Income Tax Rate in Nepal: Slabs, Rates & Filing Guide (2026)

Most salaried employees in Nepal still file under outdated assumptions — and end up either overpaying tax or facing late-filing interest at the Inland Revenue Department.

The income tax rate in Nepal for 2082/83 follows the slab structure confirmed in the Budget Speech 2082/83 (Jeth 15, 2082 BS) and is administered by the Inland Revenue Department under the Income Tax Act 2058.

Here are the exact slabs, deductions, deadlines, and e-filing steps our tax lawyers walk Kathmandu clients through every fiscal year.

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Our tax team has filed returns for salaried professionals, sole proprietors, private limited companies, and NRN investors — and the most common error we see is filing under last year's slabs without checking the current Finance Act. As a full-service law firm in Nepal, we handle PAN card registration in Nepal, advance tax computation, and corporate tax disputes through the Revenue Tribunal.

What Is Income Tax in Nepal?

Income tax in Nepal is a direct tax levied on the income of individuals, firms, companies, and other entities by the Government of Nepal. It is the single largest source of internal revenue and funds federal, provincial, and local services.

The tax is calculated on taxable income — gross income minus allowed deductions — and applied through progressive slab rates for individuals and flat rates for companies. The Inland Revenue Department (IRD) under the Ministry of Finance is the collecting authority.

Key features of the Nepal income tax system:

• Progressive slabs for individuals — higher income, higher marginal rate
• Marital status differentiation — single and couple filers have different first-band thresholds
• Sectoral corporate rates — 25% standard, 30% for regulated industries, 20% for special industries
• Self-assessment — taxpayers compute, pay, and file electronically through ird.gov.np
• Fiscal year — Shrawan 1 to Ashadh end (mid-July to mid-July)

The fiscal year 2082/83 runs from 17 July 2025 to 16 July 2026 in the Gregorian calendar — or Shrawan 1, 2082 BS to Ashadh 31, 2083 BS in the Bikram Sambat calendar.

Nepal taxes both residents on worldwide income and non-residents on Nepal-source income only. A natural person becomes a resident if they stay in Nepal for 183 days or more in a 365-day window, or if they are a Nepali government employee posted abroad. Companies are resident if incorporated in Nepal or effectively managed from Nepal during the income year. This residency test under Section 2(ka) decides the entire scope of taxable income, and getting it wrong is one of the most common cross-border filing errors we see at Alpine Law Associates.

Legal Basis Under the Income Tax Act 2058

The governing statute is the Income Tax Act 2058 (2002 AD), enacted by Parliament and amended annually through the Finance Act passed alongside the federal budget.

Core provisions taxpayers should know:

The current Schedule 1 rates for FY 2082/83 were carried forward from the previous fiscal year through the Finance Act 2082, with no major slab restructuring. The Act is published in full at lawcommission.gov.np and rate notifications appear at ird.gov.np.

Key takeaway: Schedule 1 of the Income Tax Act 2058, as amended by the Finance Act 2082, sets the rates for FY 2082/83 — always cross-check the IRD portal for any mid-year notification before filing.

Income Tax Slabs for Individuals — FY 2082/83

Personal income tax in Nepal is progressive. The first band carries a 1% Social Security Tax (SST) — not a regular income tax — and is waived for taxpayers contributing to the Social Security Fund (SSF), pensioners, and registered sole proprietors.

Single Individual (Unmarried Filer)

Married Couple (Joint Filer)

Quick example — a single Kathmandu employee earning NPR 1,200,000 a year pays:

• 1% on NPR 500,000 = NPR 5,000
• 10% on NPR 200,000 = NPR 20,000
• 20% on NPR 300,000 = NPR 60,000
• 30% on NPR 200,000 = NPR 60,000
• Total tax: NPR 145,000 before deductions and rebates

The 39% top slab on income above NPR 5,000,000 functions as a high-income surcharge introduced in 2023 and retained for FY 2082/83. It is computed as the 36% normal rate on the NPR 20–50 lakh band plus an additional 3% on income above NPR 50 lakh — not a flat 39% on the whole top band.

Two further adjustments before the slabs apply:

• Disability uplift — a person with a Ministry-issued disability ID gets the first-band threshold raised by 50%, pushing the 1% SST band to NPR 750,000 (single) or NPR 900,000 (couple)
• Pension uplift — retired government and SSF pensioners receive a 25% higher first-band threshold, often eliminating tax on a modest pension entirely
• Foreign posting allowance — Nepal government employees on foreign posting include only 25% of foreign-source income in the assessable base

Key takeaway: Married joint filers gain NPR 100,000 of additional headroom in each of the lower bands — over a full career this is one of the most overlooked benefits of registered marriage in Nepal.

How Are Corporate Tax Rates Calculated in Nepal?

Corporate income tax (CIT) in Nepal is a flat rate applied to net taxable profit after allowed business deductions. The headline rate is 25%, but Schedule 1 carves out higher rates for regulated industries and lower rates for priority sectors.

Beyond the headline rate, corporate filers also face 2% repatriation tax on remitted profits of foreign branches and a 5% dividend tax on distributions to shareholders. Loss carry-forward is permitted for up to seven years under Section 20, with a longer 12-year window for hydropower and infrastructure projects to align with concession timelines.

Capital gains for resident companies are taxed at the standard CIT rate as part of business income, while capital gains on listed-share disposals are subject to a 5% withholding by the broker — which the company can credit against its annual liability. Real estate disposals attract a 1.5% to 7.5% withholding depending on holding period and location, settled at the malpot office before the deed is registered.

For ongoing corporate filings, our team handles statutory company compliance in Nepal alongside annual tax returns, AGM minutes, and OCR submissions in a single package.

Key takeaway: A regulated-industry company (bank, insurer, telecom, tobacco, alcohol) pays 30% CIT for FY 2082/83. A standard manufacturer pays 25%. A special-industry IT exporter or hydro project pays 20%, and NEPSE-listed entities receive a 10% rebate on whichever rate applies.

Who Must File Income Tax Returns in Nepal?

Filing obligations under Section 96 of the Income Tax Act 2058 cover almost every income-earning resident — but the threshold and form differ by category.

• Salaried employees — employer files monthly TDS on Form D-01; the employee files an annual return only if there is income beyond salary or a refund claim
• Sole proprietors and freelancers with annual turnover above NPR 30 lakh or income above NPR 3 lakh — must file an annual return
• Private and public limited companies — every entity must file regardless of profit or loss
• Partnerships and firms registered under the Partnership Act 2020 — annual filing required
• Non-resident persons with Nepal-sourced income — file under Section 4 with Nepal-source income only
• NRN individuals — file only if they have Nepal-sourced rental, business, or capital gains income
• Cooperatives and NGOs — file even when claiming exemption, to preserve exempt status

Voluntary filing is open to anyone with a PAN — and useful for employees seeking a refund of excess TDS, for example after a job change mid-year.

Need help deciding whether you must file? Talk to our tax lawyers today →

What Documents Do You Need to File Tax in Nepal?

The IRD e-filing system pre-fills employer-reported salary and TDS figures, but individual filers must still prepare supporting documentation. The exact list depends on income type.

If you also need a clearance certificate for tender, visa, or property registration, our guide on tax clearance in Nepal walks through that separate process. For first-time filers, start with a TIN/PAN number registration.

Step-by-Step Process to File Income Tax Online

The IRD has fully digitised individual and corporate filing. As of April 2026, all annual returns must be submitted electronically via the taxpayer portal at ird.gov.np — paper submissions are accepted only for specific revisions.

1. Log in at ird.gov.np using your PAN, password, and registered mobile OTP. First-time users register under "Taxpayer Portal → Registration."
2. Select the correct form — D-03 for individuals, D-04 for entities, D-01 for monthly TDS by employers.
3. Pull the pre-filled data — salary, TDS, and SSF entries auto-populate from employer submissions. Verify each line against your own records.
4. Add other income — rental, freelance, capital gains, dividend, foreign income (NRNs only on Nepal-source). Each schedule has a sub-form.
5. Apply deductions — life insurance, health insurance, retirement contributions, donations, remote-area allowance.
6. Compute tax payable — the system runs Schedule 1 slabs automatically. Cross-check with a manual calculation for high-income filers.
7. Pay any balance via connectIPS, eSewa, or counter voucher at any commercial bank. The bank challan number flows back to the IRD portal.
8. Submit and download the acknowledgement — the system issues a return ID and stamped PDF. Save this for at least seven years under Section 81.

Key takeaway: Most filers complete the full e-filing cycle in 30–45 minutes, but the quality of pre-filled data depends entirely on your employer's monthly TDS reporting — verify before you submit, not after.

Filing Deadlines and Penalty for Late Filing

Under Sections 96, 100 and 117 of the Income Tax Act 2058, every taxpayer must meet both interim (advance tax) and final (annual return) deadlines. FY 2082/83 deadlines are:

Penalties under Section 117–119:

• Late filing fee — 0.1% of taxable income or NPR 100 per month, whichever is higher
• Interest on unpaid tax — 15% per annum from the due date
• Under-estimation of advance tax — 15% interest on the shortfall
• Failure to file at all — assessment by IRD officer plus penalty up to 100% of tax due in fraud cases

The IRD has tightened enforcement since 2024, with automated late-fee assessment running directly inside the taxpayer portal — manual waivers are now rare.

Allowed Deductions, Exemptions and Tax Credits

Schedule 1 and Sections 11, 12, and 63 of the Income Tax Act 2058 permit several deductions that lower taxable income before slab application — and one direct rebate on the computed tax itself.

Common mistake: filers claim insurance and SSF deductions but forget to upload the receipts. The IRD now disallows undocumented deductions on automated assessment — keep all premium receipts and SSF deposit slips for at least seven years.

For employees moving in and out of the SSF system, our overview of SSF in Nepal covers contribution rates and the SST waiver in detail. Salary structuring under the Labour Act 2074 also affects taxable allowances.

Common Mistakes Taxpayers Make

From over a decade of corporate and individual filings handled by our Kathmandu office, the same errors appear every fiscal year. Avoiding these protects against late-fee assessment and audit triggers.

• Filing under last year's slabs — the FY 2082/83 thresholds carry forward from FY 2081/82 but the Finance Act 2082 still issues fresh slab schedules; always confirm via ird.gov.np
• Skipping the female rebate — a working woman with her own PAN forgoes a flat 10% off her computed tax simply because the deduction is buried on the second screen of the e-filing form
• Claiming SSF deduction without enrolling — only registered SSF contributors qualify for both the deduction and the SST waiver on the first slab
• Combining couple-filing without joint application — couple slabs apply only when both partners formally elect joint filing through Form D-03; default treatment is single
• Missing the advance tax instalments — sole proprietors and consultants without TDS withholding owe 40% by Poush, 70% by Chaitra, 100% by Ashadh; missing these triggers 15% interest even when the annual return is on time
• Not retaining records — Section 81 requires seven-year retention; auditors who arrive in year five often find filers have already shredded receipts
• Forgetting NEPSE rebate — listed companies entitled to a 10% rate rebate sometimes file at the headline 25% or 30% rate by oversight

For broader tax-environment context, our pillar on the Income Tax Act 2058 and the companion guide on VAT in Nepal cover the related compliance regime. Employers should also review TDS obligations before the next monthly cycle.

Key takeaway: Most enforcement actions against individual taxpayers stem from missed advance tax, not from the annual return — calendar your Poush, Chaitra, and Ashadh deadlines first, then the Ashoj annual return.

Conclusion

The income tax rate in Nepal for 2082/83 stays anchored to the same progressive Schedule 1 structure — 1% SST on the first slab, climbing to 39% above NPR 50 lakh — and the standard 25% corporate rate, with sectoral 30% and concessionary 20% bands. As of April 2026, e-filing through the IRD portal is mandatory for all annual returns, and the Ashoj-end deadline for FY 2082/83 falls in mid-October 2026.

Tax law in Nepal rewards careful planning. A married couple electing joint filing, a working woman claiming her 10% rebate, or a NEPSE-listed company applying its rebate on the right base rate can save several lakhs over a single fiscal year — but only when the return is structured correctly the first time. Audits in Nepal almost always look back two to three fiscal years, so the slab a taxpayer used in 2082/83 typically resurfaces during a 2084/85 desk review at the IRD office in Lazimpat.

For business taxpayers, the bigger picture extends past the annual return. Monthly TDS, VAT returns where applicable, customs duty on imports, social security deposits, and statutory company filings with the Office of the Company Registrar all interlock — a slip in one schedule often surfaces as a discrepancy in another. Treat tax as a year-round compliance discipline, not a one-day filing exercise in Ashoj.

For end-to-end help with PAN registration, advance tax computation, corporate return filing, NRN tax matters, or Revenue Tribunal appeals, speak with our lawyers today → — Alpine Law Associates is a full-service law firm in Kathmandu with a dedicated tax compliance team.

Last reviewed: April 2026