Nepal Income Tax Rates: Personal Tax Slabs, Non-Resident Rules and Tax Law
Nepal levies income tax under the Income Tax Act, 2058 (2002), as amended by annual Finance Acts. This guide explains the personal tax framework, the treatment of non-residents, available reliefs and the historical rates for FY 2075/76 (2018/19). Historical rates must not be used for current payroll or tax returns.
Legal framework and important definitions
Income Tax Act, 2058: The principal statute covering chargeable income, persons liable to tax, taxable employment, business and investment income, deductions, withholding, assessments and administration. Schedule 1 sets the tax rates for different classes of taxpayers, subject to annual amendments. Section 2 contains statutory definitions, including the meaning of persons and relevant income-tax concepts. Section 11 addresses specified tax concessions for eligible industries and activities; entitlement depends on the applicable text and conditions for the year.
Resident person: Residence is determined by the statutory tests applicable to individuals and entities, rather than citizenship alone. Non-resident: A person not meeting the residence test, generally taxed on income with a Nepal source, subject to applicable law and any double-taxation agreement. Permanent establishment: A taxable business presence of a non-resident, determined under the Act and any relevant treaty.
How to check the latest Nepal income tax rates
The tax year in Nepal generally follows the Bikram Sambat fiscal calendar, beginning in mid-July. The IRD official website publishes income tax materials, notices, returns and guidance, while the Ministry of Finance publishes budgets and Finance Acts. Verify the annual individual and couple bands, the treatment of the initial 1% social security tax, higher-income surcharges, exemptions and any Social Security Fund rules for the precise fiscal year. Tax rates are marginal: the rate on a higher band does not ordinarily apply to all earlier bands.
Nepal income tax rates for FY 2075/76 (2018/19)
The following tables preserve the rates recorded in the original article for historical reference. Amounts are in Nepalese rupees (NPR) and the rates are shown for successive portions of taxable income.
Resident individual: FY 2075/76
| Annual taxable income (NPR) | Historical marginal rate |
|---|---|
| Up to 350,000 | 1% |
| Over 350,000 to 450,000 | 10% |
| Over 450,000 to 650,000 | 20% |
| Over 650,000 to 2,000,000 | 30% |
| Over 2,000,000 | 36% (including surcharge as reflected in historical table) |
Resident couple: FY 2075/76
| Annual taxable income (NPR) | Historical marginal rate |
|---|---|
| Up to 400,000 | 1% |
| Over 400,000 to 500,000 | 10% |
| Over 500,000 to 700,000 | 20% |
| Over 700,000 to 2,000,000 | 30% |
| Over 2,000,000 | 36% (historical) |
Deductions, rebates and special provisions
The original FY 2075/76 article listed several deductions and concessions. They are preserved below as historical provisions, not a representation of current eligibility. Their precise application depended on the statutory conditions and the Finance Act for the relevant year.
- Remote-area employment relief, historically subject to a maximum deduction of NPR 50,000 depending on the prescribed location.
- Additional relief for eligible pension recipients, historically calculated by reference to 25% of the first individual income slab.
- Additional deduction for an eligible incapacitated person, historically linked to 50% of the first slab.
- Life insurance and health insurance premium deductions, each historically capped at NPR 20,000 or actual qualifying premiums, whichever was lower.
- Special treatment of foreign allowances for qualifying Nepalese diplomatic staff and employees posted abroad.
- Historical 10% rebate on income tax for qualifying women with employment-only taxable income, subject to conditions.
- Sector-specific concessions for eligible exports and special industries, including qualifying manufacturing, tourism, energy, agricultural, forestry and mineral activities under applicable provisions such as section 11.
Some reliefs and incentives change frequently. For any current claim, consult the current Finance Act, IRD instructions and the specific eligibility provisions. The original article also mentioned an earthquake-related repair allowance that expired in FY 2073/74; it is not a current deduction.
Non-resident income tax and withholding
Non-residents may be liable on Nepal-source employment, business, investment or other income. The rate and method of taxation depend on the type of payment, whether income is subject to final withholding, whether the person has a Nepal permanent establishment, and any applicable double-taxation treaty. Do not apply a blanket 25% rate to every non-resident receipt.
For historical context, the original article described 25% for ordinary non-resident business transactions, 5% for specified transport and telecommunications-related receipts, and 4% for repatriation of profits by a foreign permanent establishment. These were category-specific historical figures, not a comprehensive current schedule.
Tax filing and compliance
Employers and other withholding agents must apply the rates and procedures for the relevant fiscal year, remit withholding and issue required statements. Individuals and businesses may have registration, estimated tax, return filing and recordkeeping obligations. The IRD is the official source for taxpayer services and electronic filing instructions.
Earlier historical Nepal tax schedules
FY 2073/74: historical resident tax slabs
Individual
| Annual taxable income (NPR) | Historical marginal rate |
|---|---|
| Up to 350,000 | 1% |
| Over 350,000 to 450,000 | 15% |
| Over 450,000 | 25% |
Couple
| Annual taxable income (NPR) | Historical marginal rate |
|---|---|
| Up to 400,000 | 1% |
| Over 400,000 to 500,000 | 15% |
| Over 500,000 | 25% |
FY 2072/73: historical resident tax slabs
Individual
| Annual taxable income (NPR) | Historical marginal rate |
|---|---|
| Up to 250,000 | 1% |
| Over 250,000 to 350,000 | 15% |
| Over 350,000 | 25% |
Couple
| Annual taxable income (NPR) | Historical marginal rate |
|---|---|
| Up to 300,000 | 1% |
| Over 300,000 to 400,000 | 15% |
| Over 400,000 | 25% |
For both FY 2073/74 and FY 2072/73, the source article also listed 25% for ordinary non-resident transactions, 5% for certain international transport and telecommunications services and 4% for foreign permanent-establishment repatriation. Those classifications should be checked against the law applicable to the transaction and year.
Official legal and tax resources
- Inland Revenue Department of Nepal - legislation, taxpayer guidance, rates, notices and tax services.
- Ministry of Finance of Nepal - annual budgets, Finance Acts and fiscal policy.
- Nepal Law Commission - consolidated legislation and legal texts.
This article provides general information and historical tables, not a tax assessment or legal opinion. Verify the official law and rates for the specific Nepal fiscal year.