When it comes to calculating your tax deductible expenses, there are plenty of reasons for you to panic. In the first sight Nepalese tax law may not appear too complex or large to be grasped by any professional; however there are ambiguities in tax law that results in differing opinions between you, your consultant and the tax office. Once you submit your tax returns, there is no opportunity for you to revise it even in case you identified an error. So, often lack of proper tax knowledge can lead you to unintentional non compliance with tax laws, ultimately leading to undesired penalties and interest. Therefore, it is important to get it right at the very beginning.
So, the only way for you to minimize your tax risks, is to be sure on your tax deductions. Here are some tips that could be useful for you.
Complete your Statutory Audit in time
Sounds simple! But having extra time to prepare and review your tax returns and tax related documents means you will have time to extract additional details from your branches to ensure correct figures are claimed and to make additional consultation in tax office or with your tax consultants for any confusions. As it goes with the proverb ‘Hurry Burry spoils the curry’, piling up your tax works for ultimate deadline may lead up to possible errors in your tax returns.
Obtain written opinion on complex matters
Opinion over phone may be cheap for you, but acting on them may be costly. So, if you are consulting with your tax consultant on tax deduction that is not clear from plain reading of tax law, ask your consultant to give his written opinion. Remember, your tax auditor has certified your tax return doesn’t mean he agrees to deductions that you have claimed. Written opinions are not given without adequate homework and it will help you to defend your case in tax office or in revenue tribunal.
Go for advance ruling
Just the way it applies for opinion from consultants, asking a tax officer may not be sufficient. You need an advance ruling to be sure of tax treatment proposed to be undertaken. Advance ruling is a ruling issued by the tax department to a taxpayer in anticipation of a proposed transaction. The ruling provided to you is binding on the tax department if you have made a full and true disclosure to the Department of all aspects of the arrangement relevant to the ruling; and the arrangement proceeds in all material respects as described in your application for the ruling. The procedure for it is simple- you just have to write an application to tax department giving the details of tax related confusions or the arrangement proposed or entered into. Rulings are normally issued unless the matter is before court or have already been decided by the court.