Advance Tax category

The Nepal Advance Tax categories are Tax Withholding Categories for advance income tax withheld on capital gains rather than ordinary payments. The demo has five: Property 5 Years or More 7.5%, Property under 5 Years 10%, Shares over 365 Days 7.5%, Shares up to 365 Days 10%, and Involuntary Disposal 2.5%. When the company sells land, a building or listed shares, the buyer, land office or broker withholds this percentage of the gain for the IRD. On your side it is a prepaid tax asset, not an expense: record it to TDS Receivable - YFF and set it off against the year's income tax. Check the purchase date, because the wrong holding band changes the rate by 2.5 points.

Advance tax = Capital gain x rate / 100; gain of Rs 2,00,000 on shares held 200 days x 10% = Rs 20,000

1. 01Go to Taxes > Tax Withholding Category and open the matching Nepal Advance Tax category.
2. 02Check the rate for the holding period: 10% up to 365 days, 7.5% over.
3. 03Go to Invoicing > Journal Entry > New and record the sale as in the entry below.
4. 04Put the withheld tax on TDS Receivable - YFF and attach the broker or office certificate.
5. 05Submit. The advance tax sits as an asset until the annual income tax return claims it.

Pick one when recording a gain on sale of land, buildings or shares; the amount withheld is a prepaid tax asset.

Selling shares held 200 days: 10% advance tax on the gain under Shares up to 365 Days; over a year it is 7.5%.