Nepal Income Tax Rate - 25%
Nepal Corporate Tax Rate - 20-30%
Nepal Sales Tax / VAT Rate - 13%
(This page may show previous year's tax rates. Always check last update time)
Nepal Income Tax Rates for Individuals
Nepal individual income tax rates are progressive to 25%. Tax exemption limit is Rs.160,000 for individuals and Rs.200,000 for couples:
Tax rates for resident individuals
Income (Rs.) Tax Rate0 - 160,000 1%
160,001 - 260,000 15% (+ Rs. 1,600)
Above Rs. 260,000 25% (+ Rs. 16,600)
Tax rates for Married (including widow & widower)
Income (Rs.) Tax Rate0 - 200,000 1%
200,001 - 300,000 15% (+ Rs. 2,000)
Above Rs. 300,000 25% (+ Rs. 17,000)
Tax rates for Proprietorship Firm - single
Income (Rs.) Tax Rate0 - 160,000 0%
160,001 - 260,000 15%
Above Rs. 260,000 25% (20% for Export Income and Income from Special Industry) + Rs. 15,000
Tax rates for Proprietorship Firm - married
Income (Rs.) Tax Rate0 - 200,000 0%
200,001 - 300,000 15%
Above Rs. 300,000 25% (20% for Export Income and Income from Special Industry) + Rs. 15,000
Having only Business Income with Annual Turnover up to Rs 20 Lacs and Annual Income up to Rs. 2 Lacs
- In the Metropolitan or Sub Metropolitan Cities Rs. 5000
- In the Municipalities Rs. 2500
- In the rest of Nepal Rs. 1500
Tax Rate for Non Resident Natural Person: Taxable income of a non resident natural person shall be taxed at 25%.
Notes:-
-
Resident Disabled Individual shall get an additional 50% of Exemption
Limit (i.e. 50% of Rs. 200,000 in case of couple & Rs. 160,000 in
case of single).
- Resident Woman, having only Remuneration Income, shall be entitled to a Tax Rebate of 10%.
- Individual having Life Insurance Policy shall get an additional exemption from hid Taxable
-
Income to the extent of Rs. 20,000 or Premium Amount, whichever is
lower. 4. Husband and Wife, having separate income source, are given
option either to get assessed separately or jointly as family.
- Annual Remote Area Allowance up to Rs. 30,000 is exempted from tax.
- Employees working in Nepalese Mission abroad are allowed 75% exemption on Foreign Allowances.
- There is no levy of any Additional Income Tax
Rebate
on Tax Liability for Resident Female with only employment income - A
female resident natural person having only remuneration income from
employment shall be provided with a rebate of 10% on the tax liability
on tax calculated as above.
Tax on Non Business Chargeable Assets
- Gain from disposal of Non Business Chargeable Assets are taxed at 10%
after taking into consideration exemption limit (i.e Rs.1,60,000 for
individual and Rs.2,00,000 for couples). In case of land and buildings,
if the disposed land & buildings has been owned for more than 5
years, tax rate of 5% shall apply.
Gain from Non Business Chargeable Assets includes
- gain from sale of shares of companies,
- gain from sale of land and building owned and resided for less than 10 years and disposed for more than Rs.50 lakhs.
Special Tax Rates for Natural Persons
Particulars Applicable Tax Rates
For incomes earned from operating special industries 20% where 25% tax rate applies
For incomes earned from export business 20% where 25% tax rate applies
Tax Deductions and Facilities for Resident Persons
Life
Insurance Premium - While calculating taxable income, life Insurance
premium paid by a resident natural person is deductible up to the limit
of Rs 20,000.
Employees working in Diplomatic Agencies - 75% of
foreign allowance is deducted from taxable income in case of an employee
employed at diplomatic agencies of Nepal situated at foreign countries.
Incapacitated
natural persons - In case of incapacitated natural persons, the minimum
exemption limit (Rs.1,60,000 for individual and Rs.2,00,000 for
couples) is increased by additional 50%.
Remote Area Benefit - In
case of resident natural persons working in remote areas, minimum
exemption limit shall be increased by Rs 30,000, Rs 24,000, Rs 18,000,
Rs 12,000 or Rs 6,000 depending on remote area category of A, B, C, D
and E prescribed in Income Tax Rules 2059.
Additional limit for
pension income - If income of a resident natural person includes pension
income, the taxable income is first reduced by additional 25% or
pension amount included in income whichever is lower and then tax
liability is calculated on balance income.
Tax Credits for Resident Persons
Medical
Tax Credit - In case of approved medical expenses, medical tax credit
is available to resident natural persons as deduction from tax
liabilities. The limit prescribed is Rs.750 or 15% of Approved medical
expense or actual approved medical expense incurred whichever is lower.
Any unutilized expenses can be carried forward to next year.
Foreign
Tax Credit - If foreign income is included in taxable income of a
resident person, foreign tax credit for tax paid in foreign country in
respect of that income. The foreign tax paid can either be deducted as
expense or tax liability in Nepal can be reduced by such tax paid up to
average rate of tax applicable in Nepal, depending on the option of tax
payer.
Nepal Corporate Tax Rates
The standard rate of corporate tax in Nepal is 25%. However, different entities are taxed at different rates:
Particulars / Tax Rate
- Bank, Finance Company, General Insurance Company, Petroleum Entities: 30%
- Cigarette, Tobacco, Beer and Alcohol Company: 30%
- Special Industries & IT Industries: 20%
- Entities engaged in construction & operation of Road, Bridge, Tunnel, Ropeway, Trolley Bus and Tram: 20%
-
Co-operative Institution registered under Co-operative Act, 2048 (other
than co- operatives dealing in except dealers in Exempted Transaction):
20%
- Entity wholly engaged in the (BOOT) projects conducted so as
to build public infrastructure, own, operate and transfer it to the HMG
& in power generation, transmission, or distribution: 20%
- Non-resident person Providing Shipping, Air Transport or Telecommunications Services in Nepal: 5%
- Private Limited Co., Limited Co., Partnership Firm not specifically mentioned above: 25%
- Airline Services having office in and business in Nepal but not operating flights to and within Nepal: 2%
- All Export Entities: 20%
- Repatriation of income of a Foreign Permanent Establishment of a Non-Resident situated in Nepal: 5%
Reduced Tax Rates
Corporate Groups Applicable tax rate
- Information Technology industries: 22.5%
-
Special Industries and Information Technology Industries providing
direct employment to 300 or more Nepalese citizens during a period: 90%
of applicable rate
- Special Industries providing direct employment to 1200 or more Nepalese citizens during a period: 80% of applicable rate
-
Special Industries providing direct employment to more than 100
Nepalese citizens during a period 33% of which are women, incapacitated
and dalits: 80% of applicable rate
- Special Industries operating in very undeveloped area: 50% of applicable rate
- Special Industries operating in undeveloped area: 70% of applicable rate
- Special Industries operating in underdeveloped area: 75% of applicable rate
-
Industries established in Special Economic Zone of mountain district as
specified by the government and hilly district: 0% for 10 years &
50% thereafter
- Industries established in Special Economic Zone of
other areas: 0% for 5 years and 50% thereafter (In case of dividend of
such industries, dividend tax is exempt for first five years of
operation and 50% concession is provided for dividend tax in next three
years)
- Income from foreign technology, management fee and royalty
earned by foreign investor from industries established in special
economic zone: 50% of applicable rate
- Industries established in remote areas: 0% for 10 years
- Information Technology based industries established at prescribed Information Technology park: 75% of Normal Rate
- Licensed Industries engaged in production and distribution of electricity, if the production and distribution is completed
by the end of Chaitra 2075: 100% exemption for first 7 years, 50% for next 3 years.
Tax Rates for Non Residents
Particulars / Applicable Tax Rates
-
For incomes earned from operation of water transport, charter service
or air transport or by operating a cable, radio, optical fiber or
earth-satellite communication business from the transmission of news or
information through the equipments installed in Nepal: 5%
- For
incomes earned from providing air transport, water transport or
telecommunication services within the territory of Nepal: 2%
- On repatriation of income by Foreign Permanent Establishment: 5%
Advance Income Tax
Income Tax for fiscal year should be paid in 3 installments as follows:
Instalment Time Period Amount
First Up to Mid-January (Poush end) 40%
Second Up to Mid- April (Chaitra end) 70%
Third Up to Mid-July (Ashadh end) 100%
Where
an instalment of tax paid by a person is less than 80% of Tax Payable,
interest shall be levied @ 10% for each month and part of month from the
date of first installment on the amount to the excess of 80% of the
instalment that would have paid over the installment paid.
The
presumptive tax-payers need not require paying any advance tax as above.
Further if the Tax Amount for the fiscal year is less than Rs 5000,
installment is not required to be paid.
Carry Forward of Loss
- Carry Forward of Loss from Business and Investment can be made up to 7 years.
-
Carry Forward of Loss can be made up to 12 years in case of Projects
building, operating & transferring public infrastructure to the
Nepal Government, Projects building Electricity Production House,
generating & transmitting electricity and entities dealing in
petroleum products under Nepal Petroleum Act, 2040.
- Loss incurred in business or investment where assessee enjoys full / partial tax exemption cannot be carried forward.
Penalty for Non-Filing of Income Tax Return on Time
- Non-Filing of Estimated Income Tax Return Income u/s 95 within due date shall attract penalty of Rs. 2000 per Return.
-
Non-Filing of Income Tax Return Income u/s 96 within due date shall
attract penalty of @ 0.10% of Annual Turnover or Rs. 100 per month
whichever is higher.
Tax Concession and Rebates
- 10
Years Tax Holiday from date of operation and 50% Tax Rebate thereafter
to industries established in Special Economic Zone (SEZ) of Himalayan
Districts and other prescribed Hilly District.
- 5 Years Tax Holiday
from date of operation and 50% Tax Rebate thereafter to industries
established in other Special Economic Zone (SEZ).
- 100% Rebate for
first 5 Years from date of operation and then 50% Rebate for next 3
Years on dividend distributed by industries established in Special
Economic Zone (SEZ).
- 50% Rebate on Income Tax on income from
Foreign Technology or Management Consultancy or Royalty earned by
foreign investors of industry established in SEZ.
- 10 Years Tax Holiday from date of operation to industries established in remote areas.
- 25% Tax Rebate to IT Industries established in prescribed Information Technology Park.
-
Entities having license for Electricity generation, transmission &
distribution, if commences generation / generation & transmission /
generation & distribution / generation, transmission &
distribution of Hydro-electricity commercial manner by Chaitra end,
2075; such entities shall have Tax Holiday for a period of first 7 Years
and 50% Tax Rebate thereafter for 3 Years, from date of such
commencement of generation, transmission & distribution. Such
facilities shall also be applicable for Electricity generated from
Solar/Wind/Organic Materials.
However, entities already having
started commercial production of electricity before Shrawan 01, 2066
shall be eligible for facility as prevalent at the time of obtaining
license
- 50%, 30% & 25% Rebate on Income Tax for 10 Years
including the year of operation to Special Industries operating in
Highly Undeveloped, Undeveloped & Under-developed areas
respectively.
- 10 % Rebate on Income Tax to Special Industries and
IT Industries which provide direct employment to 300 Nepalese nationals
throughout the year. [Earlier, it was 500 Nepalese].
- 20 % Rebate
on Income Tax to Special Industries which provide direct employment to
1200 Nepalese nationals throughout the year.
- 20 % Rebate on Income
Tax to Special Industries which provide direct employment to 100
Nepalese nationals including 33 percent women, dalits (the downtrodden)
or the handicapped, throughout the year
Tax Deduction at Source (TDS) rates
Resident employer should withhold tax while making employment income payment with sources in Nepal to an employer as follows.
(Monthly TDS = Annual Tax calculated as per schedule 1 on annual employment income divided by 12)
Particulars / Tax Rates
- On Interest, Royalty, Service Charge, Retirement Payment having source in Nepal, except mentioned otherwise: 15%
- Payment made to resident person on Service Charge invoiced in VAT bill: 1.5%
-
On Nepal sourced Interest by Banks and financial institutions and/or
listed companies to a natural person. Such payment should not be made in
connection with operation of any business: 5%
- On payment made by a resident person for rent having source in Nepal: 10%
- On payment of gain from Investment Insurance: 5%
- On payment of gain from retirement fund: 5%
- On payment of commission by resident employer company to a non resident person: 5%
- On payment of lease rental of aircraft: 10%
- On payment of premium to non-resident insurance companies: 1.5%
- On gain from transaction on commodity future market: 10%
- On windfall gains except national and international level prizes as prescribed by Nepal Government: 25%
Nepal vat (Value Added Tax)
Standard rate of Value Added Tax in Nepal is 13%. Certain goods/services are exempt.
Entity
having turnover of Rs.2.0 million or more is required to get registered
with Valu Added Tax Office and 13% VAT shall be applicable to it.
Tax deduction on sources(TDS) Tax Act 2058 -
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