Tax Rates Applicable for FY 2078/079

Government of Nepal, Ministry of Finance, Inland Revenue Department, the Tax rate
applicable for natural persons (for the income year 2078/79): In the case of taxpayers
registered as a sole proprietorship, one percent tax will not be levied on the income from
retirement, pension fund, and natural person contributing to the contribution-based social
security fund.

Subsections (1) and (2) of Section 1 of Schedule 1

Income Tax Rate in Nepal for Individual (Unmarried):

Annual Income Income Tax Rate (FY

2078/79)
Up to Rs 4,00,000 1%
Additional Rs 1,00,000 10%
Additional Rs 2,00,000 20%
Additional Rs 1,300,000 30%
Additional Tax Above Rs 2,000,000 36%
Income Tax Rate in Nepal for Married Couple:

Annual Income Tax Rate in

Nepal (FY
2078/79)
Up to Rs 450,000 1%
For Additional Rs 100,000 10%
For Additional Rs 200,000 20%
For Additional Rs 1,250,000 30%
Additional Tax Above Rs 2,000,000 36%

Tax Rate in Nepal for Non-Residents:

Source of Income Tax Rate

Normal transactions 25%
Through shipping, air or telecom services, postage, satellite, and optical 5%
fiber project
Shipping, air, or telecom services through the territory of Nepal 2%
Repatriation of profit by Foreign Permanent Establishment 5%

Corporate Tax Rates in Nepal

Normal Applicable
Type of Business Rebate
Tax Rate Tax Rate
Normal Business 25% – 25%
Special Industry under section 11 for the whole
25% 20% 20%
year
 Constructing and operating ropeway, cable car,
25% 40% 15%
railway, tunnel or sky bridge
Constructing and operating roads, bridges, tunnel,
25% 50% 12.50%
railway, and airports
trolley bus or trams 25% 40% 15.00%
Entities with export income from a source in Nepal 25% 20% 20%
Banks and financial institutions (A, B & C Class) 30% – 30%
General Insurance (Non-Life Insurance) 30% – 30%
Tobacco, alcohol, cigarette and related products 30% – 30%
Telecom and Internet Services 30% – 30%
Capital market, Securities, Merchant banking, 30% – 30%
Commodity futures market, Securities &
Commodity broker
Money transfer 30% – 30%
Petroleum business under Nepal Petroleum Act, 30% – 30%
2040

Amount not included in natural person's income or exemption in expenses:

1) Remote Allowance Facility:

Amount to be deducted from the taxable income of a natural person working in a remote
area: -

 In the area of the “A” category, Rs. 50,000 (fifty thousand)

 In the “B” class area, Rs. 40,000 (forty thousand)
 In the area of the “C” category, Rs. 30,000 (thirty thousand)
 In the “D” class area, Rs. 20,000 (Twenty Thousand)
 In the “E” class area, Rs. 10,000 (Ten Thousand)

2) Exemption facility in foreign allowance:

Seventy-five percent of the foreign allowance received by the employees working in Nepal's
diplomatic missions abroad can be deducted from the taxable income.

3) Exemption facility available to a person with retirement income:

If the resident is a natural person's retirement income, such person will be allowed to
deduct twenty-five percent from the taxable income limit.

4) Exemption facility for persons with disabilities:

If the resident is a natural person with a disability, such person will be allowed to deduct
an additional fifty percent from the taxable income limit.

5) Investment insurance exemption facility:

If the resident natural person has insured the investment, the amount deducted from the
annual premium of Rs. 25,000 paid for such insurance can be deducted from the taxable
income.
6) Premium paid for health insurance:

If the resident natural person has health insurance with the resident insurance company,
the amount deducted from the annual premium paid for such insurance or Rs. 20,000 can
be deducted from the taxable income.

7) Premium paid for insurance of private building owned by you:

If the resident natural person has insured the private building owned by the resident
insurance company, the annual premium paid for such insurance or the amount which is
less than five thousand rupees can be deducted from the taxable income.

8) Tax exemption for women with only wage income

If a resident is a natural person earning only wage income, then the exemption will be ten
percent of the tax amount to be paid by such a natural person.

Presumptive Tax: D-01 For submitting income statement:

The taxable income received by the resident natural person from the business will be Rs.
300,000 and the business turnover will not be more than Rs. 3 million annually. Subsection
(4) of Section 4 of the Income Tax Act 2018

Tax amount
Areas of business
Rs.
Natural persons doing business in metropolitan or sub-metropolitan 7,500
areas
Natural persons doing business in the municipal area 4,000
Natural persons doing business in areas other than those mentioned 2,500
above

Taxes based on transactions (1 Pa 1049. '195): 1) -02 For submitting

income statement:

In the case of taxpayers who have only income from business with natural resources in
Nepal, taxable income from the business is less than Rs. 1 million and business turnover is
more than Rs. 3 million less than Rs. (A) and (b) Ba (a), (b), and (c) should be filed as per
the sum. Income Tax Act; Sub-section (a) of section 4 of section 2048 (a)

In transactions up to three million rupees:

Tax amount
Areas of business
Rs.
Natural persons doing business in metropolitan or sub-metropolitan 7,500
areas
Natural persons doing business in the municipal area 4,000
Natural persons doing business in areas other than those mentioned 2,500
above
 Clause (b) - In transactions above Rs. 3 million to Rs. 5 million

Business Type Tax Rate

Up to three percent commission on Gas, cigarettes, etc., or value-
added to a person who trades goods up to three million rupees up to 0.25%
five million rupees of transaction amount: 0.25 percent.
To a person doing business other than the above-mentioned business,
more than Rs. 3 million to Rs. 5 million of the transaction amounts 1%

A person doing service business for a transaction amount of more than

2%
Rs. 3 million to Rs. 5 million

Section (c) - In transactions of more than Rs. 50 lakhs to Rs. 10 million

Business Type Tax Rate

Up to three percent commission on Gas, cigarettes, etc. or value added 0.30%
to a person who trades goods up to more than five million rupees to ten
million rupees of the transaction amount
To a person doing business other than the above-mentioned business 1%
up to Rs. 5 million up to Rs. 10 million of the transaction amounts
A person doing service business with a turnover of more than Rs. 5 2%
million to Rs. 10 million

Sub-section (1a) of Section 94 of the Act provides that a person who pays
Turnover Tax (TOT) on the basis of turnover has to file tax in two
installments as follows.

Date to be filed Tax amount to be filed

Until the end of the Tax to be levied on transactions as per the prescribed rate till
month of Poush Poush 20
Until the end of the Based on the actual turnover till Ashad 20, the turnover till the
month of Ashad end of Ashad is estimated and the tax levied at the prescribed
rate is calculated and the tax amount filed by Poush end is
deducted from that tax amount.