Returns of Income and Assessment of Tax Flashcards

Vocabulary flashcards covering key definitions and concepts regarding returns of income, tax calculations, and assessment types under the Income Tax Act, 2058.

Assessable Income

The income a person earns from business, employment, investment, or windfall gains during an income year under the Income Tax Act, 2058, including worldwide income for residents and Nepal-source income for non-residents.

Taxable Income

The end-point figure that actually attracts tax, calculated using the formula: $\text{Taxable income} = \text{Assessable income} - \text{deductions under Sections 12, 12A, 12B, and 63}$.

Exempt Income

Income that is completely excluded from the initial calculation of assessable income rather than being added and subsequently deducted.

Tax Assessment

The process of determining the tax liability of an assessee or taxpayer under the Income Tax Act, 2058, which includes assessing tax, interest, and penalties owed, but excludes assessments replaced by amended assessments.

Self-Assessment

A tax collection system emphasized by the Income Tax Act, 2058, where taxpayers calculate and report their own tax liabilities, which are deemed assessed on the filing due date (Section 99).

Jeopardy Assessment

An official tax assessment conducted by tax officials under Section 100 in special circumstances, such as when a taxpayer goes into liquidation, is about to leave Nepal indefinitely, or ceases activity in Nepal.

Amended Assessment

A formal re-evaluation conducted by tax officials under Section 101 according to their best judgment to adjust a tax liability so it aligns with the intent of the Income Tax Act, 2058.

Return of Income

A signed declaration by a taxpayer or their authorized manager in the prescribed format detailing total income and tax liability for an income year, required to be filed within three months after the income year ends under Section 96.

Extension of Time to File Return

A provision under Section 98 where a taxpayer submits a written request by the due date, allowing the tax office to grant single or multiple filing extensions totaling no more than three months for reasonable cause.

Rs 40 Lakhs Mandatory Return Limit

The annual income threshold above which filing a return of income becomes mandatory for an individual, regardless of standard exemption categories under Section 97.