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Income tax is one of the most important direct taxes in Nepal, applicable to individuals, businesses, and companies. Every fiscal year, the Government of Nepal announces updated tax rates and slabs through the Finance Act, which applies for that fiscal year.
Income tax in Nepal is a tax levied on income earned by individuals, firms, companies, and other entities under the Income Tax Act, 2058 (2002).
Income tax applies to:
Salary income
Business income
Investment income
Capital gains
Professional income
The tax year in Nepal runs from Shrawan to Ashad (mid-July to mid-July).
For Unmarried Individuals
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to NPR 500,000 | 1% (Social Security Tax) |
| NPR 500,001 – 700,000 | 10% |
| NPR 700,001 – 1,000,000 | 20% |
| NPR 1,000,001 – 2,000,000 | 30% |
| Above NPR 2,000,000 | 36% |
For Married Individuals
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to NPR 600,000 | 1% (Social Security Tax) |
| NPR 600,001 – 800,000 | 10% |
| NPR 800,001 – 1,100,000 | 20% |
| NPR 1,100,001 – 2,000,000 | 30% |
| Above NPR 2,000,000 | 36% |
Annual income tax is calculated after deducting:
Allowable exemptions
Contributions to Social Security Fund (SSF)
Approved deductions under tax law
Only taxable income is used for final tax calculation.
There is no official “single calculator” issued by IRD, but the calculation follows this logic:
Step-by-step method:
Determine total annual income
Deduct allowable exemptions
Apply applicable tax slabs progressively
Add 1% social security tax
Deduct advance tax/TDS already paid
This is how online income tax rate in Nepal calculators work.
The income tax slabs for 2080/81 were largely similar, with no major structural changes. Minor threshold adjustments were made via Finance Acts.
This makes the 2082/83 tax rate stable and predictable for salaried individuals.
Standard Company Tax Rate
| Type of Company | Tax Rate |
|---|---|
| Normal company | 25% |
| Banks & financial institutions | 30% |
| Insurance companies | 30% |
| Telecom companies | 30% |
| Special industries / concessions | As prescribed |
TDS (Tax Deducted at Source) means tax deducted before payment.
| Payment Type | TDS Rate |
|---|---|
| Salary | As per income tax slab |
| Rent | 10% |
| Service fees | 15% |
| Interest | 5% |
| Dividends | 5% |
| Contract payments | 1.5%–15% |
In some cases (interest, dividends), TDS is final tax
For salary and business income, TDS is adjustable against annual tax liability
If income exceeds exemption thresholds, tax is compulsory.
Failure to comply can result in:
Nepal’s tax enforcement is increasingly strict.
The income tax rate in Nepal 2082/83 follows a progressive and structured system, ensuring fairness while funding national development. Whether you’re an employee, business owner, or company, understanding tax slabs, TDS, and annual calculation is essential to remain compliant.
Income tax in Nepal ranges from 1% to 36% depending on income level and marital status.
The tax slabs were similar to 2082/83 with minor threshold differences.
Standard company tax rate is 25%; banks and insurance companies pay 30%.
TDS is calculated by applying prescribed rates on payments such as salary, rent, services, or interest.
Yes. Income tax is compulsory if income exceeds exemption limits.
Many online tools follow IRD tax slabs to estimate tax liability.
Disclaimer: This article is for informational purposes only and shall not be construed as legal advice, advertisement, personal communication, solicitation or inducement of any sort from the firm or any of its members. The firm shall not be liable for consequences arising out of any action undertaken by any person relying on the information provided herein.
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