Types of Assessment Under Income Tax Act 2058

Introduction

The procedure of establishing the amount of tax liability that an assessee or taxpayer is responsible for is referred to as an assessment. The term “assessment” is defined by the Income Tax Act, 2058 as an assessment of tax that must be paid in accordance with this Act, and it also includes an assessment of interest and penalty that is made in accordance with this Act. The Income Tax Act of 2058 outlines three distinct ways for determining tax liability: self-assessment, jeopardy assessment, and revised assessment.

1.    Self-Assessment

Section 100 of the Income Tax Act,2058 contains the provisions regarding the Self- Assessment Tax. The taxpayer is responsible for determining their tax burden when using the self-assessment method. The method of self-assessment is the primary emphasis of the Income Tax Act, 2058. When a person files a return of income for an income year by the due date for filing, an assessment is considered to have been made for that income year. Every assessment will be a self-assessment in accordance with this Act.

Even if a person misses the deadline for submitting their return, they are still considered to have made an assessment on the deadline for filing their return, and the amount of tax that they are responsible for paying is equal to the total amount of tax that was withheld and tax that was paid in instalments.

2.    Jeopardy Assessment

Section 100 of the Income Tax Act,2058 has specified certain circumstances under which the Inland Revenue Office may order a taxpayer for Jeopardy assessment. The circumstances are as under:

• The person or the taxpayer becomes bankrupt, is wound up, or goes into liquidation.
• The taxpayer is about to leave Nepal Immediately.
• The taxpayer is about to cease his business activities in Nepal.
• The IRO considers any other circumstances as appropriate for the order.

When a notification is sent to a taxpayer from the IRO, the taxpayer is obligated to file a tax return for the period that is outlined in the notice. The Department is required to grant an opportunity to produce proof, if any, in its own favour while making a jeopardy assessment.

3.    Amended Assessment

As per Section 101 of the Income Tax Act, 2058, tax officials have the authority to conduct amended assessments to alter the assessed person’s tax due. While making the amended assessment it should be done in as per the best judgement of the Department which is compatible with the intent of the Act. Within a period of four years, the Department may, in accordance with its best judgement, modify an assessment any number of times that it deems appropriate.

If the assessment is incorrect due to fraud, the Department may amend an assessment at any time (the period of four years does not apply). However, the assessment needs to be finished within a year after receiving the information. On the other hand, the Department is not permitted to change an assessment if it has previously been changed or lowered in accordance with an order issued by the Revenue Tribunal or a court of competent jurisdiction, apart from situations in which the order is reopened.

Conclusion

To sum up, the assessee is responsible for his own self-assessment, but the tax authority is responsible for jeopardy and amended assessment, which are assessments based on tax authorities’ judgement.