Nepal Income Tax Slabs Explained (FY 2083/84)

How Nepal taxes a natural person

Nepal uses progressive slabs: each portion of your taxable income is taxed at the rate for that slab, not the whole amount at the top rate. You are assessed either as an individual or, if married and you elect it, as a couple with a wider first slab.

The slabs

* The 1% on the first slab is the social security tax. It is waived for people contributing to the Social Security Fund (SSF), for sole proprietors, and on pension income.

These are the FY 2082/83 rates carried forward; always confirm against the current Finance Act.

Deductions that come off first

• Retirement contributions (SSF, CIT, EPF, approved retirement fund): up to one-third of assessable income or रु 5,00,000, whichever is lower.
• Life insurance premium: up to रु 40,000.
• Health insurance premium: up to रु 20,000.
• Remote-area allowance for employees posted in designated remote areas.

Rebates

Women with only employment income receive a 10% rebate on the tax computed. Individuals with disabilities and pensioners have additional exemptions.

A worked example

Salaried individual, रु 12,00,000 annual salary, contributes 11% to SSF (रु 1,32,000), pays रु 30,000 life insurance:

• Taxable income: 12,00,000 − 1,32,000 − 30,000 = रु 10,38,000
• First 5,00,000 at 0% (SSF contributor) = 0
• Next 2,00,000 at 10% = 20,000
• Next 3,00,000 at 20% = 60,000
• Remaining 38,000 at 30% = 11,400
• Total tax ≈ रु 91,400, about रु 7,600 a month via TDS

Run your own numbers in the estimator.

What is taxed separately

Rental income of individuals is taxed at a flat rate by the local level, capital gains on land and shares carry their own rates, and small businesses may fall under presumptive or turnover-based taxation instead of the slabs.