Entity and Corporate Income Tax Rates in Nepal — FY 2083/84

The IRD's entity-rate schedule for income year 2083/84 identifies an ordinary entity rate of 25% and a 30% rate for the specified businesses in Schedule 1, paragraph 2(2). The latter category includes banking and financial businesses, general insurance, telecommunications and internet services, money transfer, specified capital-market businesses, tobacco, liquor and beer businesses, and petroleum activities. This summary must be read with the complete statutory category. A company name or commercial registration label alone cannot settle its tax classification.

The rate applies to taxable income. It is not a percentage of sales, customer collections, VAT-inclusive turnover or accounting revenue. A concession affecting qualifying income is a separate question from the underlying ordinary rate.

The schedule also addresses specified Nepal-source income of non-residents under section 70. Do not substitute the ordinary resident-company rate for that special computation. Mixed activities, concessions and source allocation require the complete Act and current Finance Act overlay.

Take taxable income of NPR 8,000,000, with no concession, loss adjustment or tax credit. An ordinary qualifying entity at 25% has gross tax of NPR 2,000,000. A business within the 30% statutory category has gross tax of NPR 2,400,000. The NPR 400,000 difference arises from classification, not from the company having different turnover.

If the ordinary company has supported non-final withholding credits of NPR 250,000 and instalments of NPR 1,500,000, its remaining illustrative balance is NPR 250,000. A final withholding receipt needs separate treatment and cannot automatically be inserted as an ordinary credit against the same income.

Do not claim a hotel or resort concession for a restaurant merely because it operates in the tourism sector. Establish the precise qualifying activity, full-year conditions and interaction provisions. Where more than one relief appears available, document the permissible combination and the income to which it attaches. The hospitality chapters discuss those eligibility issues; this rate table does not approve a concession claim.

For a mixed business, prepare an activity-by-activity analysis with revenue, attributable expenses and shared-cost allocation. A general ledger headed “hotel revenue” may conceal rent, investment income or a separately classified activity. Preserve the reasoning used to choose the statutory category.

Keep the current-year IRD schedule, relevant Act paragraphs, Finance Act amendment mapping, business licences, income segmentation and concession evidence together. Have the reviewer check the classification before signing the computation. A rate carried forward from the previous year's return is a starting reference rather than evidence that this year's rate and eligibility remain correct.

Where a company earns income from different activities, identify the rules governing each category and any concession rather than multiplying one apparent effective rate by total accounting profit. Separate operating income, investments, disposals and final-withholding receipts. Support allocations of shared costs with a consistent method and retain the statutory reason for a separate category. For example, a hotel company also receives unrelated commercial rent and interest. A hotel concession should not be extended to those receipts simply because they enter the same bank account. Conversely, a receipt connected with the hotel’s business needs analysis of its substance; an accounting caption is not decisive.

Reconcile the categorisation to the general ledger and annual return. The FY 2083/84 notice also lists a 20% rate for a school or college registered and operated under a public trust. This is a legal-form category. It does not assign 20% to every private training company or consultancy using an educational brand. Preserve the registration and governing documents before relying on it. When an estimate changes during the year, update the advance-tax working and record why. The annual computation should explain the rate, concession, credit and payment sequence in that order. This makes a rate change or wrongly applied relief easier to detect than a single line labelled “net corporate tax.”