Income tax in Nepal: slabs, company rates, advance tax and returns (2083/84)

Income tax slabs for individuals, 2083/84

The Finance Act 2083 replaced Schedule 1 s1(1) and deleted the separate couple table, so one table applies to a resident natural person or couple from Shrawan 1, 2083 (17 July 2026):

For comparison, 2082/83 taxed a single person 1% to Rs 5 lakh, 10% to Rs 7 lakh, 20% to Rs 10 lakh, 30% to Rs 20 lakh, 36% to Rs 50 lakh and 39% above; the couple table started at Rs 6 lakh.

A non-resident natural person pays a flat 25%. Annual tax on hired vehicles (taxis, buses, trucks, tractors, electric vehicles by kilowatt) is a fixed amount collected by the Transport Management Office at registration or renewal; for an individual owner who is not a sole proprietorship it is the whole tax (Schedule 1 s1(13), s97(1)).

Deductions, reliefs and credits for individuals

Perquisites count as salary: a vehicle for private use at 0.5% of the salary and housing at 2% for employees (1% of the vehicle's market value and 25% of the rent for others), and paisa are dropped (Income Tax Rules r13, r14). A retirement lump sum from an approved fund is exempt up to the larger of half the payment or Rs 5 lakh (s65).

Company and entity tax rates

Small taxpayers: fixed tax and turnover tax

A resident individual with only Nepali business income may choose, for the year, a presumptive tax instead of keeping full accounts (s4(4), s4(4A); elective from the Finance Act 2082):

Tax on capital gains (shares, land and buildings)

Advance tax instalments

A person with business or investment income pays the year's estimated tax in instalments, each less the tax already paid and the TDS suffered (s94):

Not filing the estimated-tax statement (s95, Rules Schedule 2) costs Rs 5,000 or 0.01% of assessable income, whichever is higher (s117(1)(a)).

The income tax return

Due

Within three months of the year's end: 30 Ashwin 2084 (16 October 2027) for 2083/84s96(1)

Extension

Up to three months on application before the due date; interest still runss98, s119(2)

Amendment

A filed return may be amended within 30 days of filings96(6)

Must file

Every taxpayer except those s97(1) lists; an individual with income above Rs 40 lakh always filess96, s97

Need not file

A person with no tax to pay, an individual whose only income is a salary taxed in full by TDS (s4(3)), hired-vehicle owners taxed by the vehicle schedule, and others the Department namess97(1) (Finance Act 2083)

Late return

0.1% a year of assessable income, or Rs 1,200 a return (Rs 100 a month when less than a year late), whichever is higher; a fixed-tax payer pays the fixed amountss117(1)(c)

Tax paid late

15% a year, for each month or part months119

Refunds

Applied for within five years (was two); paid within 60 days with interests113 (Finance Act 2083)

Amended assessment

The Department may amend within three years (was four)s101(3) (Finance Act 2083)

Business expenses: what is not deductible

• A cash payment above Rs 25,000 at one time, for every person regardless of turnover, from 2083/84 (s21(2), Finance Act 2083; it was Rs 50,000 above Rs 20 lakh turnover). Payments to government or a bank, to farmers, where there is no bank within 10 km, or into the payee's own bank account are exceptions; cheques, transfers, drafts, LCs and NRB-approved wallets are not cash.
• A purchase bill above Rs 2,000 that does not show the supplier's PAN, except farm, forest, animal and household produce bought from a person not in business (s21(1)).
• Wages to staff without a PAN, except a one-off wage up to Rs 3,000; a salary above Rs 25,000 a month not paid through a bank (s21(1)).
• Income tax itself, private expenses and fines. Taxes paid to province and local governments are deductible (s21).
• Repairs above 7% of a depreciation pool's base, which join the pool next year (s16); pollution control and research above 50% of adjusted taxable income (s17, s18).
• Tea, stationery, tips, rewards, emergency medical help and similar small payments count as the Act's small amounts up to Rs 500 a payment (Rules r6, for s8(3)(d) and s21).

Business takings paid into a personal bank account cost Rs 5,000 or 2% of the amount, whichever is higher, each time (s81A, s119A(3)). Business losses carry forward seven years, twelve for power, petroleum and public infrastructure (s20).

Tax depreciation (Schedule 2)

• Pools A-D are depreciated on the declining balance: the pool's written-down value plus the year's additions less disposal proceeds, times the rate.
• An asset bought in Shrawan to Poush counts in full in its first year; Magh to Chaitra two thirds; Baisakh to Asar one third. The rest joins the pool the next year.
• A pool left below Rs 2,000 is written off. Fiscal printers and cash machines that issue bills are written off in the year bought; plant making the business's own energy may take 50% in its first year; listed industries take a third more on A-D.
• Proceeds above a pool's base are income.

Records and e-billing

Books, workings and vouchers, invoices included since the Finance Act 2083, are kept in Nepal for five years after the year (s81). The Department may, by notice, require named taxpayers to issue electronic invoices joined to CBMS or through its own billing system (s81(5)); a taxpayer whose billing software can delete or edit data pays Rs 5 lakh, and other breaches cost Rs 1 lakh (s119A(1)). The rules for the software are in the IRD billing software guide.

Questions

Sources

• आयकर ऐन, २०५८ (Income Tax Act 2058), as amended to the Finance Act 2082
• आयकर नियमावली, २०५९ (Income Tax Rules 2059), 16th amendment
• आर्थिक ऐन, २०८३ (Finance Act 2083), Nepal Gazette 2083/03/30
• IRD: Finance Act 2083 handbook on exemptions, concessions and other provisions (revised edition)
• BRAccount's page-by-page reading of the Income Tax Act (247 pages), the Income Tax Rules (21 pages) and the Finance Act 2083 (415 pages)Each figure is cited to its section; the reading notes are kept with the software.