Obtaining Tax Clearance Certificate in Nepal



The infographic depicts the process of obtaining tax clearance certificate from Inland Revenue Office.  A taxpayer has to go through a number of steps before he finally obtains tax clearance certificate. Out of all the steps, some of the steps seems redundant and they can be clubbed into a single step without affecting the efficiency of the entire system. For example the Dues section checks if any previous dues are left or not. If previous dues are left, the tax payer has to go the bank and pay the due amount, and present a photocopy of the payment slip at tax office. Again, the Tax payment Unit, verifies if the self- assessed tax amount payable by the tax payer is correct or not. If the self- assessed amount is lesser that the amount to be actually paid, the tax payer again has to go to the bank and pay the remaining amount and bring a photocopy of the payment slip.

Here, we can see that if a taxpayer has his previous dues left and if his/her self- assessed tax amount falls short of what is actually to be paid, he/she has to go to the bank twice. If checking previous dues and correcting the self- assessed tax amount can be done in a single step, the taxpayer would be spared from having to visit bank twice for similar purpose. This will reduce total time required to pay taxes and will also make tax payment process more easy and convenient.

Currently, a taxpayer has to allocate an entire day for obtaining tax clearance certificate (given no previous dues are left and self- assessed tax amount is correct). But, if previous dues or left and/or self- assessed tax amount is incorrect, it can take up to 2- 3 days to obtain tax clearance certificate. The large amount of time required for just paying taxes and obtaining tax clearance certificate has increased the cost of doing business. Therefore, it is essential to reduce the number of processes and time involved in obtaining tax clearance certificate so that entrepreneurship would not be discouraged.

Ashesh Shrestha

About Ashesh Shrestha

Ashesh Shrestha is an independent researcher. He has an Economics background and is interested in Monetary economics and Public finance.