Advance tax

Advance tax is income tax collected at the point of a particular transaction rather than withheld from a regular payment. The common cases are capital gains: the Land Revenue Office collects 7.5 percent on property held five years or more and 10 percent otherwise; brokers collect 7.5 percent on shares held over 365 days and 10 percent otherwise, all on the gain. Involuntary disposals carry 2.5 percent. BRAccount ships these as Nepal Advance Tax withholding categories so the rate is applied by rule when a document calls for it. For the business that bears the tax, the amount is a prepayment of its own income tax and sits in TDS Receivable until the annual return.

Advance tax = Gain on disposal x Rate (7.5% or 10% for property and shares by holding period, 2.5% involuntary).

1. 01Go to Taxes > Tax Withholding Category and open the matching Nepal Advance Tax category.
2. 02Check the rate and the account it posts to, then assign the category to the party on the document.
3. 03Record the disposal by Invoicing > Journal Entry > New: net bank receipt, asset at cost, gain, and tax withheld.
4. 04Submit. The entry posts for shares bought at Rs 2,00,000 and sold at Rs 2,40,000, tax 10 percent of the gain.
5. 05Keep the broker's or Land Revenue Office's receipt to claim the amount on the income tax return.

Rare for a trading business; pick the category on the document when it applies.

Advance tax on shares held up to 365 days.