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Protect your enterprise from massive short-stock liabilities and preserve valuable input tax credits. Our expert business consultancy Kathmandu guides you through the rigorous legal documentation and filing procedures required for an official Application for Loss of Goods, maintaining absolute compliance with IRD directives.
₨ 10,000.00
Under the provisions of Nepalese indirect tax laws, any missing inventory that cannot be physically accounted for during an audit is automatically deemed by tax authorities to have been sold without a tax invoice. To counter this automatic assessment and legally adjust your accounts, an entity must file a formal Application for Loss of Goods. Procedurally, the taxpayer must systematically gather formal third-party evidence—such as police accident briefs, insurance surveyor evaluations, or fire damage reports—and log a digital claim through the tax portal, allowing the Inland Revenue Department (IRD) to formally inspect and verify the physical short-stock before modifying input tax parameters.
Pursuant to Section 17 of the Value Added Tax Act, 2052, read in conjunction with Rule 40 and Rule 41 of the Value Added Tax Rules, 2053, registered entities can claim a credit or reduction for input tax paid on goods that have been stolen, lost, or destroyed due to force majeure (such as fire, theft, or transit accidents). To legally exercise this adjustment, the taxpayer is strictly required to submit a physical or digital Application for Loss of Goods to the concerned Tax Officer within 30 days of the occurrence of the event. According to the Inland Revenue Department Directives, the application must be backed by unalterable corporate records, including your official Purchase Register (खरिद खाता), a formal police report (मुचुल्का), and corresponding insurance claim filings to validate that the items were never commercially supplied.
Failing to submit a timely application or neglecting to report physical short-stock to the local Inland Revenue Office (IRO/LTO) triggers immediate punitive actions under Chapter 8 of the Act. If a discrepancy between the physical stock and the Sales Register (बिक्री खाता) is uncovered during an IRD inspection without an approved loss claim, the Tax Officer will deem those items as a hidden sale at market rates. Pursuant to Section 29(2), this results in a penalty of 100% of the tax amount hidden on those items, alongside a mandatory interest rate of 15% per annum under Section 26 for unpaid output tax liabilities. Furthermore, making a false declaration regarding the status or destruction of inventory triggers severe prosecution, including fines up to 200% of the tax amount or up to six months of imprisonment under Section 29, completely blocking the entity’s Tax Clearance Certificate (कर चुक्ता).
