Intergovernmental Fiscal Arrangement Act, 2074 (Nepal)

Vocabulary practice flashcards covering key terms, legal provisions, grant classifications, revenue-sharing ratios, and fiscal management rules from the Intergovernmental Fiscal Arrangement Act, 2074.

Intergovernmental Fiscal Arrangement Act, 2074

Act No. 21 of the year 2074, enacted under Article 296, Sub-article (1) of the Constitution of Nepal by the Legislature-Parliament to regulate revenue rights, revenue sharing, grants, loans, budget management, public expenditure, and fiscal discipline among the Government of Nepal, Provinces, and Local Levels.

Deficit Budget (घाटा बजेट)

Under Section 2(ख), a budget formulated such that total expenditure exceeds the sum total of revenue and grants.

Commission (आयोग)

Defined under Section 2(क) as the National Natural Resources and Fiscal Commission constituted in accordance with Article 250 of the Constitution of Nepal.

Single Tax Administration for Vehicle Tax

Under Section 5(1)(क), vehicle tax rates are determined and collected by the Province; however, on tangas, rickshaws, auto-rickshaws, and electric rickshaws, the rates are determined and collected by the Gaunpalika (Rural Municipality) or Municipality.

Shared Local Taxes Revenue Distribution

Under Section 5(2), the revenue collected from house and land registration fees, entertainment tax, and advertisement tax is allocated with $60\%$ deposited into the Local Consolidated Fund and $40\%$ deposited monthly into the Provincial Consolidated Fund.

VAT and Domestic Excise Duty Sharing Ratio

Under Section 6(2), proceeds collected in the Federal Divisible Fund from Value Added Tax (VAT) and domestic excise duty are distributed as $70\%$ to the Government of Nepal, $15\%$ to the Provinces, and $15\%$ to Local Levels.

Vehicle Tax Sharing Ratio

Under Section 6A(2), revenue collected from vehicle tax deposited in the Provincial Divisible Fund is divided as $60\%$ to the Provincial Government and $40\%$ to Local Levels.

Fiscal Equalization Grant (वित्तीय समानीकरण अनुदान)

Under Section 8, a grant distributed by the Government of Nepal and Provinces based on expenditure needs and revenue capacity upon recommendation of the Commission.

Conditional Grant (सशर्त अनुदान)

Under Section 9, a grant provided by the Government of Nepal or Provinces to execute specific plans subject to criteria prescribed by the Commission pursuant to Article 251, Sub-article (1)(ग) of the Constitution.

Complementary Grant (समपूरक अनुदान)

Under Section 10, a grant provided for infrastructure development projects based on a ratio of the project's total cost, considering project feasibility, cost, returns, implementing capacity, and priority.

Special Grant (विशेष अनुदान)

Under Section 11, a grant provided by the Government of Nepal or Provinces for projects targeting basic services (education, health, drinking water), inter-provincial or inter-local balanced development, or the upliftment of marginalized and discriminated classes and communities.

Foreign Assistance Authority

Under Section 12, the exclusive authority to take foreign grants or foreign loans belongs to the Government of Nepal; Provinces and Local Levels are prohibited from taking foreign grants or executing projects funded by foreign assistance without prior approval.

Internal Borrowing (आन्तरिक ऋण)

Under Section 14, borrowing by the Government of Nepal, Provinces, and Local Levels within the limits recommended by the Commission; Provinces and Local Levels must obtain prior consent from the Government of Nepal before taking internal loans.

Medium Term Expenditure Framework (MTEF)

Under Section 17, a multi-year framework projecting public expenditure over the upcoming $3$ fiscal years, including project objectives, feasibility justifications, expected outcomes, and alignment with annual budgets.

Budget Presentation Deadlines

Under Section 21, the Provincial Finance Minister must present the revenue and expenditure estimates to the Provincial Assembly by Ashadh 1 (असार १ गतेभित्र), and the Village/Municipal Executive must present it to the Village/Municipal Assembly by Ashadh 10 (असार १० गतेभित्र).

Prohibition on Administrative Deficit Budget

Pursuant to Section 23(4), a deficit budget cannot be presented to bear or finance administrative expenses.

Advance Expenditure (पेश्की खर्च)

Under Section 24, an expenditure authorization that allows the government to spend an amount not exceeding one-third ($\frac{1}{3}$) of the current fiscal year's expenditure estimates while the Appropriation Bill is under consideration.

Prohibition of Virement (रकमान्तर)

Under Section 29, funds allocated in the budget under capital expenditure (पूँजीगत खर्च) are strictly prohibited from being transferred or vired to recurrent/current expenditure (चालु खर्च).

Periodic Reporting Timelines

Under Section 32, Local Levels must submit their four-monthly (चौमासिक) income and expenditure statements to the Ministry and Province within $15$ days of period completion; Provinces must submit theirs to the Ministry within $30$ days.

Inter-Governmental Fiscal Council (अन्तर–सरकारी वित्त परिषद्)

A consultative and coordination body established under Section 33, coordinated by the Federal Finance Minister, comprising Provincial Finance Ministers, $14$ local level representatives, $3$ finance experts nominated by the Ministry, and the Secretary of the Ministry as Member-Secretary.

Schedule-4 Royalty Sharing Ratio

The distribution ratio for royalties derived from natural resources (mountaineering, electricity, forests, mines and minerals, water): $50\%$ to the Government of Nepal, $25\%$ to the concerned Province, and $25\%$ to the concerned Local Level.