Handbook

REGISTERING PROPERTY

The Nepalese Property (Land/ House) transaction is based on Deed System. Under the deeds system, the government does not guarantee peoples land ownership; government is just a witness to the land and building transaction. Property refers to anything that is owned, whether it is products, land, or intellectual property. It can be utilized or traded, and its ownership rights can be transferred through purchase, sale, or other means. Leasing land, renting a house/premise, and buying/acquiring land or a house are all relevant from the standpoint of a starting company. The entrepreneurs should register property for its validity and legal recognition in the Land Revenue Office.

(a)    With an annual taxable turnover of more than 2 million rupees.
(b)   Belonging to a conglomerate which has an aggregate annual taxable turnover exceeding 2 million rupees.

In Nepal, companies have to pay taxes in the form of Direct Taxes (Income tax, House and Land Registration Fee) and Indirect Taxes (Custom Duties, Value Added Tax and Excise Duties) when conducting the business. Taxes must be paid at all levels of federal government, local government and province. Duty and Customs must be paid at the federal level, whereas company taxes and rental taxes must be paid at the local level, and the province government collects motor vehicle taxes, entertainment taxes, and agricultural revenue.​​​​​​

Leasing and Renting a Land and House/Building
An entity can rent a property by entering into a land lease agreement pursuant to Section 620 of the Civil Code and by entering into a rental agreement pursuant to Section 386 of the Civil Code rent a house or flat or house or room for a house/building.

SN Entitlement Agency Time Cost Required Documents
1 Registration of Land Lease Agreement Land Revenue Office more than 10 years, maximum term of land lease for farming purpose is 20 years If the monthly rent exceeds NPR 100,000 such lease agreement must be registered with the land revenue office.
According to Section 386 of Civil Code, if the monthly rent is more than NPR 20 thousand, it is mandatory to enter into a rent agreement.
The person renting the house should paid the rent tax and arrange for insurance of the house.
  • Full name and address of the owner and of the tenant, their citizenship number, and passport or identification certificate, in the case of a foreigner.
  • Place and plot number of the land where the house is located.
  • Purpose for the rent
  • Date of commencement of rent
  • Validity period of rent
  • Monthly rent amount
  • Time and mode of payment of rent
  • Liability to pay tariffs of electricity, water, telephone, and such other utilities
  • Liability to pay house rent tax
  • Matters relating to insurance of the house
  • Matters relating to leaving the house and eviction of the tenant
  • Matters regarding sub-lease
  • Other necessary matters
1 Registration of Renting House/ Building Agreement Land Revenue Office Not more than 5 years but it does not apply if the house is being rented for commercial purpose

Buying/Acquiring a Land or House/Building

SN Process Document for Acquiring a land or House/ Building Fees and Taxes
1
  • Negotiation between Buyer and Seller.
  • Payment of local land taxes and local house/building at local level government(village municipality/municipality/sub metro municipality/ metro municipality).
  • Obtaining recommendation from related ward office. (This includes valuation and property characteristics of the land and house)
  • Execution of Transfer Deed by the Seller (Rajinama)
  • Payment of transaction amount by Buyer to Seller. (It is recommended to do this payment through ‘good-for-payment cheque)
  • Submission of all the necessary documents to related Land Revenue Office
  • Land Revenue Office verifies all the documents, and cross-checks with the official records (Moth Srestha)
  • Calculation and Payment of Registration Fees and Capital Gains Tax.
  • Verification and Approval of Transfer Deed by Land Revenue Office.
  • Land Revenue Office updates the record and issues new Land Ownership Certificate in the name of Buyer
  • The updated files are sent to Archive Section (Tameli) for recording.
  • Recommendation letter from related ward office.
  • Tax clearance voucher from local level government.
  • Board Minute and Power of attorney executed by the Company.
  • Document stating the income source of the Company. (The source of the Company can be capital raised from shareholders or loans taken by the Company or profit generated by the Company. If the source is generated through shareholders, the document can be capital injection approved by Office of Company Registrar. If the source is generated through loans, loan documents can be submitted. If the source is generated through profit, the document can be audit report of the Company.)
  • Audit Report of the Company. (This depends on practice of various Land Revenue Offices)
  • Tax Clearance Certificate of the Company.
  • Transfer Deed executed by the Seller. (Rajinama)
  • Receipt of payment of registration fees and Capital Gains Tax.
 Registration Fees is fixed through provincial law and vary from one province to another. For example; Bagmati Province Finance Act 2077 registration fee for transfer of title over land:
  • ForMetropolitan Municipality Area: 5% of transaction amount
  • For Sub - Meropolitian Area: 4.5% of transaction amount
  • For Municipality Area: 4%
  • For Village Municipality Area:2%
If the transaction is amount is exceed NPR 10 Lakh the capital gain tax is applied:
  • If the land being sold is owned by the Seller for period more than 5 Years: 2.5 %.
  • If the land being sold is owned by the Seller for period less than 5 years: 5%
  • If the Seller is a corporate entity, 1.5% CGT is applicable is any transaction, regardless of time of ownership.

Land Ceiling
The upper ceiling of the Land, which a person may own as landowner, is prescribed in Section 7 of the Land Act 2021 (the "Land Act"). The top limit of land that a person can acquire as a land owner on geographical location was set by section 7 of the land Act of 2021.

SN Location of Land Land Ceiling Required Documents for Land Ceiling
1 All Terai Regions 10 Bighas + 1 Bigha (for house and premises)
  • Details of the lands that the applicant is desirous of purchasing including exact location of the lands, area covered type of the land and other details that are available.
  • Registration Certificate of the applicant and other ancillary documents relating to the registration of said applicant.
  • Copy of renewal documents of the applicant
  • Copy of documents that reveal the nature, class and type of applicant that has been registered.
  • Memorandum of Association and the Articles of Association of the applicant
  • Tax registration of the applicant as provided by the Inland Revenue Department, copy of PAN Card of the applicant as well as its tax clearance certificate.
  • Copies of citizenship certificate (if Nepalese citizen) and passport of the founders and directors of the applicant.
  • Document containing details of the directors of the applicant along with document that furnishes proof of change in directors (if any).
  • Copy of decision of the board of directors of the applicant authorizing the purchase of said land.
  • Details of all the works carried out by the applicant
  • Letter of recommendation of the local government under whose jurisdiction the said land falls.
  • Letter of recommendation from the ministry relating to the operations of the applicant.
  • All landholding details of the applicant along with title certificates and copy of land revenue payment certificate.
  • Foreign Investment Approval Letter in case the applicant is a company with foreign investment,
  • Latest Audit report and annual progress report of the applicant.
1 Kathmandu Valley 25 Ropanis + 5 Ropanis (for house and premises)
1 All hilly regions except Kathmandu Valley 70 Ropanis + 5 Ropanis (for house and premises)

Process of Property Registration

SN Process Agency Duration Cost Remarks
1 Check for encumbrances on the property Land Revenue Office 1 day Free Buyers or their lawyers conduct a property search at the Land R¬¬evenue Office to check for encumbrances on the property such as mortgages, easements, property taxliens (House and Land Tax Act, 1962), encroachment etc.
2 Obtain Tax Clearance Certificate, Certificate of Access & Building from the Municipality, and road certification from the ward committee Municipality/ Ward Office 1-7 days The costs payable include:
  • NPR 7,012.4; (Certificate of access and building (in case of Kathmandu Metropolitan City):
  • Main road: NPR 2,000 (The land area is less than or equal to 4 Anna) / NPR 500 per Anna (If the land area exceeds 4 Anna)
  • Side road: NPR 1,500 (The land area is less than or equal to 4 Anna) / NPR 400 per Anna (If the land area exceeds 4 Anna)
  • Gravel/unpaved road: NPR 1,000 (The land area is less than or equal to 4 Anna) / NPR 300 per Anna (If the land area exceeds 4 Anna)
  • Track road: NPR. 800 (The land area exceeds or equal to 4 Anna) / NPR 200 per Anna (The land area exceeds 4 Anna)
 A tax clearance certificate (Information on types of taxes) must be obtained from the Municipality regarding the payment of property tax. If the property is not registered in the municipality for tax purposes, municipal engineers are required to conduct a field visit to verify and access the property and value the property for tax purposes after which the building permit, land deed, and land revenue papers (Land Revenue Act, 1978) can be obtained. The seller must then visit the local government (ward committee) to obtain a certificate to certify the type of road that adjoins the property.
3 Prepare a transfer deed document Lawyer 1 day NPR 7,000 While the document can be prepared by oneself, it is advisable to get legal help while getting this. The deed documents include a certificate of citizenship, certificate of ownership, and a tax clearance certificate.
4 Registration of the deed certificate and issuance of a new title certificate Land Revenue Office 2 days 5% of the property value The transfer deed documents are submitted for registration to the Land Revenue Office. The encumbrances on the property are also reviewed on the same day. Parties must sign and put thumbprints on the transfer deed. After the documents are verified, the transfer deed is verified and the title certificate is issued. The documentations include: -Land Ownership Certificate -Citizen certificate of seller and buyer OR -Incorporation certificate of Company Tax Clearance from Municipality/VDC

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