CIT begins deducting 15% income tax from gratuity
By CK Khanal
Kathmandu, Nov. 1: The Citizens Investment Trust (CIT) has started to deduct 15 per cent income tax to the gratuity amount of the employees of the private and government corporations effective from current fiscal year 2018/19
Earlier, the CIT used to deduct only 5 per cent income tax in the gratuity amount that the corporation and private companies used to deposit in the name of their employees in the CIT.
“Earlier, we used to deduct only 5 per cent tax from the gratuity amount of the employees of the corporations/companies as in the case of the government employees getting gratuity from the government treasury, but from this fiscal year we started to deduct 15 per cent tax as per the direction of the Inland Revenue Office of the government,” said Sushil Kumar Aryal, spokesperson of the CIT.
He said that the 15 per cent income tax was deducted after the revenue office clarified regarding the provision in Income Tax Act 2058. He said that the revenue office had not made any complaint regarding the deduction of 5 per cent tax from the gratuity amount of employees in the past.
He, however, said that they were deducting only 5 per cent tax to the amount collected by the individuals in the CIT.
Due to the hike in the tax rate from 5 per cent to 15 per cent, the employees from the same corporation in the difference of one week were charged different tax rate.
A senior level officer retired recently from the Corporation said in the condition of anonymity that he received Rs. 250,000 less gratuity amount than his co-workers who retired one month before him due to the difference in the tax rate.
Bishnu Prasad Nepal, director general of the Inland Revenue Department, clarified that the 15 per cent tax rate was imposed as per the provision of Income Tax Act 2058, and it was not the hike in the tax rate.
“Imposition of only 5 per cent tax rate was due to the confusion of the CIT which we made clear and now it started deducting the tax as per the law,” he said.
He said that any employee could deposit whatever amount of money at the CIT without paying income tax, therefore, such employees would not be allowed to pay only 5 per cent tax from the money collected in the CIT and should pay 15 per cent.
He said that the Income Tax Act 2058 has not made any different treatment in the rate of income tax whether it was paid by the employees during their job or after the retirement.
He, however, said that the law had ensured for not imposing double taxation.
The Media Council Bill that the government has registered in the National Assembly has been dragged into controversy. Media workers have also been divided...