The obligation for entities with an annual turnover of up to Rs 250 million and other taxpayers to submit their income statements by mid-December has been lifted with immediate effect.
The Patan High Court issued a short-term interim order in response to a writ petition jointly filed by advocates Srijana Adhikari and Swastika Dangal along with Nepal Taxpayers Society President Tika Karki and Chartered Accountant Shailendra Upreti. The court ordered the Inland Revenue Department (IRD) not to implement its decision to refuse an extension for income statement submission deadlines for taxpayers in this category.
Section 98 of the Income Tax Act, 2058 BS, allows the department to extend the deadline for submitting income statements by up to three months, either once or multiple times. However, the IRD decided in the month of Asoj (mid-September to mid-October) not to extend the deadline for sole proprietorships with annual turnovers of up to Rs 10 million and entities with zero turnover. It also announced that for taxpayers with turnovers up to Rs 250 million, the deadline would be extended only until mid-December. For those with turnovers exceeding Rs 250 million, the deadline would only be extended until January 4.
The writ petitioners argued that this decision contradicted the facilities provided under the law. The petition named the Ministry of Finance, the Office of the Prime Minister and Council of Ministers, and the IRD as defendants. In its interim order, the court directed the IRD to maintain the previous practice of allowing extensions until the final hearing on the case.
Chartered Accountant Shailendra Upreti explained that while tax offices were accepting applications, they were not granting extensions. “This created a situation where deadlines were not extended despite the law allowing it. The court’s order ensures that income statements can be submitted as in previous years until the case is resolved,” Upreti said.
A single bench of High Court Judge Hemant Rawal stated that the defendants must provide a written response within 15 days, excluding travel time, if they have any basis or evidence to oppose the petition. The court also issued a short-term interim order under Rule 42 of the High Court Rules, 2073 BS, directing the IRD not to immediately enforce its notice dated September 23, 2024.
The order further instructed the defendants to inform the court of their compliance and issued summons for discussion within 15 days. This interim order preserves the status quo, allowing taxpayers to submit their income statements as per the previous arrangement.