The government has revised several essential regulations concerning real estate dealings, undoing a previous mandate that imposed stringent banking and reporting obligations. These alterations come in response to widespread apprehension regarding privacy, administrative strain, and potential disruptions in property transactions.
In the past, land revenue offices had the obligation to report the identities of both buyers and sellers to Nepal Rastra Bank (NRB) if an individual conducted transactions worth Rs. 3 crore or more on a single day or across multiple dealings. This threshold has now been considerably reduced. According to the newly revised guidelines, any transaction exceeding Rs. 1 crore is now required to be reported to the NRB.
Moreover, the stipulation that obligates buyers to provide evidence of payment from their bank account to the seller’s account—if the advance agreement (bainapatra) sanctioned by local authorities was presented for transactions over Rs. 10 lakhs—has also been rescinded. This regulation had previously necessitated banking or electronic transfer details as part of transaction documentation.
Another significant change is the elimination of a dedicated schedule that identified high-profile individuals, likely to facilitate enhanced scrutiny under anti-money laundering laws.
These measures were initially established by the Department of Land Management and Archive on May 27 (Jestha 14), following government directives intended to assist Nepal in adhering to the Financial Action Task Force (FATF) recommendations. The initiative aimed to remove Nepal from the FATF’s “grey list” by bolstering measures against money laundering and terrorist financing.
Nonetheless, the rigorous regulations faced considerable opposition. Land revenue offices throughout the nation voiced their discontent, stating that the increased documentation has complicated the process for service users. Land administration officials had cautioned that real estate transactions might plummet by as much as 25% due to the new encumbrances.
In light of this feedback, and after discussions involving the Prime Minister’s Office, the Department of Land Management has revised the directive. The refreshed guidelines continue to emphasize transparency and encourage banking transactions, yet they provide more leeway and lessen obligatory requirements.
The updated directive also brings in flexibility for tax payments concerning transactions over Rs. 10 lakhs. Previously, it was obligatory for the buyer to directly pay registration fees from their bank account, while the seller was responsible for capital gains tax from theirs. Now, either party may opt for the payment method that suits them best.
The Department has officially relayed these updated instructions to all land revenue offices nationwide. These changes are anticipated to balance the need to control illegal financial activities while ensuring smoother property transactions for the public.
