Siddhartha Bank cannot deduct employee vehicle depreciation and insurance costs, tribunal rules

Kathmandu, October 2, 2026 — The Revenue Tribunal has ruled that Siddhartha Bank cannot deduct depreciation and insurance expenses claimed under its employee vehicle schemes for tax purposes for three consecutive fiscal years.

The joint bench of Revenue Tribunal Kathmandu Chairman Brajesh Pyakurel and Revenue Member Hariprasad Timilsina issued the ruling in income-tax disputes between Siddhartha Bank and the Large Taxpayers Office for fiscal years 2015/16, 2016/17 and 2017/18.

The tribunal held that vehicles provided to employees under the ‘Own Your Vehicle Scheme’ and employee vehicle scheme cannot be considered substantially owned by the bank merely because they are registered in the bank’s name.

According to the tribunal, the vehicles are ultimately transferred to employees after a specified period and are used and enjoyed by them. The provision allowing the bank to take back the vehicles or provide them to another employee when necessary was not, by itself, sufficient to establish that the vehicles were used for generating the bank’s income.

On that basis, the tribunal ruled that depreciation claimed on the vehicles could not be deducted under Section 19 of the Income Tax Act, 2002. It also ruled that the related insurance expenses could not be treated as deductible business expenses.

For fiscal year 2015/16, Siddhartha Bank reported taxable income of Rs 1.802 billion to the Large Taxpayers Office on January 10, 2017. The tax office subsequently revised the taxable income to Rs 1.815 billion.

The bank had claimed Rs 6.95 million in depreciation expenses under its employee vehicle scheme as deductible. It argued that the portion used for employees’ private purposes had already been taxed as salary and benefits and that the vehicles remained under the bank’s ownership.

The tribunal rejected the claim, ruling that vehicles provided as employee benefits and ultimately transferred to employees could not be regarded as fixed assets used for the bank’s income-generating purposes. It upheld the revised tax assessment made by the Large Taxpayers Office.