Kathmandu. The government-to-be-formed Alternative Development Finance Company is going to take deposits from banks and financial institutions. Keeping in mind individual and institutional depositors, the fund has proposed an exemption in income tax.
The bill prepared by the Ministry of Finance to make provisions for the mobilization of alternative development finance has announced an exemption in income tax to be received by individual and institutional depositors.
Development Finance has come up with a tax exemption measure to take deposits from banks and financial institutions. Under Chapter 7 of the proposed bill, Section 28 has made provisions regarding incentives for investors.
In which it is mentioned that married couples will not be taxed on income up to 2 lakh rupees when they deposit money in the fund. Sub-section 1 states, ‘An investment of up to Rs 200,000 annually by an individual or couple in various financial instruments issued by the fund shall be 100% tax exempt when calculating the taxable income of such amount.’ That is, currently, when keeping the amount in a fixed term, the government has to pay 5% income tax on the total interest income. However, it is mentioned that couples investing in this fund will not have to pay tax on their annual income of up to Rs 200,000. However, it has been stipulated that such investment should be maintained continuously for at least three years.
Similarly, Sub-section 2 proposes a 50% interest tax exemption for institutional investors. The section states, ‘If an institutional investor or corporate body investing in various financial instruments issued by the fund invests up to twenty percent of the retained income after deducting income tax, the income received from such investment will be exempted from tax up to fifty percent when calculating income tax.’ According to this provision, now institutional depositors have announced an income tax exemption of up to 50 percent on the income received while investing in the fund. This will benefit institutional investors by depositing money in the fund itself rather than depositing it in a bank. The fund has come up with a new way to attract institutional investors’ money.
The Ministry of Finance is currently preparing to finalize the bill. This provision is seen to take away the business of banks and financial institutions. According to data from the Nepal Bankers Association (NBA), deposits in commercial banks have reached Rs 603.7 billion as of the month of Falgun, while loan investments have reached Rs 485.1 billion.
प्रतिक्रिया दिनुहोस्