN) or Value Added Tax (VAT) registration certificate.
4. Company Registration Certificate: A copy of the company registration certificate issued by the Office of Company Registrar.
5. Memorandum and Articles of Association: For companies, copies of the Memorandum and Articles of Association.
6. Tax Clearance Certificate: A valid tax clearance certificate for the previous fiscal year.
7. Audit Report: The latest audited financial statements of the company.
8. License Fee Payment Receipt: Proof of payment for the license renewal fee.
9. Excise Duty Payment Records: Evidence of excise duty payments made during the previous license period.
10. Citizenship Certificate: Copies of citizenship certificates of company directors or proprietors.
11. Photos: Recent passport-sized photographs of the company’s authorized representative.
12. Bank Guarantee: For certain high-risk products, a bank guarantee may be required.
13. Import-Export Licenses: If applicable, copies of import or export licenses related to excisable goods.

Timeframe for Excise Duty Renewal

The timeframe for excise duty renewal in Nepal is typically aligned with the country’s fiscal year, which runs from mid-July to mid-July (Shrawan to Ashad in the Nepali calendar). Excise duty licenses are generally renewed annually. The renewal process usually begins towards the end of the fiscal year.

The standard deadline for renewal is within 3 months from the start of the new fiscal year. This means businesses have until mid-October (end of Ashwin) to complete their renewals. In some cases, a short grace period may be allowed after the deadline, but this often comes with additional fees or penalties.

Once all required documents are submitted, the renewal process typically takes 7-14 working days, depending on the workload of the Inland Revenue Office. The existing license remains valid until the renewal deadline, provided the renewal application is submitted on time.

Cost of Excise Duty Renewal

The cost of excise duty renewal in Nepal can vary depending on several factors. This is a fixed fee set by the government for renewing the excise license. The amount can vary based on the type and size of the business.

Any outstanding excise duty for the previous period must be paid in full during renewal. If renewal is done after the deadline, late fees may be applicable. These can increase significantly the longer the delay.

Laws and Authorities Governing Excise Duty

Here’s the information organized into a table:

Category	Key Laws	Governing Authorities
Excise Act 2058 (2002)	The primary legislation governing excise duty in Nepal. It outlines the framework for imposing and collecting excise duty.	Inland Revenue Department (IRD): Administers excise duty, licensing, and collections.
Excise Regulation 2059 (2003)	Provides detailed rules and procedures for implementing the Excise Act.	Customs Department: Coordinates with IRD for excise duty on imports.
Finance Act	Annual budget legislation that may introduce changes to excise rates or policies.	Local Inland Revenue Offices: Manage daily operations related to excise duty.
Income Tax Act 2058 (2002)	Relevant for tax aspects related to excisable goods and businesses.	Tax Settlement Commission: Resolves disputes on excise assessments.
Value Added Tax Act 2052 (1996)	Interacts with excise duty for certain goods and services.	Revenue Tribunal: Hears appeals on excise-related decisions by authorities.
Customs Act 2064 (2007)	Relevant for excise duty on imported goods.

Excise Duty Renewal Practices in Nepal

Excise licenses must be renewed every fiscal year, typically within three months of the new fiscal year starting. Most renewals require physical submission of documents at the local Inland Revenue Office, though some online initiatives are being developed.

Tax officers thoroughly verify all submitted documents before approving renewals. In some cases, especially for manufacturing units, tax authorities may conduct site inspections before renewal.

The renewal process includes a review of the business’s compliance with excise regulations over the past year. Businesses are expected to maintain detailed records of production, sales, and excise payments for review during renewal.

Proof of timely excise duty payments throughout the year is crucial for smooth renewal. Renewed licenses must be prominently displayed at the business premises.

Conclusion

Excise duty renewal is a critical process for businesses dealing with excisable goods in Nepal. It ensures legal compliance, contributes to government revenue, and allows for proper regulation of excisable products in the market. The renewal process, while detailed, is designed to maintain transparency and accountability in the excise system.

Key points to remember:

• Renewals are typically required annually, within three months of the new fiscal year.
• Proper documentation and timely submission are crucial for smooth renewal.
• Compliance with excise regulations throughout the year facilitates easier renewals.
• Costs involved in renewal should be budgeted for in advance.
• Staying informed about changes in excise laws and regulations is important for businesses.

FAQ