Value Added Tax

1. Registration: Mention the provisions related to mandatory registration under Value Added Tax Act,
2052.
2. Application of VAT: Cosmos p. ltd having its registered office in Jawalakhel, Lalitpur transferred
some goods costing Rs. 1 million to its branch at Bangladesh. In the same month, the Bangladesh
branch transferred some goods costing Rs. 500,000 to its head office in Nepal. Gross profit Margin of
head office is 20% and that of branch is consolidated at the end of each FY in books of Head Office.
Discuss the VAT impact on above transactions.
3. Place of Supply: A lawyer practicing in Nepal provides consultancy service to a legal firm in United
Kingdom. The legal firm of the UK used that service to release a person in USA. Where is the place of
supply of service as per VAT Act/Rules?
4. Time of Supply: You are a tax expert. Answer stating the provisions relating to “Time of Supply” as
per Value Added Tax (VAT) Act, 2052, what happens when:
i) A customer takes delivery of the goods from the business place before the supplier issues invoice.
ii) A customer paid NPR 10,000 to a supplier along with a list of certain goods to be supplied to the
customer. As per the list the total goods are worth NPR 12,000
iii) A supplier at Kathmandu receives order for supply goods from a customer from Pokhara. The
supplier packs the goods as per the order, asks a labor to deliver the goods to the transporter and the
transporter gives delivery of the goods to the party of Pokhara at Pokhara. When the buyer receives
the goods, the supplier issues the invoices.
5. Types of Registration.
6. NO VAT and Zero VAT: Tax Accountant of Subhashree & Co. contends that the terms “Zero VAT”
and “No VAT” have the same meaning. As a Tax Expert, express your opinion within the framework
of VAT Act, 2052.
7. Application of VAT: State the following goods or services are VAT able (Taxable) or not with the
provision of the Act.
(a) Fresh Water P. Ltd is running the business of supplying water in tanker.
(b) Reinsurance of general Insurance.
(c) Cargo Service for import
(d) Ujyalo Hydro power development company Ltd running its business of hydropower generation and
consultancy on hydropower construction registered in PAN for Income tax only. Its consultancy
income for the Year 2075/76 is Rs. 30 lakhs. What if consultancy income is Rs. 11 lakhs?

8. VAT Registration: Nepal Philanthropic Society is a ―Company not Distributing Profit registered
under the Company Act, 2063. The source of fund of this company comes from membership fees,
donation from the member groups and other outsiders. The company deals with various goods other
than those mentioned in schedule 1 to VAT Act 2052. Annual turnover of this company ranges from
Rs. 50 lakh to 75 lakh every year. Though profits earned by the company are not for the distribution
amongst its members, more than 50% of its profits are utilized towards activities related to the
Corporate Social Responsibilities (CSR) every year. The members of the company when approached
by IRD staffs for VAT registration contended that the company need not be registered in VAT. As you
are the tax consultant of the entity you are required to comment this statement by the company.

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 Value Added Tax
9. VAT Registration and VAT Claim at the time of registration: Air Cell Nepal (P) Ltd, a
telecommunication Tower Construction Company registered in PAN only in 2067.7.10 as the company
has no business in hand. The Company receives some contracts after registration, hence the company
registered in VAT on 2067.7.30.
The following are VAT paid purchase lying at closing stock as on 2067.7.30.
Date Particulars VAT Amount
2067.7.11 Assembling Accessories 13,000
2067.7.12 Steels 130,000
2067.7.13 Cements 65,000
2067.7.14 Beverage 6,500
2067.7.24 Spare parts 3,900
2067.7.25 Fixed Assets 10,000
CEO of Air Cell Nepal (P) Ltd is worried about the VAT paid above because one of his consultants
said him that the VAT paid can‘t be claimed for Office set as it is of prior to VAT registration. Hence
he approached you on 2067.8.1.
Required:
Give the advice to the CEO of Air Cell Nepl (P) Ltd. regarding the matter of VAT offset.

10. Business Transfer: Mr. Prakash was engaged in the hardware business and now wants to quit from
this business. He wants to sell and transfer the business to a willing buyer. He has the followings assets:

Furniture & Fixtures Rs. 300,000 made to order but no VAT paid
Computer System Rs. 100,000 purchased by paying VAT
Hardware Stock Rs. 2,500,000, out of which Rs. 20 lakhs was VAT paid

Mr. Dark offered to purchase the business for Rs. 2,600,000 and approached the VAT office for
effecting the transfer. What are the procedures to be adopted, various commitments required and VAT,
if any, to be paid by Mr. Dark?

11. Temporary Registration: PQR Pvt. Ltd. is engaged in supply of taxable goods and is an unregistered
under VAT. There is an exhibition scheduled on Poush 3, 2073 and the company wants to participate
in the exhibition for promoting its products. Exhibition is for a period of one week. Since the company
is unregistered, it claims that registration is not mandatory as its participating in exhibition for a week
only. In other hand, Tax Officer demanded deposit of Rs. 500,000 citing the reason that the company
is participating in exhibition. Also, Tax Officer asked for the submission of tax return. Since the
transactions occurred on Poush, 2073, the company is in the view that it will submit tax return by Magh
25, 2073.
Comment referring to the provisions of VAT Act/Rule. Also, mention the fine to be paid by the
company, if any, on non-compliance of registration.

12. Taxable Value: M/s Thirsty Drinkers Ltd. has sold a kind of drink to non VAT registered party for Rs.
10,000. As per the retail price published by the same company under the direction of IRD, the retail
price is Rs. 12,000. The company has collected VAT from the party on the amount of Rs. 10,000 saying
that it has given the trade discount to the party and the trade discount can be deducted to arrive at the
transaction value. But the assessing officer insists to collect VAT on the published price. As an expert,
give your opinion on this.

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 Value Added Tax
13. VAT Collection: Lumbini District Development Committee has called up an auction to sell its fixed
assets (Computer, Furniture & Fixtures) as it is shifting to new office with modern infrastructures.
Detail of amount collected from auction is as follows:

Fixed Assets Amount (Rs.)

Computer 50,000
Table 30,000
Chairs 40,000
Furniture 140,000
Miscellaneous Assets 70,000
Total Amount Received 330,000
The officer of Lumbini District Development Committee did not collect VAT on this sale. Is he
correct? Answer in the light of VAT Act, 2052.

14. VAT on Used Goods: Kathmandu reconditions has following transaction details for the month of
Chaitra 2071. Calculate the VAT payable/receivable for the month, assuming that the transactions are
of used goods.
Purchase (including VAT) Sales (excluding VAT)
(Rs.) (Rs.)
Chairs 20,000 25,000
Motorbike 35,000 45,000
Refrigerator 10,000 9,000
Cupboard 8,000 7,000
Bookshelf 12,000 15,000
Scooter 25,000 In stock
What would be your calculation if the transactions were of brand new goods and not the reconditioned
goods?

15. Sharma & co, a registered person dealing in second hand vehicles has purchased a secondhand
motorcycle for NPR 10,000 plus chargeable VAT on it. The following expenses are incurred for repair
of the motorcycle to make it saleable;
Particulars Amount (NPR) VAT (NPR)
Spare Parts 4,000 520
Labor Charges 2,000 0
The person sells the motorcycle for NPR 20,000. Calculate the taxable value of the motorcycle as per
VAT Act, 2052.

16. VAT on Wood: Compute, how much VAT amount can be claimed for refund by the trade link on 30
Shrawan 2071.
Nepal Government has determined the Royalty @ Rs. 800 per cu.fit on wood for national forest.
suppliers submitted a bid quoting @ Rs. 900 per cu.fit for 2000 cu.fit wood to Kathmandu forest office
to purchase the wood on auction. The suppliers have been awarded the auction of the wood. In addition,
the suppliers have purchased 1000 cu.fit wood from co- operative forest @ Rs. 700 per cu.fit for its
business. Determine the VAT amount on these purchases with reference to the provisions of Value
Added Tax Act, 2052.
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 Value Added Tax

17. VAT Collected by INGO: A foreign embassy in Kathmandu sells its used car for Rs. 30 lakhs to an
INGO, a tax exempt entity. VAT office demanded tax on the sale of car from the embassy. The embassy
denies its liability to pay tax as it enjoys diplomatic facilities in Nepal. The INGO states, since it is a
tax exempt entity it need not pay any tax. Advise the parties, giving consideration to the provisions of
Value Added Tax Act, 2052.

18. VAT to Unregistered Person: What are the circumstances where an unregistered person needs to pay
VAT on his transactions similar to as registered person?

19. Refund to Tourist: Mr. Banwarilal, an Indian tourist, visited Nepal in the year 2016. He purchased
taxable goods of NPR 16,000 from Pokhara and decided to take the purchased goods along with him
while going back to India via Sunauli boarder by his own vehicle. He seeks your advice on refund of
VAT paid by him on purchase of such goods. What would be your answer if he had purchased the
taxable goods worth NPR 26,000 instead of NPR 16,000?

20. Refund to Tourist: Mr. John entered to Nepal via Birgunj with his family on 1st Aswin 2072 and
visited so many places in Nepal. The detail of few expenses incurred in Nepal by Mr. John & his family
members are as follows:
Amount paid to tour operator for family tour package amounted to Rs. 339,000 including Rs.
39,000 applicable VAT.
i) Mr. John purchase one laptop costing Rs. 100,000 and paid applicable VAT on it.
ii) Mr. John Paid to Hotel in Kathmandu for cost of lodging, foods & other services Rs. 226,000
including Rs. 26,000 VAT.
iii) Mr. John with his family visited orphanage home in Kathmandu and donated a fridge costing Rs.
50,000 and paid applicable VAT on it.
At the time of departure from Tribhuvan International Airport, Kathmandu, Mr. John submitted all vat
invoices to the counter of IRD and Mr. John is carrying the laptop purchased in Nepal along with all
his other belongings.
Advise Mr. John how much VAT refund he will get.

21. Reverse VAT: Saurav Publication prints the various books and sells to the wholesaler. The Company
itself has constructed a building for its Publication House. The cost of construction was as follows:
Labour charges Rs. 30,00,000
All Material (Cement, rod etc) purchase cost Rs. 5,50,000 inclusive VAT.
State the VAT Implications on this case, if applicable with references to VAT Act, 2052 and rules,
2053.

22. Reverse VAT: TAR Construction P. Ltd. hired a Technical Expert from India for consultancy service
architect design of Hydropower projects on contract basis. The consultant charges NRs. 621,500
towards his service. Quantify the amount of taxes to be deducted from his payments and deposited at
the Inland Revenue Department.

23. Reverse VAT: Consider who should pay and how much VAT in the following circumstances with
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 Value Added Tax
explanations according to the relevant section and rules:
a) Mr. Buddhi Bahadur builds his house through a contractor who is not registered in VAT for own
living. The total value of the contract comes to Rs. 90 lakhs. He gets built another house from the
same contractor for a cost of Rs. 45 lakhs for letting out on hire.

24. Reverse VAT: Sayami Infosys Pvt. Ltd. deals in computer and related IT technology business. In the
course of its business, it received services from Magnet Technology Corp., Japan. Magnet Technology
Corp., raised bill of Rs. 21.60 Lakhs against the services provided. Management of Sayami is confused
as to whether VAT shall be charged or not?
Advise the management of Sayami as regards to VAT applicable in this case and net payment to be
sent. Specify the provision of VAT Act, 2052 in this regards. (Ignore other taxes, if applicable).

25. Reverse VAT: What are the provisions with regards to collection of VAT on construction of
commercial building/ apartment/ shopping complex?

26. Reverse VAT: The owner of the building who constructed the building at a cost of Rs. 4 lakhs for the
purpose of his business paid VAT of Rs. 40,000 on account of non-submission of VAT bills for
purchase of materials and labour under section 8(3) of the VAT Act. Can the businessman set off this
VAT payment of Rs. 40,000 against his VAT liability on sales he makes when he starts his business of
trading?

27. Bank Guarantee: Naya Nepal Ltd. is engaged in the business of manufacturing juice. The product of
the Industry has good market in India and Nepal. The company exports the juice to India as well as
the same is sold in the local market. Sales turnover of the company for the following quarters are as
follows:

Period Export to India Rs. Local sales Rs. In

In Lacs Lacs
Shrawan- Ashoj 2065 65 85
Kartik- Poush 2065 80 45
Magh- Chaitra 2065 67 100
Baisakh- Asadh 2066 136 44
Shrawan- Ashoj 2066 165 85

The company is scheduled to export 900 M tones of the juice to India and the necessary raw materials
are imported at CIF value at Raxaul from South Africa for Rs. 80 lacs. Also the company is scheduled
to import raw materials amounting to Rs. 20 lacs for the local sales. The company seeks your advice
on whether it avails Bank guarantee facility against VAT. If yes what would be the amount of Bank
Guarantee required.

28. General Household Pvt. Ltd. provides you the following information:
Particulars Period Amount
Total Sales 2074 Baishakh to Chaitra 4,054,000
2074 Chaitra 360,000
Export 2074 Baishakh to Chaitra 2,400,000
2074 Chaitra 200,000
The company seeks your opinion based on Value Added Tax Act, 2052 and wants to know:
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a. Does the company get bank guarantee facility for importing finished goods?
b. Does the company get bank guarantee facility for importing raw materials?
c. Does the company get tax refund facility in the month of return submission?

29. Bank Guarantee and VAT Refund: Heat & Cool Pipe Industry Ltd. is a pipe manufacturing company.
The raw material imported during various months are as follows:

Month Raw Material

2069 Baisakh 10,000 Kg
2069 Jestha 11,000 Kg
2069 Ashadh 9,000 Kg
The sale done by company in various periods are as follows:

Month Local Sale Export Sale Total Sales

2068 Baisakh -Chaitra 4,200 kg 4,800 kg 9,000 kg
2068 Baisakh 600 kg 100 kg 700 kg
2068 Jestha 150 kg 550 kg 700 kg
2068 Ashadh 300 kg - 300 kg
2069 Baisakh - 900 kg 900 kg
2069 Jestha 300 kg 300 kg 600 kg
2069 Ashadh 400 kg 500 kg 900 kg

The company marks up 15% to its product. The selling price is same for local and export market. Raw
material required per kg of output is 2 kg.
i) Determine whether the company can claim bank guarantee facility for VAT at the time of
import of raw material. Also specify the provisions of VAT Act, 2052 in this regards.
ii) The company's VAT account showed following balances. Can company claim refund
immediately after closure of month? Specify the provision of the VAT Act.

Month Balance Remarks

Baisakh 40,000 Payable
Jestha 120,000 Receivable
Ashadh 140,000 Receivable

30. VAT Refund: M/s ABC Limited has shown the following sales and purchases without VAT. The
policy of the company is to claim VAT refund as and when eligible as per the VAT Act. Calculate the
amount of credit and refund that can be claimed in each month by mentioning the relevant provision of
the act.
Months Sales Purchases Export
Bhadra 500,000 600,000 45%
Ashwin 520,000 500,000 25%
Kartik 600,000 500,000 45%
Mangsir 450,000 500,000 35%
Poush 320,000 500,000 45%
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 Value Added Tax
Magh 400,000 500,000 25%
Falgun 350,000 500,000 35%

31. VAT Refund: Rai Pvt. Ltd. working in Bhojpur has the following amounts of sales and purchases
excluding VAT. Can VAT refund be claimed in Falgun return?
Month Sales Purchase
Bhadra 500,000 600,000
Aswin 520,000 500,000
Kartik 520,000 500,000
Mangsir 450,000 500,000
Poush 320,000 500,000
Magh 400,000 500,000
Falgun 350,000 500,000

32. Deregistration: Mr. Ram has taken voluntary registration in VAT on 2070.05.02. He feels it
troublesome to comply with legal requirements of VAT Act, and wish to cancel his registration. He
seeks your assistance in this regards. Answer the following queries placed to you by Mr. Ram:
i) When can he apply for cancellation of registration?
ii) The books of Mr. Ram showed following balances at the date of cancellation.
Account head Closing balance (Rs.) Market value on date of cancellation (Rs.)
Items on Items on Total Items on which Items on which Total
which VAT which VAT VAT input was VAT was not
input was was not claimed. claimed.
claimed. claimed.
i) Inventory 10 lakh 5 lakh 15 lakh 12 lakh 7 lakh 19 lakh

ii) Fixed assets 20 lakh 7 lakh 27 lakh 11 lakh 3 lakh 14 lakh

What shall be the tax implication on the above items on the date of cancellation? State the provision
of Act.

33. VAT Calculation: Sankshi Pvt. Ltd trading company has its Branch office in Thailand, Bangkok,
Singapore and China. It has adopted the International Financial Reporting Standards (IFRS/IAS) for
preparation and presentation of Financial Statements. In the months of Falgun end 2073 sales in the
Head office is NPR. 50 Million and sales from Thailand, Bangkok, Singapore and China is NPR.
60Million, NPR. 70 Million, NPR. 80 Million and NPR.100 Million respectively. With considering the
VAT Act 2052, how much Vat Need to pay, if input tax credit is NPR. 5 Million.

34. VAT Calculation: M/s Ankur Plastics has the following transactions, calculate the amount of VAT
payable or receivable for the month of Jestha 2068. Rs.
i) Purchase of Raw material 650,000
ii) Purchase of packing material 100,000
iii) Purchase of Fuel for generator 23,000

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iv) Purchase of Fuel for Vehicle 15,000
v) Purchase of a vehicle 2,300,000
vi) Sale of finished goods 1,500,000
vii) Opening VAT receivable 120,000
viii) Purchase of raw material includes an item for Rs. 35,000 which was purchased (bill dated) on
Baisakh 2067, which could be accounted only this month since the invoice was misplaced.
ix) Opening VAT receivable balance has been running from Poush 2067.
x) All of above amounts are exclusive of VAT.

35. VAT Calculation: Calculate net VAT payable after deducting available concession based on following
information of Kathmandu Private Limited, a VAT registered match (wooden stick) and incense sticks
Udhyog, for the tax period of Baishakh 2071.
Purchase of VAT exempted raw material Rs. 2,500,000
Plant consumables Rs. 250,000 plus VAT
Bus for staff transportation Rs. 1,130,000 including VAT
Sale of Match (wooden stick) Rs. 1,500,000 excluding VAT
Sale of incense sticks Rs. 600,000 excluding VAT
Export sale of incense sticks Rs. 800,000 excluding VAT

36. VAT Calculation: M/s Makalu Food and Beverages had following VAT attractive transactions in the
month of Poush 2068. From these details and notes below, calculate the
VAT payable/receivable for the month of Poush.

Details Amount in Rs.

Purchase of raw material – local 4,500,000
Purchase of raw material – import 5,500,000
Purchase of packing material 500,000
Purchase of motorcycle 150,000
Purchase of bus for staff 1,000,000
Purchase of delivery van 800,000
Purchase of diesel for staff bus 50,000
Purchase of petrol for van/motorbike 25,000
Payment of consultancy services to a party in India 90,000
Telephone expenses 15,000
Dealers’ meet expenses 45,000
Miscellaneous expenses 85,000
Opening VAT receivable 9,000
 Above items are excluding VAT.
 Miscellaneous expenses includes Coke and Fanta purchased for dealers' meet for Rs. 10,000 and gift
items purchased though abbreviated tax invoice of Rs. 25,000.

37. Proportionate VAT Credit: Mr. Pure operates dairy and is registered to VAT. His transaction for first
month of operation are as follows:
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Particulars Quantity Amount

Purchase of Cow milk 20,000 liters. 1,000,000

Purchase of Powdered Milk 20,000 kg. 800,000

Purchase of Sugar (for ice cream) 18,000 kg. 1,080,000

Sale of Cow milk (pasteurized) 18,000 liters. 1,080,000

Sale of Ice cream 17,500 liters. 4,500,000

Advertisement for Ice cream (from registered party) 50,000

Purchase of office furniture (from registered party) for 200,000
sale counter of milk and ice-cream.
Packing expenses for milk delivery (from registered 25,000
party)
2,000 kg of Powder milk was added to cow milk for sale and rest was used for ice-cream production.
All above data are excluding VAT and VAT is paid & collected on goods which are not exempted.
Calculate the amount of VAT:
a) Paid
b) Collected

38. XYZ Pvt. Ltd. imports/purchases the taxable raw materials such as Iron Ingots and Steel Plates to
manufacture them into different furniture items as well as agriculture tools.
Details of total imports excluding Input VAT are as follows:
Cost of Iron Ingots declared by XYZ Pvt. Ltd. Rs. 3,00,000
Revised cost fixed by Customs Officer Rs. 3,50,000
Freight Rs. 50,000
Insurance Rs. 5,000
Import Duty @ 6%
In addition, it has also purchased following raw materials:
Steel plates (exclusive of VAT) Rs. 1,00,000
Woods (exclusive of VAT) Rs. 35,000
The products manufactured out of the above raw materials are sold out with the details as given below:
Agriculture tools (VAT exempt items) Rs. 2,50,000
Furniture Rs. 3,00,000
Find the ratio between taxable and non taxable sales and calculate the amount of Input VAT that XYZ
Pvt. Ltd. is entitled to claim under sec 17 (3) of VAT Act.

39. VAT Calculation: Janaki Garment Pvt. Ltd. engaged in production of readymade wear and registered

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 Value Added Tax
with VAT at Inland Revenue Department has the following transactions during Jestha 2068. The
Company has VAT refundable Rs. 33,450 as on 31/01/2068.
Required to calculate:
a) amount of VAT collection on sales
b) input tax available for set off and
c) the net VAT payable/receivable to/from Inland Revenue Office.

Sales for the month (before VAT as applicable) Rs.

Export of garments 7,000,000
Local sale 1,200,000
Purchases and expenditures:
Particulars Amount(Rs.) VAT (Rs.)
Cloth purchase 5,000,000 650,000
Garment material purchase 400,000 52,000
Packing materials 50,000 6,500
Carton for export Packing 100,000 13,000
Parts for machine 150,000 19,500
Telephone Expenses 50,000 6,500
Purchase of cloth press machine spare parts ( in stock) 200,000 26,000
Misc. factory consumables 200,000 26,000
Plant and factory building repair 100,000 13,000
(No VAT bill on payment of Rs. 200,000)
Purchase of cloth pack machines. 600,000 78,000
Purchase of delivery VAN 800,000 104,000
Purchase of a car 1,600,000 208,000
Construction of a shed for production work 400,000 52,000
Additional information:
Van and Car has been purchased under loan arrangement for 70% of the amount and the blue book is
in the name of ABC Bank Ltd.

40. VAT Calculation: Supreme Garment Pvt Ltd had the following transaction in the month of Ashwin
2069. Calculate the VAT payable/receivable from the information below.
Particulars (Rs.)
Purchase of clothes 3,500,000
Material for stitching 200,000
Packing materials 300,000
Special packing for export 200,000
Loose tools for machineries 50,000
Payment of consultancy charges abroad 250,000
Purchase of bus for staff transportation 1,000,000
Purchase of motorcycle of hire purchase 200,000

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Telephone expenses 38,000
Purchase of diesel for generator 40,000
Purchase of diesel for bus 12,000
Purchase of petrol for motorcycle 15,000
Purchase of computers 45,000
Purchase of soft drinks 6,000
Purchase of Stationery 14,000
Local Sale 2,500,000
Export Sale 5,000,000

Additional information:
Opening VAT receivable for the month was Rs. 45,780
Diesel for bus for Rs. 8,000 and soft drinks for Rs. 3,000 was purchased through abbreviated tax
invoice. Stationery was purchased from non-registered vendor. Items above are exclusive of VAT.

41. VAT Calculation: M/s ABC Pvt. Ltd. deals in purchase and sales of various items. During a month, it
has made the following transactions. Calculate the amount of allowable Input Tax Credit.
Purchase (Rs.) Sales (Rs.)
Asparagus 5,000 10,000
Onions and Shallots 5,000 5,000
Fish Fillets 5,000 2,500
Livers and Roes 5,000 2,500
Shorn Wool 5,000 5,000
Garlic 20,000 10,000
Potato 20,000 30,000
Green Tea 5,000 10,000
Black Tea 10,000 5,000

Purchase of Office Supplies 20,000

All the amounts are exclusive of VAT.

42. Proportionate VAT Credit: A manufacturer has the following details during the month of Chaitra
2072. Calculate VAT receivable/payable.
Rs.
Opening VAT Receivable 20,000
Purchase of raw materials 200,000
Salary expenses 50,000
Reverse VAT attractive service fees 10,000
Purchase of motorcycle 150,000
Office supplies inclusive of VAT 22,600
Total sales for the month 400,000
Out of total production 80% is VAT attractive and 50% of total production is exported.

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43. VAT Calculation: Smart Pvt. Limited furnished the following particulars of VAT for the month of
Shrawan, 2072:

` Particulars Amount
Sales (Rs.)

Local Sales To a registered party in Nepal 5,000,000

Local Sales To a party not registered in Nepal 500,000

Export Sales Of services to a party outside Nepal. 2,200,000

Party outside Nepal is not having any
Legally registered party in Nepal

` Total Sales 7,700,000

Purchases
Local Purchases
Purchase of Foundation Materials 400,000
Purchase of Advertisement Materials 100,000
Purchase of Motorcycle 200,000
Purchase of Trucks 500,000
Purchase of bus for carrying its staff 600,000
Purchase of bus for Delivery Van under Hire 650,000
` Purchase of liquor and Beverage during
Promotional event 100,000
Purchase of Petrol* 300,000

Purchase of Diesel for generator 50,000

Purchased gift items from Super market** 75,000

Miscellaneous Purchase 30,000

Purchase from non-VAT Registered Party 30,000
Total Local Purchase 3,035,000

Import of Goods

Purchase of Infrastructure Equipment 650,000

Purchase of Infrastructure Equipment on
Deposit (Dharauti) 250,000
Temporary import of Infrastructure
Equipment for testing purpose 500,000
Total Import of Goods 1,400,000

Import of Services
From a party not registered outside Nepal 300,000
Total Import of Services 300,000
Total Purchase 4,735,000
* 20% of petrol purchased is used for running its machinery and rest others for vehicle.
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** This includes the items purchased through Abbreviated Invoice amounting to Rs. 50,000.
Amount mentioned are exclusive of taxes unless otherwise stated.
Answer the followings;
i) Opening VAT Receivable is Rs. 500,000. The company is on credit for continuous period
for last 7 months. Can the company claim refund of VAT?
ii) Opening VAT Receivable is NIL. Calculate VAT Receivable/ (Payable).
iii) The company paid VAT payable amount as computed under (ii) above on Kartik 25, 2072.
Compute the amount to be paid as VAT, Additional Fee under Section 19(2), Interest under
Section 26 and Fine under Section 29.

44. VAT Calculation: Guras international Trade Link, a proprietorship firm is a leading exporter of
jewelry. The trade link imports the glass beads and exports the jewelry made by the glass beads. It was
registered on 15 Jestha, 2068 in Inland Revenue Department. The books of account of the trade link
shows value added tax receivable Rs. 7 million at the end of Ashad, 2071. It has not produced any
application for refund. The details of the VAT receivable of Rs. 7 million are as follows:

Tax period Amount receivables

2068 Jestha Rs. 10,00,000.00
2068 Ashad Rs. 5,00,000.00
Total of 12 periods (2068 shrawan to Ashad, 2069) Rs.24,00,000.00

Total of 12 periods (2069 shrawan to Ashad, 2070) Rs.15,00,000.00

Total of 12 periods (2070 shrawan to Ashad, 2071) Rs. 16,00,000.00

Rs.70,00,000.00
Further information:
The following issues are not adjusted till Ashad end, 2071.

 In the month of Shrawan, 2071, the trade link found the missing invoice of Rs. 1,50,000.00 dated on
14 Shrawan 2070 during the tax auditing.
 In the month of Ashad, 2069, the trade link imported goods of Rs. 20, 00,000.00 but the Custom
officer could not determine the transaction value of the goods and asked the link to deposit the amount
on the declared value. The declared value of this transaction was determined on 15 Mangsir 2070.

45. VAT Calculation: XYZ Ltd. exported goods worth Rs. 15,000,000 that contained the taxable and non-
taxable goods at a ration 8:7. The company also had sales in the domestic market worth Rs. 31,625,000
that contained taxable sales of Rs. 29,625,000 and the rest is non- taxable sales. Besides, the domestic
taxable sales included Rs.14,125,000 sold through abbreviated tax invoice.
The company paid VAT on purchase of taxable Goods Rs. 30,00,000 and on taxable service Rs.
200,000. The opening input credit of VAT carried forward is Rs. 300,000.
From the above information, calculate the following:
i) Statement of taxable and non-taxable sales; and
ii) Statement of VAT receivable or payable at the end.

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 Value Added Tax
46. Circumstances beyond Control: Binita is a proprietor of a VAT registered firm. For the month of
Shrawan 2073, she has collected VAT of Rs. 300,000 which she has to deposit within 25th Bhadra,
2073. But on Bhadra 10, 2073, she has delivered a baby boy due to that she could not deposit the VAT
amount within Bhadra 25. The tax officer wants to levy additional fee of 10% per annum on her. She
has submitted an application to Director General, Inland Revenue Department on Bhadra 26, 2073 for
waiver of additional fee levied by the tax officer as the non-payment of VAT was due to the
circumstances beyond her control. Can Director General waive that additional fee levy imposed by the
tax officer? Give your opinion.

47. Answer the following questions.

i) Appeal: An Inland Revenue Officer has passed Assessment Order under section 23(ga) of Value
Added Tax Act. The order states that goods sold by the firm is under invoiced. Consequently the
firm is ordered to pay additional tax, fine and fee for the under invoiced amount. The proprietor of
the firm is considering to file petition in the Revenue Tribunal. Advise the firm.

ii) Registration: Best Computers (P) Limited filed statements which included following:
 Purchases Rs. 52 lacs
 Sales Rs. 22 lacs.
 Rent Rs. 84 thousands
 Telephone expenses Rs 24 thousands.

The Inland Revenue Officer has served notice for not registering under VAT. Advise the company.

48. Loss of Goods: State the provisions of the Act for set off VAT for losses of goods due to fire.

49. Penalties: What are the penalties mentioned in section 29 of the act on the following infringements:
i Registration as mentioned in section 10(1) and (2) related infringement.
ii An unregistered person issuing an invoice or documents showing collection of tax.
iii On obstruction in inspection by a tax officer.
iv On infringement of the VAT act and the rules.
v To erase and edit the data in software of approved Electronic Billing System

50. Market Value: Elaborate the provisions relating the market value and its determination under VAT
Act.

51. Market Value: What is market Value as per Value Added Tax 2053? Mention the relevant provision
applicable to market Value as per Value Added Tax 2053?

52. Assessment: Can tax officer assess the tax under Value Added Tax 2058? List out the situations under
which the tax officer may assess the tax.

53. Recovery of VAT Dues: With the VAT Return Poush end 2073, XYZ Securities service Pvt. Ltd.,
VAT due is NPR 12 crore. IRD has information several times (previous months return) to pay the Vat
due in time but the management of the company didn‘t pay any amount until the months of Falgun end,
which is increased by NPR. 4 Corer with return of Magh end 2073. On the 1st Chaitra 2073 IRD request
to Nepal Rastra Bank to hold the Bank account of XYZ Securities service Pvt. Ltd. for three months
and NRB issued letter to Delta Bank to hold Bank account for three months with request of IRD. Can
IRD hold the bank account of XYZ Securities service Pvt. Ltd., due to nonpayment of Vat in timely?
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 Value Added Tax
54. Assessment: What are the powers given to the tax officer under sec 23(2) of VAT Act for the purpose
of making an assessment under sec. 18 and sec. 20?

55. Appeal on Disallowed of VAT: Mr. Kamal, a registered dealer, had purchased Rs. 500,000 worth of
materials from M/s Eastwood Private Limited, a registered dealer through a VAT bill. During VAT
audit, the tax officer says that Eastwood Private Limited has not deposited the VAT amount collected
on the bill and hence credit for Rs. 65,000 VAT paid on that purchase cannot be given. Explain the
course of action to be taken by Mr. Kamal and his obligations under the VAT Act.

56. Write short notes on the following considering the provisions of Value Added Tax Act.
a) VAT credit in case of purchase under finance lease.
b) VAT assessment in doubtful conditions.

57. Books and records: What are the types of accounts and records to be kept by a taxpayer under VAT
Act, 2052? What are their contents?

58. Books and records: What are the records to be maintained by registered dealer dealing in used or
second hand materials?

59. Debit and Credit Note: Discuss the provision of Debit and Credit Note in VAT Rules.

60. Discuss about rights of the tax officer.

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