Kathmandu. A company operating a digital wallet has evaded tax of about Rs 2.75 crore.

The 63rd report of the Auditor General has exposed this tax evasion. The Comptroller and Auditor General has directed the government to determine the exemption tax of Rs 1,71,76,000 along with interest and fees.

Schedule 1 of the Income Tax Act, 2058 has provisions regarding tax rates. Clause 2 of the same Schedule mentions the rate of tax levied in the case of an entity.

According to the report, the taxpayers operating a digital wallet under the Large Taxpayers’ Office (LTO) with a license from the Nepal Rastra Bank (NRB) had submitted separate income statements at the rate of 25 percent tax in the fiscal year 2080/81. Section 11 (3) (a) of the Income Tax Act, 2058 states that the IT industry has provided direct employment to more than 300 people and paid 20 percent tax exemption by taking 80 percent tax exemption.

The taxpayer has paid 20 percent tax stating that he has done recharge card transaction but has been recharging using the amount in his wallet while doing recharge card transactions. As the Finance Act of the fiscal year 2080/81 states that such services are covered under financial transactions and the income is taxed at 30 percent, only 20 percent tax has to be paid while getting exemption as per Section 11 (3) (a).