Core rule: section 71 permits a resident credit for eligible foreign income tax paid on assessable foreign income. Compute the limit separately for each country using Nepal's average tax rate. The credit cannot exceed the applicable country limit.
Example: assume Nepal's properly calculated average rate is 10%. Assessable foreign income is NPR 100,000 from Country A and NPR 100,000 from Country B. Eligible foreign tax paid is NPR 15,000 in A and NPR 2,000 in B. Each country limit is NPR 10,000. Current credits total NPR 12,000: NPR 10,000 plus NPR 2,000, not NPR 17,000.
Retain gross-income records and evidence that foreign income tax was paid. Assess any excess under section 71's carry-forward rules; do not pool countries or claim foreign withholding on Nepal-source income without examining source and treaty relief.