KATHMANDU, Dec 28: The Kathmandu Metropolitan City (KMC) has sent a letter to government-owned entities and social organizations registered in the name of institutions that are operating businesses, instructing them to pay taxes.
In the first phase, letters have been sent to organizations such as Agriculture Materials Company Limited, Kuleshwar, Pashupati Area Development Fund, Marwadi Sewa Samiti, Phaskhel, New Road, and Food Management and Trading Company Limited. These companies have been instructed to pay property tax and rent tax, according to Deepak Adhikari, head of the Revenue Department.
"According to constitutional and legal provisions, the rent tax on rental income must be paid to the local government," says Adhikari, head of the department, stating that there should be no confusion among taxpayers regarding the rent tax.
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According to Article 57(4) and Schedule 8 of the Constitution of Nepal, the collection of house rent tax falls under the sole authority of local governments. Article 60 of the Constitution allows local governments to impose taxes and collect revenue within their economic jurisdiction.
Section 57 of the Local Government Operations Act, 2074 BS states that if any individual or institution rents out a building, house, shop, garage, warehouse, shed, factory, land, or pond, either fully or partially, within the jurisdiction of a rural municipality or municipality, the respective rural municipality or municipality will impose rent tax. According to this provision, the municipality has the sole authority to collect taxes on rental income within its jurisdiction.
Along with this, Section 3(3) and Schedule 3 of the Intergovernmental Fiscal Arrangement Act, 2074 BS, allow local governments to impose house rent tax according to local laws. The Revenue Act, 2075 BS, issued by the municipality, along with Chapter 4 of the Economic Act and the House Rent Management Directive, 2079, provides provisions for collecting rent tax on buildings, houses, or land rented out by individuals or institutions within its jurisdiction.
The Kathmandu Metropolitan City (KMC) has issued the Revenue Act, 2075, in accordance with Subsection (1) of Article 226 of the Constitution of Nepal and Section 102 of the Local Government Operations Act, 2074 BS, to manage rent arrangements. According to the Constitution, the municipal assembly has been imposing rent tax on rental income from all taxpayers, following the rates set by the annual financial act.
