Nepal Income Tax Guide 2082/83 — Tax Slabs, Rules & Filing
Nepal's tax system is governed by the Income Tax Act 2058 (2002) and administered by the Inland Revenue Department (IRD) under the Ministry of Finance. Whether you are a salaried employee, business owner, freelancer, or investor, understanding your tax obligations is essential for compliance and financial planning.
This guide covers all key aspects of Nepal's tax system for fiscal year 2082/83 (mid-July 2025 to mid-July 2026): income tax slabs, TDS rates, VAT rules, Social Security Fund contributions, filing deadlines, penalties, and practical tips to reduce your tax burden legally.
Nepal's Fiscal Year (Shrawan to Ashadh)
Unlike many countries that use a January-December or April-March fiscal year, Nepal's fiscal year runs from Shrawan 1 to Ashadh end in the Bikram Sambat calendar. In Gregorian terms, this corresponds approximately to mid-July to mid-July.
For FY 2082/83, the period is roughly mid-July 2025 to mid-July 2026. All income earned during this period is assessed for tax, and all filing deadlines reference this timeframe.
Income Tax Slabs for Individuals
Nepal uses a progressive tax system — higher income brackets are taxed at higher rates. The slabs differ for single and married individuals:
Individual (Single) Tax Slabs
| Income Range (NPR) | Tax Rate | Tax Amount |
|---|---|---|
| First 5,00,000 | 1% | 5,000 |
| Next 2,00,000 (5,00,001 - 7,00,000) | 10% | 20,000 |
| Next 3,00,000 (7,00,001 - 10,00,000) | 20% | 60,000 |
| Next 10,00,000 (10,00,001 - 20,00,000) | 30% | 3,00,000 |
| Above 20,00,000 | 36% | Varies |
| Above 50,00,000 (additional) | +25% social security tax | Varies |
Individual (Married) Tax Slabs
| Income Range (NPR) | Tax Rate | Tax Amount |
|---|---|---|
| First 6,00,000 | 1% | 6,000 |
| Next 2,00,000 (6,00,001 - 8,00,000) | 10% | 20,000 |
| Next 3,00,000 (8,00,001 - 11,00,000) | 20% | 60,000 |
| Next 10,00,000 (11,00,001 - 21,00,000) | 30% | 3,00,000 |
| Above 21,00,000 | 36% | Varies |
| Above 50,00,000 (additional) | +25% social security tax | Varies |
Note: Married individuals receive a NPR 1,00,000 higher threshold in the first slab, providing a modest tax benefit. Female taxpayers receive an additional 10% rebate on the total tax payable.
Use our Income Tax Calculator to compute your exact tax liability based on your annual income and filing status.
TDS (Tax Deducted at Source) Rates
TDS is Nepal's pay-as-you-earn mechanism. The payer deducts tax at the time of making certain payments and deposits it directly to the Inland Revenue Department. This ensures the government receives tax revenue throughout the year rather than only at filing time.
| Payment Type | TDS Rate (Resident) | TDS Rate (Non-Resident) |
|---|---|---|
| Salary | As per income tax slab rate | 25% |
| Rent (land/building) | 10% | 15% |
| Rent (vehicles/machinery) | 10% | 15% |
| Interest | 5% | 15% |
| Dividends | 5% | 5% |
| Royalty | 15% | 15% |
| Service / Professional fees | 15% | 15% |
| Contract / Commission | 1.5% | 15% |
| Meeting / Training allowances | 15% | 25% |
| Natural resource payment | 10% | 15% |
| Windfall gain (lottery, etc.) | 25% | 25% |
| Capital gains (securities) | 5% / 7.5% / 10% | 10% / 15% / 25% |
Calculate your TDS liability with our TDS Calculator.
Value Added Tax (VAT) — 13%
Nepal charges a flat 13% VAT on most goods and services. VAT is a consumption tax collected by businesses from customers and remitted to the government.
Who Must Register for VAT?
- Businesses with annual turnover exceeding NPR 50 lakhs for goods
- Businesses with annual turnover exceeding NPR 20 lakhs for services
- All importers (regardless of turnover)
- Businesses that voluntarily choose to register
VAT-Exempt Items
Essential goods and services exempt from VAT include:
- Basic agricultural products (rice, wheat, lentils, vegetables, fruits)
- Livestock and fresh animal products (meat, eggs, milk)
- Educational services and textbooks
- Healthcare services and essential medicines
- Public transportation
- Newspapers, books, and magazines
- Kerosene and cooking gas for households
- Electricity (up to a household consumption threshold)
Use our VAT Calculator to quickly compute VAT-inclusive and VAT-exclusive prices.
Social Security Fund (SSF) Contribution
Under the Social Security Act 2075 (2018), all formal-sector employees and employers in Nepal must contribute to the Social Security Fund:
| Contributor | Rate | Basis |
|---|---|---|
| Employee | 11% | Basic salary |
| Employer | 20% | Basic salary |
| Total | 31% | Basic salary |
The SSF covers four protection schemes:
- Medical Treatment, Health & Maternity Scheme — Medical expenses, maternity leave, sick leave
- Accident & Disability Scheme — Workplace accident coverage and disability benefits
- Dependent Family Protection Scheme — Benefits to the family of a deceased contributor
- Old Age Protection Scheme — Retirement pension (contributory provident fund)
The employee's 11% SSF contribution is tax-deductible — it is subtracted from gross income before applying income tax slabs. Use our Salary Calculator to see your take-home pay after SSF and tax deductions.
Tax Filing Deadlines for FY 2082/83
Missing deadlines results in penalties and interest. Here are the key dates:
| Deadline | BS Date | Approx. AD Date | Description |
|---|---|---|---|
| First installment | Poush end, 2082 | Mid-January 2026 | 40% of estimated annual tax |
| Second installment | Chaitra end, 2082 | Mid-April 2026 | 70% of estimated annual tax (cumulative) |
| Third installment | Ashadh end, 2083 | Mid-July 2026 | 100% of actual annual tax |
| Annual return filing | Kartik end, 2083 | Mid-November 2026 | Final income tax return submission |
| TDS monthly deposit | 25th of each month | Monthly | Deposit TDS within 25 days of month end |
| VAT return | 25th of each month | Monthly | Monthly VAT return filing |
Penalties for Late Filing
The Inland Revenue Department imposes the following penalties for non-compliance:
- Late filing fee: 0.1% per annum of assessable income per day of delay
- Interest on unpaid tax: 15% per annum on the outstanding tax amount
- Failure to deduct TDS: The payer becomes liable for the full TDS amount plus additional penalties
- Understatement of income: 50% of the additional tax assessed on understated income
Tax-Saving Tips for Nepal
There are several legal ways to reduce your income tax liability in Nepal:
- Maximize SSF contribution: The employee's 11% SSF share is fully deductible from gross income before tax calculation.
- Life insurance premium: Deductible up to NPR 40,000 per year. Purchase a life insurance policy to claim this deduction.
- Donations to approved organizations: Deductible up to NPR 1,00,000 or 5% of adjusted gross income, whichever is lower.
- Female taxpayer rebate: Women receive a 10% reduction on the total income tax payable.
- Remote area exemption: Income earned in designated remote areas qualifies for up to 50% tax exemption.
- Disabled individual rebate: Persons with disability receive a 50% tax rebate.
- File on time: Avoiding late-filing penalties and interest charges is itself a form of tax saving.
- Maintain proper records: Keep all receipts and documentation for claimed deductions in case of an IRD audit.
Tax Calculation Tools
Online Calculator Nepal provides free tax calculators to help you plan your finances:
- Tax Calculator — All-in-one tax computation for Nepal
- Income Tax Calculator — Calculate income tax based on annual earnings and filing status
- TDS Calculator — Compute TDS on salary, rent, interest, and other payment types
- Salary Calculator — See your net take-home pay after SSF and tax deductions
- VAT Calculator — Calculate VAT-inclusive and VAT-exclusive amounts