Who Is Eligible to Participate in the Taxpayer Incentive Gift (Lottery) Program?
Under Section 4 of the Procedure, a consumer becomes eligible to participate in the program if they purchase goods or services worth more than NPR 100 in a single transaction, for personal use, within Nepal.
Purchases made through electronic payment and invoices entered into the System between the first and last day of a given month are considered for that month's program cycle. Each qualifying purchase invoice, or purchase made through electronic payment, entitles the consumer to one gift ticket through the System.
Which Bills Are Excluded from the Tax Incentive Gift Program?
However, not every invoice qualifies. The Procedure expressly excludes the following categories of bills from participation:
- Invoices for purchases made for business or commercial purposes;
- Invoices issued in the name of a government body or a public institution;
- Bills issued for telephone, internet, electricity, vehicle and transportation services, and airline ticket purchases; and
- Invoices issued by a person who has not obtained a Permanent Account Number.
Additionally, the same invoice or the same electronic payment transaction cannot be used to participate in the program more than once, and any invoice entered in the System is eligible for one round of participation only.
How Can Taxpayers Participate in the Tax Lottery Program?
Participation in the program depends on the mode of payment:
- Electronic payments: Purchases made through a payment service provider's electronic payment channel are automatically included in the program - no separate action is required from the consumer.
- Other qualifying invoices: A consumer holding an eligible bill who wishes to participate must manually enter the following details into the System within the prescribed period (i.e., within the relevant fortnightly cycle referred to in Section 6):
- Invoice number;
- Seller's Permanent Account Number;
- Date of invoice issuance;
- Total amount stated in the invoice;
- Mode of payment (cash or electronic);
- Name of the purchaser; and
- Mobile number of the purchaser.
Details entered into the System are automatically verified, and only invoices and electronic payments that pass this verification are included in the draw.
How Are Winners Selected Under the Taxpayer Incentive Gift (Lottery) Program?
The Department draws winners twice a month, on the 1st and 16th of each Nepali month (Section 6):
- The draw held on the 1st covers transactions and invoices entered into the System from the 16th of the preceding month through the end of that month.
- The draw held on the 16th covers transactions and invoices entered from the 1st to the 15th of the same month.
From among eligible participants, the System selects winners automatically:
- One daily winner for each day within the cycle; and
- One bumper winner, selected on a fortnightly basis, from among all participants eligible during that fortnight.
The Department may invite dignitaries, representatives of various institutions, and media representatives to be present during the winner-selection process, and winners are notified individually through their registered mobile number and email.
Will the Names of Lottery Winners Be Made Public?
Consistent with the transparency objective of the scheme, the names of selected winners must be made public through the Department's official website and social media channels (Section 7).
What Are the Prize Amounts and How Are They Taxed?
The Procedure fixes the value of prizes as follows (Section 8):
- Daily prize: NPR 1,33,334 (one lakh thirty-three thousand three hundred thirty-four) per winner.
- Fortnightly bumper prize: NPR 10,00,000 (ten lakh) per winner.
Importantly, these amounts are not tax-free. Under Section 88(Ka) of the Income Tax Act, 2058 (2002), prize money of this nature is treated as a windfall gain, and tax is deducted at source at the rate of 25 percent before disbursement.
How Can Winners Claim Their Lottery Prize?
A winning consumer must submit a written application to the nearest Inland Revenue Office - either in person or through an authorized representative -within 15 days of the date the prize is announced. The application must be accompanied by (Section 9):
- The original invoice (Sakkal Bijak);
- A copy of an official identity document - national identity card, citizenship certificate, passport, driving licence, or similar;
- Bank account details; and
- Permanent Account Number (if any).
The relevant office is required to verify the submitted documents within 10 days and disburse the prize thereafter. If the submitted documents are found to be false, forged, or fraudulent, the matter is referred to the concerned authority for action under prevailing law against the persons involved.
Prize money is paid directly into the winner's bank account through the Department. If a winning consumer fails to claim the prize with the required documents within the 15-day window, the unclaimed amount is deposited into the Prime Minister Disaster Relief Fund.
Who Oversees the Taxpayer Incentive Gift (Lottery) Program and How Is It Administered?
The Department is required to publicise the program through its subordinate offices and other media (Section 10). Where any obstruction or difficulty arises in implementing the Procedure, the Ministry of Finance retains the authority to make necessary decisions to remove such obstruction (Section 11).
What Are the Practical Legal and Tax Implications of the Taxpayer Incentive Gift (Lottery) Program?
For consumers, the program creates a direct financial incentive to insist on a proper bill for every purchase above NPR 100 - reinforcing an obligation that already exists in principle under Nepal's VAT and income tax framework, but which is often overlooked in everyday cash transactions, an area where our consumer protection lawyers in Nepal frequently advise both individuals and businesses.
For businesses, the scheme is a reminder that invoicing discipline is now tied to a highly visible, publicly promoted government initiative. Since certain categories of invoices (business-purpose purchases, government-related purchases, utility and transport-related bills, and invoices from unregistered sellers) are excluded, businesses should ensure their billing practices - including correct classification of transactions and timely PAN registration of vendors - remain fully compliant, both to support customer participation in the program and to avoid scrutiny arising from under reported transactions.
Businesses that operate electronic payment channels should also note that qualifying transactions are automatically captured by the System, which effectively increases the traceability of digital transactions and, by extension, the importance of accurate transaction recording.
How Sherpa Law Associates Can Assist
As this program ties tax compliance to a public, incentive-driven scheme, both businesses and individual taxpayers may need legal support to participate correctly or to resolve issues that arise along the way. Our team can assist with:
- Invoicing and billing compliance: Reviewing and structuring billing practices so that transactions are correctly classified (business vs. personal-use), vendors are properly PAN-registered, and invoices meet the standards required for System eligibility.
- Regulatory advisory on the Procedure: Advising businesses on how the Procedure interacts with obligations under the Value Added Tax Act, the Income Tax Act, 2058, and the Financial Procedures and Fiscal Accountability Act, 2076.
- Tax withholding and windfall gain queries: Guidance on the 25% tax deduction under Section 88(Ka) of the Income Tax Act on prize amounts, and related filing or refund questions.
- Assistance with prize claims: Support in preparing and submitting the documentation required under Section 9 (original invoice, identity document, bank details, PAN) to the relevant Inland Revenue Office within the 15-day claim window.
- Disputes and grievances: Representation in cases involving rejected claims, allegations of false or forged documentation, or disputes with an Office or the Department over eligibility or disbursement.
- General tax compliance advisory: Broader support on record-keeping, transaction documentation, and compliance systems to help businesses operate confidently within Nepal's evolving tax administration framework.
Contact Us for Help
If you have questions about the Taxpayer Incentive Gift Program, invoicing compliance, or any other tax, or need a lawyer in Nepal, our team at Sherpa Law Associates is happy to assist.
This article is for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult our team directly.
