Budget 2082/83 Tax Changes in Nepal — FY 2025/26

2% DST on annual turnover above NPR 3 million from Nepal customers by foreign digital service providers (streaming, SaaS, ads, e-commerce). B2B exempt; only B2C taxed. Permanent establishment requirement removed.

75% exemption on IT export earnings — effective tax rate around 5%. Major incentive for Nepali IT services companies serving overseas clients. Introduced in Budget 2082/83.

15 Jestha 2082 BS (29 May 2025) by Finance Minister Bishnu Prasad Paudel in the Federal Parliament. Total budget size NPR 1.964 trillion. The Finance Bill 2082 gives statutory effect to the tax changes. Fiscal year runs from 1 Shrawan 2082 (16 July 2025) to 32 Ashadh 2083 (16 July 2026). FY 2082/83 corresponds to FY 2025/26 in international fiscal terms.

25% (unchanged). Banks, insurance, telecom, tobacco and alcohol: 30% (unchanged). Material sectoral concessions in Budget 2082/83 — IT services and hotels / tourism get 20% effective rate via 20% rebate on the standard rate (NEW). IT export earnings get 75% exemption (effective rate around 5%). IT parks, bio-tech and zoological parks — exemption raised from 50% to 75%. The sectoral incentives are the main business-friendly piece of the Budget.

Nepal-incorporated companies with turnover under NPR 10 crore (NPR 100 million) get 100% income-tax exemption for 5 years from incorporation. The operational definition of "startup" comes from the Industrial Enterprise Act 2076 and IRD circulars — typically a Nepal-registered private limited company, founded within prior 5-7 years, in an innovative / new-technology / value-addition sector. The exemption is one of the larger pro-business incentives and is particularly relevant for early-stage IT, fintech, e-commerce, manufacturing and tourism ventures.

VAT rate remains 13% — unchanged. Two new VAT exemptions added: digital payment services and hearing aids. The continued VAT amnesty — principal paid plus 25% interest (reduced from 50%) for non-filers — extends the catch-up window for delinquent VAT-registered businesses to come into compliance without the full interest penalty. The 13% rate has held since 2005 and is unlikely to change without a major fiscal restructuring exercise.

A new Green Tax introduced in Budget 2082/83 at customs on environmentally-sensitive imports. The specific tariff schedule is set by Customs Act 2082 amendments and IRD circulars. The intent is to incentivise environmentally-friendly imports and disincentivise high-emission, high-pollution and high-waste imports. Verify the specific Green Tax rate for any given HS-code import at the Customs office or through a tariff consultant before quoting a price. The Green Tax sits alongside regular customs duty, VAT and excise — it is an additional levy, not a replacement.

No. EV customs and excise rates for FY 2082/83 are UNCHANGED from the FY 2081/82 hike. Schedule by motor power: under 50 kW — 15% customs + 5% excise; 51-100 kW — 20% + 15%; 101-200 kW — 30% + 20%; 201-300 kW — 60% + 35%; above 300 kW — 80% + 50%. Industry expected further moderation; the unchanged schedule was a Budget surprise. EV charging-station manufacturers received separate concessions (1% customs on equipment + 5-year income-tax holiday).

Land and building held 5+ years: 2.5%. Held under 5 years: 5%. Securities held by non-resident individuals: 25%. Securities held by resident individuals: 7.5% (long-term) / 7.5% (short-term — to be confirmed under the FY 2082/83 schedule via IRD circulars). The Budget 2082/83 did not introduce major capital-gains changes; the rates carry over from prior years. Verify the current rate with IRD or a tax consultant before any transaction.

1% Social Security Tax on the first slab of personal income (NPR 0-500K). SSF (Social Security Fund) contributors have the SST waived under the structural design — those who pay 11% employee + 20% employer SSF contribution are not also liable for the 1% SST on the same income. The SST is a small but real overhead on lower-income earners outside the SSF; SSF participation is therefore beneficial both for retirement / medical / accident insurance and for SST waiver.

Retirement fund contributions: max NPR 500,000 or 1/3 of income. Life insurance premiums: up to NPR 40,000. Health insurance premiums: up to NPR 20,000. Remote area allowance: up to NPR 50,000 deduction. These are the principal personal-income deductions in FY 2082/83, all carrying over from prior years (Budget 2082/83 did not introduce changes here). Women filing individually: 10% rebate on computed tax. SSF contributors: 1% SST waived on the first slab. Tax planning should maximise these permitted deductions.

Two notable removals. PAN registration tax amnesty — discontinued. The "approved SSF" concept — removed. Advance income tax at customs — removed for essential / agricultural goods (food, legumes, fruits), reducing upfront cash-flow burden for food importers. The removal of advance customs tax on essentials is small but meaningful for food-import businesses. The amnesty discontinuation aligns with IRD's broader enforcement-focused posture.

Yes — three new sectoral holidays in Budget 2082/83. (1) Startups under NPR 10 crore turnover — 5-year income-tax exemption (extended/clarified). (2) EV charging-station manufacturers — 1% customs on equipment plus 5-year income-tax holiday. (3) Green hydrogen projects — 6-year tax holiday. The IT parks and bio-tech / zoological parks exemption raised from 50% to 75%. The IT services and hotels / tourism sectors got 20% concessional effective rate via 20% rebate on standard. Cumulatively significant sectoral incentive package.

Nepali tax residents (183-day rule) are taxed on worldwide income — Nepal-source + foreign-source. Foreign-source income is included in the resident's total income and subject to the standard slabs. DTAA relief is available for income from treaty countries (India, China, Korea, Thailand, Sri Lanka, Mauritius, Austria, Norway, Pakistan, Bangladesh, Qatar). Non-resident Nepalis (failing the 183-day test) are taxed only on Nepal-source income. Budget 2082/83 did not change these basic principles. For specific cross-border tax structuring, consult a tax adviser.

Major TDS rates carry over from prior years. 15% on salary (subject to slab computation). 15% on rent (10% for natural-person landlord under Sec 88 proviso). 5% on dividends to non-residents. 5% on interest on commercial loans (1.5% for foreign loans). 1.5% on payments to contractors. 15% on professional services. 25% on royalties to non-residents. The exact TDS schedule and any FY 2082/83 modifications are operationalised by IRD circulars — verify before deducting.

IRD is the operational tax administrator. After Parliament passes the Finance Bill, IRD issues circulars implementing the changes — registration of digital service providers under the DST, operationalisation of the Green Tax tariff schedule, sectoral-incentive certification procedures (IT export, startup, IT park), and refund / amnesty mechanics. IRD circulars are published on ird.gov.np and binding on taxpayers. The taxpayer's compliance ultimately runs through IRD assessment / dispute / appeal — Revenue Tribunal as the next stage.

Budget presentation (15 Jestha 2082) → Finance Bill 2082 tabled → Parliamentary debate and amendments → Bill passed → Authentication by the President → Finance Act 2082 in force from start of fiscal year (1 Shrawan 2082 = 16 July 2025). IRD then issues operational circulars. The Finance Act remains in force for the fiscal year; the next Budget (presented Jestha 2083 = May 2026) supersedes it for FY 2083/84. Mid-year amendments are uncommon but possible via supplementary budgets.

Foreign businesses with Nepal operations face the standard corporate tax framework (25% / 30% sectoral) plus FITTA / sectoral compliance. Foreign businesses without physical Nepal presence — but selling digital services B2C to Nepal customers above NPR 3M turnover — must register and pay 2% DST under the new Budget 2082/83 framework. The permanent-establishment requirement is removed for DST purposes. The new Green Tax at customs affects environmentally-sensitive imports. Foreign manufacturers benefit from the EV charging-station and green-hydrogen tax holidays where applicable.

For business-level tax planning under Budget 2082/83 — particularly for IT companies (export 75% exemption), startups (NPR 10 cr / 5 years), and foreign digital service providers (2% DST). For tax-planning advisory on personal income — maximising permitted deductions, SSF participation, and capital-gains structuring. For customs / import advisory under the new Green Tax framework. For VAT amnesty take-up for delinquent VAT-registered businesses. And for ongoing FY 2082/83 IRD circular tracking and compliance.