The annual income is the document that shows the visa officer that you will have a sufficient flow of income to survive in Finland. It shows that you will have sufficient funds for your tuition and living expenses. Largely, it's for living expenses.
You need to show that you have an income of 18 lakhs annually. This income should come from your sponsors. Your sponsors could be anyone ranging from your parents to your cousins, uncle, aunt, grandparents and all as long as they are related to you and you can verify that relationship through the ward.
Your sponsors could have different sources of income like salary, land lease, rent, business income, agricultural income, animal husbandry, etc.
Income like salary, land lease, rent, and business income are taxable. Hence, you are required to provide tax clearance or tax receipt for this income. Whereas, income like agricultural income and animal husbandry are exempted from tax payment as per the law of Nepal. Although, you are required to provide a tax exemption report.
All these documents should show the income of the previous year.
A brief summary of each kind of income is provided below:
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Photo by Karolina Grabowska
1. Salary Income
This is one of the most common types of income. It is also one of the easiest incomes to show as most of its documentation is already present. Every year, the company where the individual works files for taxes which makes your life a bit easier. The documents that you need to show salary income are:
1. Tax receipt which can be collected from the Inland Revenue Department.
2. Salary Certificate from the Company or organization.
3. Bank statement where the salary gets deposited monthly.
4. If a bank statement is not available, pay slips that the company gives at the time of salary deposit.
2. Land Lease Income
A land lease is an arrangement in which a landowner rents out the land to a tenant. This is another common kind of income for those people who have land or whose sponsor possess some form of land. This is a taxable income where there is a fixed rate of tax whereas in salary the rate of tax will increase progressively as the income increases. The tax rate for land leases is usually 10% in Nepal. However, there are some municipalities where the tax rate for land leases is reduced. For instance, Damak municipality in Koshi Province has a tax rate of 2% when it comes to Land leases.To show this income, one must have a legal land lease contract between landlord and tenant where all the conditions of the land lease agreement should be mentioned. A minimum of 6 months of taxes should be paid to the government. This tax could be paid in the local ward office. The following are the documents required to add land lease income:
1. Land lease agreement between tenant and landlord.
2. Tax receipt.
3. Redbook of the land which is given on lease. (lal kitab or lal purja)
4. Receipt of Malpot Tax
5. Bank statements if available.
3. Rent Income
A rent income is same as the land lease income. But, in case of rent income, we rent house/house room instead of land. The tax rate usually is same which is 10%. You need to possess rent agreement where the conditions between landlord and tenenat is mentioned. You must pay tax of at least six months latest.
The following documents are required to make rent income:
1. Contract between landlord and tenant.
2. Tax receipt of rent income from ward.
3. Red book of the land where the building is located.
4. Papers of the building. (ghar dhani purja)
5. Receipt of house tax
6. Receipt of land tax.
7. Bank statements if available.
4. Agricultural income
Nepal is an agricultural country. Hence, it is more than likely that most of Nepali families have agricultural land in their name. We can show this income as well. To show this income following documents are required:
1. Agricultural income verified by the Local ward office.
2. Tax exemption certificate issued by the Local ward office.
You must know that Nepal's no tax is levied for agricultural income. In the context of Nepal agricultural tax is exempted.
To make this document, we need the land tax and land certificate ( lal kitab), we need to go to our local ward office and submit these documents along with the written application disclosing the agricultural income. The local ward will then look into a case, and if the case is justifiable, it will issue both documents.
5. Business Income
Another common income is business income. I am sure that most of the people have business in Nepal. And we can show that income as well. But, first, you need to know your taxable income. You can only show taxable income. To know the taxable income, you need to look at the financial documents of your business. Or, you can simply go to the Inland Revenue Department and request for your tax receipt. In that receipt, there will be the your taxable income and the amount you paid as tax.
Documents required to show this income:
1. Your business PAN certificate.
2. Your Business registration certificate.
3. Tax receipt from IRD.
4. Audit Report if the business is huge.
5. Bank statement of the Business account
