Major Changes by Finance Ordinance 2067 In Value Added Tax (VAT) Act, 2052

 1. Amendment in list of the Business to be registered to VAT – Section 10(2) – Amendment

•  The business of a person is taxable or is of hardware, sanitary, furniture, electronics, marble, educational consultancy, disco theque, catering service, party palace, parking service, dry cleaners using machine, restaurants with bar and color lab within jurisdiction of the metropolitan, sub-metropolitan, municipality or in area specified by IRD is required to file application for Vat registration in the specified format within 30 days of the effectiveness of the provision or start of business.- Additions Highlited
  

   2. Search, seizure and deposit – Section 23 (Gha), Amendment
  

   Seize the bank account of tax payer up to 3 months. But with the prior permission of Director General, bank accounts could be seized for additional 3 months if in case tax assessment procedure not completed. - Gha
  

   
   

  3. Tax refund from the custom point in case of Re-export - Section 25(b) - Addition 
  

• Based on the proof of the re-export of the goods, Vat kept as deposit at the custom point to the extent of re-export shall be refunded from the specified custom point.
  
• 4. Fine in case of use of defective Software for Computerized billing– Section 29 (1Tha) – Addition
  
• If taxpayers have obtained approval to use the computer billing system uses the software system with the facility of the deletion and modification shall be imposed fine of NRs. 5 lakhs.
  

  Changes to Schedule 1 of VAT Act, 2052
  

  Vat Exempt Goods
  

• Group 3: Live Animals and animal products – Addition
  
• Metal barrel, sheet to control Queen Bee, bee brush, main hive roller, gear pump & wheel place and machine of bee keeping business, honey purifier and liquid purifier etc imported for bee keeping activities. – 3 (b)
  
• Group 5: Medicine, Medical and Similar Health services – Addition
  
• a. Plastic of blood, transfusion set, testing kits, reagent & blood testing, reagent building equipment & chemicals imported in Nepal by Nepal Red Cross Society.- 5 (b) 
  
• b. Equipment used for treatment of kidney related disease. – 5(gna)
  
• c. Equipment (heading 90.18 and 90.27) used by pharmaceutical industries and hospital for research and development on the recommendation of Drug department. – 5 (cha)
  
• d. Raw materials used to produce intraocular lens – 5 (cha), Removed
  
• Group 9: Passengers and goods transportation services – Addition
  
• Cargo service for export purpose
  
• Group 11: Other goods or services – Addition
  
• a. Agricultural product storage facility provided in Cold Storage. – 1
  
• b. Reinsurance Business – 3
  
• c. 50 percent of VAT collected from the vat registered customers on sale of the mustard oil, vegetable ghee, refined eligible oil produced by the national industrialist involved shall be refunded as specified by IRD. However, such facility shall not be availed by the packing industries bulk import of the refined oil and sale of them after packing (refilling) activities. - 21