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Nepal's income tax system changed significantly with the Finance Act 2082 — and most taxpayers are still calculating under the old slabs. For fiscal year 2082/83 (July 2025 to July 2026), individual income tax rates range from 1% to 39% across six progressive bands. The tax-free threshold remains NRS 5,00,000 for single taxpayers and NRS 6,00,000 for married couples, but a 1% Social Security Tax (SST) applies even on these amounts unless you contribute to the Social Security Fund.
Whether you are a salaried employee, a business owner, a freelancer earning from abroad, or a foreign national working in Nepal, understanding your tax obligations under the Income Tax Act 2058 can save you from penalties of up to 15% annual interest on unpaid tax. The Inland Revenue Department (IRD) administers all income tax collection, and returns can now be filed online through the official taxpayer portal.
Income tax in Nepal is governed by the Income Tax Act 2058 (2002), updated annually by the Finance Act. For FY 2082/83, single individuals pay 1% SST on the first NRS 5 lakh, then progressive rates of 10% to 39%. Married couples get a higher threshold of NRS 6 lakh. Corporate tax ranges from 20% to 30%. Filing deadline: end of Ashwin (mid-October), 3 months after the fiscal year ends.
Court Marriage in Nepal Pvt. Ltd. — Nepal's first registered law firm for court marriage services. Married couples in Nepal enjoy a higher income tax threshold of NRS 6,00,000 compared to NRS 5,00,000 for single filers. If you are planning to register your marriage, contact our lawyers for a free consultation.
What Is the Legal Framework for Income Tax in Nepal?
Nepal's income tax system is built on three pillars:
| Law / Authority | Role |
|---|---|
| Income Tax Act 2058 (2002) | The primary statute — 143 sections covering tax computation, deductions, filing, assessment, and penalties |
| Finance Act (Annual) | Updates tax slabs, rates, and incentives each fiscal year. The Finance Act 2082 sets current rates. |
| Inland Revenue Department (IRD) | The government body under the Ministry of Finance that administers tax collection, audits, and the online portal at ird.gov.np |
The fiscal year in Nepal runs from Shrawan 1 to Ashadh end in the Bikram Sambat calendar — approximately mid-July to mid-July in the Gregorian calendar. FY 2082/83 covers roughly July 17, 2025 to July 16, 2026.
Who Must Pay Income Tax in Nepal?
Under Section 3 of the Income Tax Act 2058, the following persons and entities must pay income tax:
- Resident individuals — salaried employees, self-employed professionals, freelancers, sole proprietors
- Non-resident individuals — anyone earning Nepal-source income (salary, rent, business profits, capital gains)
- Companies and corporations — private limited, public limited, foreign branch offices
- Partnerships and firms — including joint ventures
- Trusts and cooperatives — with some exemptions for agricultural cooperatives
Income is classified into three heads under Section 5: business income, employment income, and investment income. Your total taxable income is the sum of all three heads minus allowable deductions.
What Are the Individual Income Tax Slabs for FY 2082/83?
The individual income tax slabs for fiscal year 2082/83 are progressive — meaning higher income is taxed at higher rates. Nepal uses six tax bands for individuals.
Tax Slabs for Single (Unmarried) Individuals
| Taxable Income (NRS) | Tax Rate | Tax on Band |
|---|---|---|
| First 5,00,000 | 1% (SST) | NRS 5,000 |
| 5,00,001 – 7,00,000 | 10% | NRS 20,000 |
| 7,00,001 – 10,00,000 | 20% | NRS 60,000 |
| 10,00,001 – 20,00,000 | 30% | NRS 3,00,000 |
| 20,00,001 – 50,00,000 | 36% | NRS 10,80,000 |
| Above 50,00,000 | 39% | — |
Tax Slabs for Married Individuals
| Taxable Income (NRS) | Tax Rate | Tax on Band |
|---|---|---|
| First 6,00,000 | 1% (SST) | NRS 6,000 |
| 6,00,001 – 8,00,000 | 10% | NRS 20,000 |
| 8,00,001 – 11,00,000 | 20% | NRS 60,000 |
| 11,00,001 – 20,00,000 | 30% | NRS 2,70,000 |
| 20,00,001 – 50,00,000 | 36% | NRS 10,80,000 |
| Above 50,00,000 | 39% | — |
Key points: The 1% on the first band is a Social Security Tax (SST), not a standard income tax. If you contribute to the Social Security Fund (SSF), the 1% SST is waived. Women taxpayers receive a 10% rebate on computed income tax. Married couples get a NRS 1,00,000 higher tax-free threshold — one reason why court marriage in Nepal carries tangible financial benefits beyond legal recognition.
Key Takeaway: Married individuals save at least NRS 1,000 per year in SST alone (NRS 6,000 vs NRS 5,000 on the first band). At higher income levels, the savings from the expanded 10% and 20% brackets add up further.
What Are the Corporate Tax Rates in Nepal?
Nepal applies different tax rates based on business type and sector. The standard corporate rate is 25%, but priority sectors enjoy reduced rates.
| Business Type | Tax Rate |
|---|---|
| General companies and corporations | 25% |
| Banks and financial institutions | 30% |
| Insurance and telecom companies | 30% |
| Manufacturing and export industries | 20% |
| Hotels, resorts, and tourism | 20% |
| Hydropower and agriculture | 20% |
| IT/Software export companies | 20% |
| Infrastructure development | 12.5% |
| Electric vehicle manufacturers | 15% |
| Agricultural cooperatives | 0% |
Companies listed on the Nepal Stock Exchange (NEPSE) receive a 15% rebate on their applicable tax rate. Startups with annual turnover under NRS 10 crore are eligible for 100% tax exemption for 5 years under the Finance Act 2082.
What Are the Common Tax Deductions in Nepal?
The Income Tax Act 2058 allows several deductions that reduce your taxable income:
- Life insurance premium — deductible up to NRS 40,000 per year (Section 12)
- Health insurance premium — deductible up to NRS 20,000 per year
- Retirement contributions — SSF and provident fund contributions are deductible
- Donations — contributions to tax-exempt organisations (Section 12) up to 5% of adjusted taxable income
- Home loan interest — limited deduction available for housing loans
- Remote area allowance — employees posted in designated remote areas receive additional tax-free allowances
- Depreciation — business assets can be depreciated under Section 19 at prescribed rates
What Is TDS (Tax Deducted at Source) in Nepal?
TDS is a mechanism where the payer deducts tax before making payment to the recipient. Under Sections 87–92 of the Income Tax Act 2058, employers and entities must deduct TDS on various payment types.
| Payment Type | TDS Rate |
|---|---|
| Salary and wages | Progressive (based on projected annual income) |
| Rent — residential building | 10% |
| Rent — machinery/equipment | 15% |
| Interest on deposits (individuals) | 5% |
| Interest (entities) | 15% |
| Dividends | 5% |
| Consultancy fees (with VAT invoice) | 1.5% |
| Consultancy fees (without VAT) | 15% |
| Contract payments (with VAT, above NRS 50,000) | 1.5% |
| Commission and royalty | 15% |
| Windfall gains (lottery, prizes) | 25% |
TDS must be deposited to the government within 25 days of the end of the Nepali month in which the deduction was made. Employers deducting salary TDS must issue an annual TDS certificate to employees.
How Do Capital Gains Taxes Work in Nepal?
Capital gains on land, buildings, and shares are taxed separately under the Non-Business Chargeable Assets (NBCA) provisions of the Income Tax Act 2058.
| Asset Type | Holding Period | Tax Rate (Individual) |
|---|---|---|
| Land and buildings | More than 5 years | 5% |
| Land and buildings | 5 years or less | 7.5% |
| Listed shares (NEPSE) | More than 365 days | 5% |
| Listed shares (NEPSE) | 365 days or less | 7.5% |
| Unlisted shares | Any period | 10% |
Properties sold for less than NRS 10,00,000 are not classified as NBCA and may not attract capital gains tax. Inherited property (up to three generations) and spouse-to-spouse transfers under Section 43 are generally exempt.
Key Takeaway: Hold assets for more than 5 years (land) or 365 days (shares) to reduce your capital gains rate from 7.5% to 5%. The difference matters on high-value transactions.
How to File Income Tax Return in Nepal
Nepal's IRD offers online filing through the Taxpayer Portal. Here is the step-by-step process:
- Register for PAN — if you do not already have a Permanent Account Number, apply at your nearest Inland Revenue Office or initiate the process online at ird.gov.np
- Create a portal account — register at taxpayerportal.ird.gov.np using your PAN number
- Log in — enter your PAN and password
- Select the return form — choose the correct form for your taxpayer category (individual, business, or entity) and fiscal year
- Enter income details — fill in employment income, business income, and investment income. Enter deductions and TDS credits.
- Review calculation — the system auto-calculates your tax liability
- Submit — file the return electronically
- Pay remaining tax — use the e-Payment section (online banking or card options available)
The portal is available in both English and Nepali. Filing is free through the official portal — there is no government fee for submitting your return.
What Are the Filing Deadlines and Advance Tax Rules?
| Deadline | Date | Details |
|---|---|---|
| Fiscal year end | Ashadh end (~July 16) | End of FY 2082/83 |
| Filing deadline | Ashwin end (~mid-October) | 3 months after fiscal year end |
| Extension | Up to 3 additional months | By application to IRD |
| Advance tax — 1st instalment | Poush end (~mid-January) | 40% of estimated annual tax |
| Advance tax — 2nd instalment | Chaitra end (~mid-April) | 70% of estimated annual tax |
| Advance tax — 3rd instalment | Ashadh end (~mid-July) | 100% of estimated annual tax |
Advance tax is not required if your total tax payable for the year is less than NRS 7,500. Most salaried employees do not need to pay advance tax separately because their employer deducts TDS monthly.
What Are the Penalties for Late Filing or Non-Payment?
The IRD imposes significant penalties for non-compliance:
| Violation | Penalty |
|---|---|
| Late payment of tax | 15% per annum interest on unpaid amount (Section 119) |
| Non-filing of return | NRS 1,200/year or 0.1% of assessable income, whichever is higher, plus NRS 100/month (Section 117) |
| False statement (knowingly) | 100% of underpaid tax (Section 120) |
| False statement (unknowingly) | 50% of underpaid tax |
| Failure to maintain records | Fine up to NRS 50,000 |
| No PAN registration | Fine up to NRS 50,000 + NRS 100/day for continued non-compliance |
How Are Foreign Nationals and NRNs Taxed in Nepal?
Foreign nationals working in Nepal are taxed on their Nepal-source income only. Non-Resident Nepalis (NRNs) follow the same rule — foreign income is generally not taxable in Nepal, but any income earned from Nepali sources (rent, dividends, business profits) is subject to tax.
| Income Type (Non-Resident) | Tax Rate |
|---|---|
| Rental income from Nepal property | 10% |
| Dividends from Nepali companies | 5% |
| Interest income | 15% |
| Consultancy / service fees | 15% |
| Contract payments | 5% |
Foreign nationals who are married to a Nepali citizen and residing in Nepal may qualify as resident taxpayers, which subjects them to the progressive individual tax slabs instead of flat withholding rates. This can be advantageous or disadvantageous depending on total income — consult a tax professional for your specific situation.
Conclusion: File on Time and Know Your Deductions
Nepal's income tax system for FY 2082/83 is straightforward once you understand the six-band progressive structure. The key numbers to remember: NRS 5 lakh threshold for singles, NRS 6 lakh for married couples, and a top marginal rate of 39% on income above NRS 50 lakh. File your return by Ashwin end (mid-October) to avoid penalties, and make sure your PAN registration is current.
If your tax situation involves marriage-related changes — such as updating your filing status after court marriage registration, a name change on tax records, or understanding the married couple threshold — our team at Court Marriage in Nepal Pvt. Ltd. can connect you with qualified tax advisors. Contact us for guidance.
Frequently Asked Questions
Individual income tax rates for FY 2082/83 range from 1% to 39% across six progressive bands. The first NRS 5,00,000 (single) or NRS 6,00,000 (married) is taxed at 1% SST. The highest rate of 39% applies to income exceeding NRS 50,00,000.
There is no fully tax-free threshold. The first NRS 5,00,000 (single) or NRS 6,00,000 (married) is taxed at only 1% Social Security Tax. This 1% SST is waived if you contribute to the Social Security Fund.
Yes. Married individuals get a higher first band of NRS 6,00,000 at 1% compared to NRS 5,00,000 for single filers. The 10% and 20% bands are also wider for married taxpayers, resulting in lower total tax at the same income level.
The standard filing deadline is the end of Ashwin (approximately mid-October), which is 3 months after the fiscal year ends in Ashadh. An extension of up to 3 additional months can be requested from the IRD.
Register at taxpayerportal.ird.gov.np using your PAN number. Log in, select the correct return form for your taxpayer category, enter income and deduction details, and submit. Payment can be made online through the e-Payment section.
TDS (Tax Deducted at Source) is tax deducted by the payer before making a payment. Under Sections 87–92 of the Income Tax Act 2058, employers and entities must deduct TDS on salaries, rent, interest, dividends, and contract payments at prescribed rates.
The standard corporate tax rate is 25%. Banks and financial institutions pay 30%. Manufacturing, tourism, and export industries pay 20%. Infrastructure companies pay 12.5%. NEPSE-listed companies get a 15% rebate on their applicable rate.
Yes. Freelance income is taxable under the employment or business income head. Freelancers earning foreign income through banking channels may qualify for a flat 5% final tax if annual income is below NRS 40 lakh.
Non-filing attracts a penalty of NRS 1,200/year or 0.1% of assessable income (whichever is higher) plus NRS 100/month. Late payment of tax incurs 15% annual interest. Knowingly filing a false statement can result in 100% penalty on underpaid tax.
Yes. A Permanent Account Number (PAN) is mandatory for all taxpayers in Nepal. You can register at any Inland Revenue Office or initiate the process online at ird.gov.np. Operating without PAN can attract fines up to NRS 50,000.
Capital gains on land and buildings are taxed at 5% if held for more than 5 years, and 7.5% if held for 5 years or less. Properties sold for less than NRS 10 lakh may not attract capital gains tax.
No. Non-Resident Nepalis are taxed only on Nepal-source income — such as rental income, dividends, and business profits from Nepal. Income earned abroad is generally not taxable in Nepal.
SST is a 1% tax on the first income band (NRS 5 lakh for singles, NRS 6 lakh for married). It is waived if you contribute to the Social Security Fund (SSF). SST replaced the former concept of a fully tax-free threshold.
Advance tax is paid in three instalments: 40% by Poush end (mid-January), 70% by Chaitra end (mid-April), and 100% by Ashadh end (mid-July). It is not required if total annual tax payable is below NRS 7,500.
Yes. Women taxpayers in Nepal receive a 10% rebate on their computed income tax. This applies after all deductions and before final tax payable is determined.
Court Marriage in Nepal Pvt. Ltd. is Nepal's first registered law firm for court marriage services. Since 2016, our Nepal Bar Council-registered advocates have helped 2,000+ couples from 50+ countries with marriage registration, document preparation, and legal consultation. Whether you are a Nepali citizen or a foreign national, contact us today for confidential legal assistance.
