What is Withholding Tax?
Withholding Tax is an advance tax deducted at the source of income. In simple terms, when a person or entity (the payer) makes a payment to another person or entity (the payee), a certain amount of tax is deducted and paid to the government on behalf of the payee. This tax is deducted at the time of payment for various transactions, such as salaries, rent, dividends, professional fees, and payments to contractors. The deducted amount is then deposited with the Inland Revenue Department (IRD) of Nepal.
How to Check Withholding Tax in Nepal Through the IRD Portal
To check your withholding tax details in Nepal, you can follow these steps using the Inland Revenue Department’s (IRD) online portal:
Step-by-Step Process to Check Withholding Tax
- Visit the IRD Website:
Go to the official Inland Revenue Department (IRD) website: www.ird.gov.np.
- Access the Taxpayer Portal:
On the homepage, click on the “Taxpayer Portal” link, which will direct you to the online services provided by IRD.
- Log In to Your Account:
If you already have an account, log in using your User ID and Password.
If you do not have an account, you may need to create one by registering your Permanent Account Number (PAN) and following the instructions.
- Navigate to Withholding Tax Information:
Once logged in, look for the option labeled “Withholding Tax Details” or a similar link related to tax details.
Click on this link to view the withholding tax transactions and details.
- Enter Necessary Details:
You may be asked to enter specific details, such as your PAN number, the period you want to check, or other relevant information.
Fill in the required fields and submit your request.
- View Withholding Tax Records:
The system will display your withholding tax details, including the amounts deducted, transaction dates, and payers’ names.
You can review the records to ensure all deducted taxes are correctly reported.
- Download or Print Records:
If needed, you can download or print a copy of your withholding tax statement for your records or further verification.
Key Points to Remember
Withholding Agents: The entities responsible for deducting and paying withholding tax to the IRD are known as withholding agents. These can be employers, banks, businesses, or any other entity making taxable payments.
Tax Credit: The withholding tax deducted is treated as an advance tax payment and can be credited against your total tax liability when filing your annual tax return.
Verification: Always verify that the withholding tax deducted from your income is correctly deposited with the IRD. You can cross-check using the portal to ensure there are no discrepancies.
Importance of Withholding Tax
Revenue Collection: It ensures the government receives tax revenue in advance.
Tax Compliance: Encourages taxpayers to comply with tax laws by making the deduction process automatic.
Reduced Burden: By paying tax in advance, the taxpayer’s year-end tax liability may be reduced, making the overall tax management easier.
This process helps individuals and businesses in Nepal keep track of their withheld taxes and ensures transparency in tax transactions.
