FY 2083/84 Individual Income Tax Rates in Nepal

The percentage shown for a slab applies only to the portion of taxable income falling within that slab.

For example, if a resident individual's taxable income is NPR 1,800,000 and the 1% first-band charge applies:

• First NPR 1,000,000 × 1% = NPR 10,000

• Next NPR 500,000 × 10% = NPR 50,000

• Remaining NPR 300,000 × 20% = NPR 60,000

Total tax before other applicable credits or rebates = NPR 120,000.

A person does not pay 20% on the entire NPR 1,800,000.

*Where the statutory exemption from the 1% first-band charge applies, reduce the corresponding cumulative amount by NPR 10,000.

For FY 2083/84, the former separate couple slab has been deleted. The principal income-tax thresholds above therefore apply under the unified Schedule 1 structure.

This does not mean that every other provision relating to a couple under the Income Tax Act has disappeared. Couple election and other statutory provisions should be considered separately where relevant.

The slabs are applied to taxable income, not automatically to gross salary or gross receipts.

The broad computation sequence is: Assessable income

minus eligible statutory deductions

= taxable income

then apply applicable tax slabs then apply eligible tax credits/rebates then adjust allowable advance tax/TDS

= final tax payable or refundable

For an employee, employment income may include salary, bonus, allowances, taxable benefits and employer contributions that are required to be included under the Act.

Where the statutory contribution-based Social Security Fund condition is satisfied, the 1% first-band social-security charge does not apply.

Example: Taxable income: NPR 1,200,000
Qualifying SSF contributor

• First NPR 1,000,000 → no 1% charge

• Remaining NPR 200,000 × 10% = NPR 20,000

Indicative annual tax = NPR 20,000, before any other applicable credit or adjustment.

Depending on the taxpayer's circumstances, taxable income or tax liability may also be affected by items such as:

• approved retirement contributions;

• life insurance;

• health insurance;

• qualifying private-building insurance;

• qualifying child tuition fees;

• remote-area relief;

• disability relief;

• foreign allowance treatment;

• medical tax credit;

• other statutory concessions.

For FY 2083/84, the private-building insurance ceiling was increased to NPR 10,000 and a new deduction was introduced for qualifying tuition fees equal to 25% of the annual fee paid or NPR 25,000, whichever is lower.

These should be checked individually because eligibility conditions apply.

Separate rules may apply to:

• non-residents;

• presumptive taxpayers;

• turnover-based taxpayers;

• capital gains;

• final withholding payments;

• windfall gains;

• special industries and concessions;

• foreign-source income;

• permanent establishments;

• treaty cases.

Using gross salary directly: The rate applies to taxable income after applicable adjustments.

Applying the highest rate to all income: Nepal uses progressive slabs.

Using last year's single/couple thresholds: FY 2083/84 uses the new unified structure.

Charging 1% automatically to an SSF contributor: The statutory exception must be considered.

Treating TDS as final tax in every case: Many withholding payments are only advance/non-final tax.

Primary reference should always be made to:

• Income Tax Act, 2058;

• Finance Act 2083;

• applicable Income Tax Rules;

• FY 2083/84 tax-rate notice issued by IRD.

IRD lists the current FY 2083/84 natural-person tax-rate notice dated 22 Shrawan 2083 and the gazetted Finance Act 2083.

This resource provides general information. Tax liability depends on the nature of income, deductions, residency, withholding status and other facts. Transaction-specific professional review may be necessary.