- annual interest on unpaid tax
- 15%
- amnesty deadline
- Poush 2083
- charges for late filing
- 2
What a late return costs
Two separate charges apply:
Section 117 fee for failing to file on time, calculated on assessable income with a minimum amount.
Section 119 interest at 15% a year on tax not paid by the due date, counted for each month or part of a month.
Penalties for false statements or evasion are separate and much larger. Interest keeps running until the tax is paid, so delay always costs more.
The 2083 amnesty
The Finance Act 2083 opened a time-limited window, ending in Poush 2083, for taxpayers with:
returns not filed for earlier years,
tax shown as due but unpaid, and
in some cases, pending disputes over income tax, VAT or excise.
As published in tax-firm summaries of the Finance Act 2083, the relief works in three ways:
| Who | What they do | What is waived |
|---|---|---|
| PAN holders with unfiled returns or unpaid tax | File every outstanding return and pay the tax plus an additional 1% by the end of Poush 2083 | Fees and interest |
| People who should have had a PAN but never registered, and dormant PAN holders | Register or reactivate, file and pay by the same date | Fees and interest |
| Taxpayers with a pending income tax, VAT or excise assessment or case | Pay the assessed principal plus 1% by the same date | Interest, penalties and fees, with some sector exceptions (reported for telecom) |
Other windows run on different dates: resident staff of UN bodies, international organisations and diplomatic missions have their own window closing at the end of Mangsir 2083, and the Company Registrar ran a separate amnesty for late company annual returns that closed in Ashoj 2083.
The "1%" is described differently across sources, as a fee, an additional amount or an extra payment. The base it applies to also differs by case. Read the enacted section and the IRD public notice, and take the figure from your own file, before you rely on it.
Who should act now
Businesses with non-filer status on the IRD portal for any past year.
Owners who stopped filing after closing a business but never cancelled the PAN.
Companies with an assessment under administrative review or at the Revenue Tribunal, where settling may cost less than continuing.
Anyone a bank has asked for a tax clearance certificate but who cannot get one because of old dues.
How to prepare
Download your ledger from the IRD taxpayer portal and list every year with a missing return or unpaid balance.
Rebuild the figures for each missing year from bank statements and sales records.
Compare the two routes: paying under the amnesty or contesting the matter. For a disputed assessment, the amnesty is often cheaper even where you think you would win.
File and pay within the window, and keep the receipts and the acknowledgement.
Close what you no longer need: cancel unused PAN or VAT registrations so new defaults do not build up.
Where an assessment is already under dispute, see IRD assessment defence and the Revenue Tribunal appeal process.
Worked examples: what a settlement could look like
The following are illustrations with round numbers. Your facts, and the enacted text, decide the actual amounts.
Example 1: A shop that stopped filing. A PAN holder stopped filing income tax returns for two years. Assessed tax for the two years, computed from sales records, is NPR 4 lakh. Without relief, the fee and interest on this tax at 15% a year could add roughly NPR 1.2 lakh or more, depending on the dates. Under the reported amnesty, the owner files both returns, pays the NPR 4 lakh tax plus an additional 1%, which is NPR 4,000, and the fee and interest are waived. The saving is more than NPR 1 lakh, and the owner can then obtain clearance.
Example 2: A company with a pending assessment. The IRD assessed an additional NPR 50 lakh tax on a company, plus penalty and interest of NPR 35 lakh. The company is appealing. Under the reported dispute settlement, it could pay the principal of NPR 50 lakh plus 1%, which is NPR 50,000, and have the penalty and interest of NPR 35 lakh waived. Whether this is better than continuing the appeal depends on the strength of the case. If the company believes it will win, it may still prefer to contest, but the settlement removes uncertainty and cost. See defending a large IRD assessment.
Example 3: A person who should have registered. A consultant earned income for three years without registering for a PAN. The tax on that income is NPR 2.5 lakh. By registering, filing the returns and paying the tax plus an additional 1%, the consultant avoids the fee and interest that would otherwise run on each year.
In each case, the saving comes from the waiver of fee, interest and penalty, not from a reduction of the principal tax. The amnesty is not a general write-off: you still owe the tax.
How to decide whether to use the window
Ask these questions in order.
Do I owe tax I have not paid or filed? If yes, the window may help.
Is the amount certain? Compute the tax carefully. An error in the return filed under the window could create a new problem.
Is there a dispute? If an assessment is under review or appeal, compare the settlement cost with the likely outcome and the cost of continuing.
What conditions apply to my category? The relief differs for non-filers, PAN holders, disputes and certain sectors.
What do I lose by settling? In some cases, paying the principal ends your right to contest. Check the terms before you pay.
What do I gain beyond the money? Clearance, the ability to bid or borrow, and an end to the stress and time of a dispute.
If your answers point to using the window, plan the work backwards from the last date. Computing missing returns takes time, and the portal can be slow near the deadline.
A timeline for the last weeks of the window
| When | Action |
|---|---|
| Six weeks before the end of Poush | Pull the account from the portal, list the gaps and decide the route for each |
| Five weeks before | Compute missing returns and the tax; get supporting records |
| Four weeks before | Review the figures with an adviser; resolve questions about the "1%" base |
| Three weeks before | File returns and request any settlement orders; arrange the funds |
| Two weeks before | Pay, and keep proofs of filing and payment |
| One week before | Confirm that the portal shows the waiver or the settlement; correct anything wrong |
| After the window | Apply for clearance and update the registrations |
Last-minute rushes risk errors and missed steps, and the deadline in the Act is fixed. If you are unsure whether a payment or filing has been recorded, ask before the date passes.
What the amnesty does not do
It does not reduce the tax itself.
It does not protect against prosecution for serious offences such as deliberate evasion or fraud, unless the Act says so. Check the exclusions.
It does not extend to every sector or every tax. Some sectors, such as the telecom sector in reported provisions, are treated differently.
It does not remove the need to file future returns on time.
It does not guarantee that the IRD will not examine earlier years that are outside the window.
After the amnesty: keeping clean
Use the settlement as a reset. Put in place a monthly filing calendar, a named person responsible for each return, a reconciliation of VAT and TDS and an annual review of the tax position. See the tax calendar, filing your income tax return and tax clearance. We help clients assess whether the window is worth using, compute and file the returns, negotiate settlements and set up the routine that prevents a repeat. See tax services and IRD assessment defence. Amnesty provisions depend on the enacted text and on IRD notices, so confirm both before you act.
Questions people ask
Is the amnesty available for VAT? Reports say disputes over income tax, VAT and excise can be settled on the principal plus 1% within the window. Confirm how it applies to your VAT matter.
Do I have to withdraw an appeal to use it? Settlement terms usually require the case to end. Check what the order says.
Can I use it if I have already paid some interest? The treatment of amounts already paid depends on the provision. Ask the tax office, and keep receipts.
What if I miss the window? The normal fee, interest and penalties apply, and a new amnesty cannot be assumed.
Who can help? A tax adviser who has handled settlements can compute the position and deal with the office; ask for the basis of the calculation in writing.
A checklist for the filing pack
Whether you file alone or with an adviser, prepare the same pack so that nothing is missed in the final days.
The IRD account statement showing each year and tax type with a gap or balance.
Sales, purchase and bank records for each missing period, reconciled to each other.
The calculation of tax for each year, with the assumptions written down.
Copies of notices, assessments, appeals and orders for disputed matters.
A schedule of the proposed payments: tax, the additional 1% where applicable and any other amounts the order requires.
Evidence of the source of funds, in case the bank or the office asks.
A list of registrations to cancel or update after the settlement.
A record of every acknowledgement, receipt and order number.
Keep this pack for years after the settlement. If a later query touches the same period, the pack answers it quickly.
