Nepal Tax Guide 2082/83 — Income Tax, TDS, VAT Explained
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, or freelancer, understanding your tax obligations is essential.
This guide covers the key components 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, and important filing deadlines.
Overview of Nepal's Tax System
Nepal levies several types of taxes:
- Income Tax — Progressive tax on personal and corporate income
- Tax Deducted at Source (TDS) — Withholding tax on payments like salary, rent, interest, and professional fees
- Value Added Tax (VAT) — 13% consumption tax on goods and services
- Excise Duty — On specific goods like alcohol, tobacco, and vehicles
- Customs Duty — On imported goods
- Social Security Tax — Additional 25% tax on very high incomes
The fiscal year in Nepal runs from Shrawan 1 to Ashadh end (mid-July to mid-July in the Gregorian calendar). All tax calculations, filings, and deadlines follow this cycle.
Income Tax Slabs for FY 2082/83
Nepal uses a progressive tax system where higher income brackets are taxed at higher rates. The slabs differ slightly 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: The married individual threshold is NPR 1,00,000 higher in the first slab compared to single individuals. This provides a small tax benefit to married taxpayers.
Use our Income Tax Calculator to compute your exact tax liability based on your annual income.
Tax Deducted at Source (TDS) Rates
TDS is the government's mechanism for collecting tax at the point of payment. The payer is responsible for deducting the appropriate amount and depositing it to IRD. Below are the key TDS rates:
| Payment Type | TDS Rate (Resident) | TDS Rate (Non-Resident) |
|---|---|---|
| Salary | As per slab rate | 25% |
| Rent (land/building) | 10% | 15% |
| Rent (vehicles/machinery) | 10% | 15% |
| Interest | 5% | 15% |
| Dividends | 5% | 5% |
| Royalty | 15% | 15% |
| Service fees / 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)
Nepal charges a flat 13% VAT on most goods and services. VAT is a consumption tax — businesses collect it from customers and remit it 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
- Importers (regardless of turnover)
- Businesses that voluntarily choose to register
VAT-Exempt Goods and Services
Certain essential items are exempt from VAT in Nepal:
- Basic agricultural products (rice, wheat, lentils, vegetables, fruits)
- Livestock and animal products (fresh meat, eggs, milk)
- Educational services
- Healthcare services and medicines
- Public transportation
- Books, newspapers, and magazines
- Kerosene and cooking gas (for households)
- Electricity (up to a 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), 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 schemes:
- Medical Treatment, Health & Maternity Protection Scheme — Covers medical expenses, maternity leave, and sick leave
- Accident & Disability Protection Scheme — Covers workplace accidents and resulting disabilities
- Dependent Family Protection Scheme — Provides 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.
Corporate Tax Rates
Businesses operating in Nepal are subject to corporate income tax. The standard rate is 25%, but special rates apply to certain sectors:
| Business Type | Tax Rate |
|---|---|
| General businesses | 25% |
| Banks, financial institutions, insurance | 30% |
| Telecom, ISP, media (with FM license) | 30% |
| Cigarette, bidi, alcohol, khaini manufacturing | 30% |
| Special industries (in remote areas) | 20% |
| Cooperatives | 20% |
| Export income | 20% |
Tax Filing Deadlines
Missing tax deadlines in Nepal results in penalties and interest charges. Here are the key dates for FY 2082/83:
| 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 |
| TDS monthly deposit | 25th of each month | — | Deposit TDS within 25 days of month end |
| VAT return | 25th of each month | — | Monthly VAT return filing |
Penalty for late filing: A fee of 0.1% per annum of assessable income per day, plus interest of 15% per annum on unpaid tax.
Common Tax Deductions and Exemptions
- SSF contribution (employee share) — Fully deductible from gross income
- Life insurance premium — Deductible up to NPR 40,000 per year
- Donation to tax-exempt organizations — Deductible up to NPR 1,00,000 or 5% of adjusted gross income, whichever is lower
- Remote area allowance — Up to 50% exemption for income earned in specified remote areas
- Disabled individual exemption — 50% tax rebate for persons with disability
- Women's tax rebate — 10% reduction on income tax payable for female taxpayers
Tax Calculation Tools
Online Calculator Nepal provides a suite of free tax calculators to help you plan your finances:
- Tax Calculator — All-in-one tax computation for Nepal
- Income Tax Calculator — Calculate your income tax based on annual earnings
- TDS Calculator — Compute TDS on various payment types
- Salary Calculator — See your net take-home pay after all deductions
- VAT Calculator — Calculate VAT-inclusive and exclusive amounts