Updated Income Tax rates in Nepal for 2077/2078 (2020-21) including tax rates and rules for Individual and Couple and businesses. The tax threshold slabs for the Fiscal year 2077/78 is updated as per the Budget speech.
Tax slab for Resident Natural Person (Individual and married couple). To calculate your tax liability add all the personal incomes and check for the slabs to find out rates.
For example if you are unmarried and you earn Nrs 5,50,000 per year, your tax is calculated as:
4,00,000*1%=Rs 4000 Plus
1,00,000*10%= Rs. 10000 Plus
50,000*20%= Rs 10000
Total Tax= 4000+10000+10000= Nrs . 24000
*This is the Social Security Tax to be deposited in a separate revenue account (11211) provided for this purpose. However, tax payer registered as sole proprietorship or on pension income or on income from contribution based pension fund shall not attract social security tax i.e. 1%. And if the taxpayer is depositing amount in the Social Security Fund (SST) then for those taxpayer Social Security Tax is not applicable
Some important notes related to Income Tax rules for resident natural person. Please click the arrow next to the image to view the next image
Income tax applicable for Corporations. To calculate the corporate income tax you need to find out the profit after deducting all the allowable expenses and deductables from the gross profit. Below is the chart of corporate income tax in Nepal for FY 2077/78 (2020-21).
By Finance Act 2019-20, tax rates of special industry, entities involved in the operation business of road, bridge, tunnel, ropeway, railway, or sky bridge; operation of trolleybus and tram; export business, construction of infrastructures and construction, production, and distribution of electricity has been removed from the Schedule -1 of the Income Tax Act, 2058. Normal tax rate applicable to the above entities is 25%. However, these entities can avail various concessions given under Section 11 of the Act.
Please check the comment section for discussions and solutions.
*This information is not updated for FY 2076/77. Please use the facts and figures below for comparisons and referral purpose only.
1. Natural person working at remote areas are entitled to get deduction from taxable income to a maximum of Rs. 50000.
2. Natural person with pension income included in the taxable income shall be entitled to deduct from taxable income an additional 25% of the amount prescribed under first tax slab.
3. An incapacitated natural person shall be entitled to get a deduction from taxable income an additional 50% of the amount prescribed under first tax slab.
4. A Resident natural person who has procured life insurance and paid premium amount thereon shall be entitled to a deduction of actual annual insurance premium or Rs. 20000 whichever is less from gross taxable income.
5. A Resident natural person who has procured Health Insurance and paid premium amount thereon shall be entitled to a deduction of actual annual insurance premium or Rs. 20,000 whichever is less from gross taxable income.
6. In case of the employee employed at the foreign diplomatic of Nepal only 25% of the foreign allowances are to be included in the income from salary.
7. In case of the employee posted outside Nepal is getting foreign allowance will get 75% rebate of such allowance.
8. In case of the female employee whose taxable income is only from employment than 10% rebate is allowed on tax liability.
9. In case of individual having income from export, tax rate of 15% is applicable in place of 25%.
10. The limit of 7% of Depreciable Base is not applicable on the repair and improvement expenses incurred for assets located at earthquake affected areas prescribed by GON, in case the person desires to apply this provision. This facility is allowed until FY 2073/74.
11. Productive industries, except tobacco and alcohol industries are eligible to get 50% discount on land registration fee.
12. Special Industries related with manufacturing, tourist services, electricity production and distribution listed on NEPSE and industries mentioned on section 11(3ga) shall be provided with concession of 15% on applicable tax rate. This budget has included Agricultural, Forestry and Mineral Industries also in to the category of Special Industries.
B. Income Tax Rates in Nepal For Non-Resident Person
|S. N.||Nature of transaction||FY 2072/73||FY 2073/74|
|1||Income earned from normal transactions.||25% flat rate||25% flat rate|
|a.||Income earned from providing shipping, air transport or||5%||5%|
|telecommunication services, postage, satellite, optical fiber|
|b.||Income earned providing shipping, air transport of||2%||2%|
|Telecommunication services through the territory of Nepal.|
|c.||Repatriation by Foreign Permanent Establishment.||5%||5%|
A. Income Tax Rates of Nepal For Resident Person
There has been a change in the Income Tax Rates applicable to the Resident Person from the Budget this year. Details of the same has been provided below.
Income tax rates for F/Y 2076/2077 (Individual)
Income tax rates for F/Y 2076/2077 (Couple)
Income tax rate comparisons for FY 2075/76 and 2076/77
|Particulars||FY 2075/76||FY 2076/77|
|Rs.||Tax Rate||Rs.||Tax Rate|
|Assessed as Individual|
|First Tax Slab||350,000||1%||400,000||1%|
|Assessed as Couple|
|First Tax Slab||400,000||1%||450,000||1%|