Income Tax Rate in Nepal 2082/83 (2026): Slabs & Brackets

Most salaried employees and small-business owners in Nepal still file under outdated slab assumptions — and end up either overpaying tax or facing late-filing interest, penalty, and assessment notices from the Inland Revenue Department (IRD). The structure changed materially in the Budget Speech for FY 2082/83 (Jestha 2082 BS), the rates and rebates are administered under the Income Tax Act 2058 (2002), and the filing window closes on Ashoj end every year. Getting it right at the start of the year saves the late-year scramble — and the assessment-appeal cycle that follows when the IRD reopens an under-declared return. See our tax-law practice area for related matters.

This guide is the 2026 (2083 BS) practitioner's deep-dive on the income tax rate in Nepal for FY 2082/83 (mid-July 2025 to mid-July 2026) — the individual slab tables for single and couple filers, the 1% Social Security Tax band and the SSF-contributor waiver, the female-taxpayer rebate, the corporate rates by sector, the 75% IT-export rebate, the startup tax holiday, the capital-gains framework for shares and real estate, the withholding tax catalogue (dividend, rent, interest, freelancer foreign-currency income), the Non-Resident Nepali (NRN) foreign-source rule, the Income Tax Act 2058 statutory framework, the e-filing process through taxpayerportal.ird.gov.np, the Ashoj-end deadline, and the assessment-and-appeal route through the Revenue Tribunal. For the broader corporate framework see our company registration guide; for PAN registration see our PAN card guide.

What is the income tax rate in Nepal for FY 2082/83?

For FY 2082/83 (mid-July 2025 to mid-July 2026, equivalently Shrawan 2082 to Ashad end 2083 BS), the income tax rate in Nepal for an individual resident is determined by a six-band progressive slab structure that sits within the Income Tax Act 2058 framework and is updated annually by the Finance Act enacted alongside the Budget Speech. The slab table differs slightly between a single filer and a married couple electing the joint-filing option — the couple's first slab is NPR 100,000 wider, providing a small saving for low-income households where both spouses are taxpayers. The remaining rates — 10%, 20%, 30%, 36% and the top 39% band on income above NPR 5,000,000 — are identical between the two filing categories.

A first-time reader of the rate table often mistakes the 1% on the lowest slab for a tax on income; it is in fact the Social Security Tax (SST) — a separate levy intended to fund a contributory social-security framework that pre-dates the SSF and continues to apply for taxpayers outside the SSF. Employees and self-employed persons who contribute to the Social Security Fund under the Social Security Fund Act 2074 (2017) are exempt from the SST band, because their SSF contribution satisfies the social-security obligation directly. For all other taxpayers — including most independent professionals, freelancers, and small-business owners not yet on the SSF roster — the 1% SST applies on the first NPR 500,000 (single) or NPR 600,000 (couple) of income.

What are the FY 2082/83 individual tax slabs in detail?

For an individual single filer resident in Nepal for FY 2082/83, the six-band slab structure is: NPR 0 to NPR 500,000 at 1% Social Security Tax (waived for SSF contributors); NPR 500,001 to NPR 700,000 at 10%; NPR 700,001 to NPR 1,000,000 at 20%; NPR 1,000,001 to NPR 2,000,000 at 30%; NPR 2,000,001 to NPR 5,000,000 at 36%; and any portion above NPR 5,000,000 at 39%. A single filer earning NPR 1,200,000 in the year pays: 5,000 on the first slab (1% on 500,000), 20,000 on the second (10% on 200,000), 60,000 on the third (20% on 300,000), and 60,000 on the fourth (30% on 200,000) — total annual tax of NPR 145,000 before rebates and credits.

For a married couple filing jointly, the structure is: NPR 0 to NPR 600,000 at 1% SST; NPR 600,001 to NPR 800,000 at 10%; NPR 800,001 to NPR 1,100,000 at 20%; NPR 1,100,001 to NPR 2,000,000 at 30%; NPR 2,000,001 to NPR 5,000,000 at 36%; above NPR 5,000,000 at 39%. The couple's first-slab threshold is NPR 100,000 higher than the single filer's. Couple filing is elective and irrevocable for the year — once made on the return it cannot be changed without a revised return filed with IRD acceptance. For couples where one spouse earns substantially more than the other, single filing of each spouse separately often produces a lower combined liability than the joint election; the choice is fact-specific and worth a calculator pass at the start of every fiscal year.

What are the corporate income tax rates in Nepal for FY 2082/83?

The corporate tax rate is fixed by entity type and sector. The general corporate rate is 25% — applied to all resident companies that do not fall into a specific sector category. A 30% rate applies to banks and financial institutions licensed under BAFIA 2073, insurance companies licensed under the Insurance Act 2079, telecommunication-service providers, and the cigarette, tobacco, and liquor industries — these are the heavier-taxed sectors reflecting either licensing privileges or public-health rationale. A 20% rate applies to special industries listed in Schedule 1 of the Income Tax Act — manufacturing industries, agro-processing, tourism, and certain export-oriented activities — reflecting the policy to incentivise productive and employment-generating sectors. IT companies receive a separately reduced rate of 15% under the FY 2082/83 schedule, with further rebates available where the unit is located in a remote or undeveloped area. Cooperatives registered under the Cooperatives Act 2074 and carrying on permitted cooperative activities in rural municipalities are taxed at 0% on cooperative-source income, with non-cooperative income taxed at the ordinary rate.

Layered on top of the headline rates are several rebates and concessions worth knowing. An IT-export rebate of 75% applies on tax payable on income earned by an IT-services company from exports in foreign currency — the effective rate on export income drops to roughly 5% (25% × 25% remaining after the 75% rebate, rounded). A startup tax holiday of 100% exemption applies for five fiscal years from the year of commencement, available to new enterprises with annual turnover not exceeding NPR 100 million (NPR 10 crore) and meeting the eligibility criteria in the Finance Act. Special-industry concessions further reduce rates in remote, undeveloped, or backward areas. Listed-company concessions reduce the rate by 10% on the income attributable to a Nepal Stock Exchange listing in specified sectors. These rebates and concessions interact, and the combined effect on a multi-line business is best modelled on a per-source basis rather than at the entity level.

How does the 1% Social Security Tax (SST) work?

The Social Security Tax is the levy on the lowest income slab — 1% on the first NPR 500,000 (single filer) or NPR 600,000 (couple) of annual income. It is a flat 1% with no further graduation and applies before the 10% second slab begins. The SST is not a separate filing — it appears as a line in the income-tax computation on the annual return, and is paid alongside the rest of the tax. For an employee on a Nepal payroll, the SST is withheld by the employer along with the regular income tax through monthly TDS and remitted to IRD.

The single most consequential rule on the SST is the SSF-contributor waiver. Where the taxpayer (or, for joint filing, both spouses) contributes to the Social Security Fund — a contributory scheme established under the Social Security Fund Act 2074 (2017) covering medical, accident, dependents', and old-age benefits — the 1% SST is not levied. SSF membership and contribution at the rates prescribed by the SSF authority (employer 20% and employee 11% on the basic wage, broadly) satisfies the social-security obligation directly, and a separate SST would amount to double-counting. The waiver requires evidence — typically a copy of the SSF contribution remittance receipt — annexed to the return, and the chart of accounts must show the SSF contribution as a separately identified line. Self-employed professionals who voluntarily enrol with the SSF can also claim the waiver on the same basis.

What is the female-taxpayer rebate?

Women filing individually as single filers receive a 10% rebate on computed income tax liability. The rebate is calculated on the tax payable after applying the slab table and any other credits — it is a true tax reduction rather than an income exemption. A woman with computed tax liability of NPR 145,000 (the example earlier) reduces her actual payable tax to NPR 130,500 after applying the 10% rebate. The rebate is not available where the woman elects to be part of a couple filing jointly; the structure intends to support women's individual tax filing and economic visibility, not to apply at the household level. The rebate is claimed on the return itself; no separate application is required.

How is capital gains taxed in Nepal?

Capital gains taxation is regime-specific and stratified by asset class and holding period. Real estate sold by a resident individual is taxed at 5% on the gain (sale value less acquisition cost adjusted for permitted additions) where the holding period is less than five years, and at 2.5% on the gain where the holding period is five years or more. The holding period for inherited property is calculated from the deceased's original acquisition date, not from the date of inheritance — preserving the long-term holding benefit through generations. The municipal Land Revenue Office and the IRD coordinate the tax collection at the time of registration of the transfer.

Listed shares — shares of companies listed on the Nepal Stock Exchange — are taxed at 5% on the capital gain on disposal for resident individuals, with the tax collected at source by the broker through the CDS and Clearing Limited netting system. Unlisted shares — shares of private companies and unlisted public companies — are taxed at 7.5% for resident individuals on the gain on disposal, with the buyer responsible for withholding and remitting the tax to IRD. For entity sellers (companies, partnerships, cooperatives), the capital gain on shares is taxed at 10% regardless of listing status. Non-resident sellers of Nepal-source capital assets are subject to a 25% rate, subject to relief under any applicable Double Taxation Avoidance Agreement (DTAA).

What withholding tax rates apply on dividend, rent, interest, and freelancer income?

The withholding-tax catalogue is essentially the operational backbone of Nepal's tax administration — most non-employment income is taxed at source at the time of payment, with the recipient receiving the net amount and the withholding agent remitting the tax to IRD. Dividends paid by a resident company to a resident shareholder are subject to a 5% final withholding tax — the recipient need not include the dividend in the annual return computation, and no further tax is payable on the dividend at the recipient level. Rent paid for the use of land or buildings is subject to 10% withholding by the tenant where the tenant is a registered entity, with the rate adjustable through DTAA reliefs for non-resident landlords.

Interest paid by resident banks and FIs on deposits to resident individuals is subject to 5% final withholding, and 15% for non-residents subject to DTAA relief. Service-fee payments to resident contractors are subject to 1.5% withholding, with the recipient including the gross amount in the annual return and claiming the withholding as a credit. Freelancer foreign-currency income — payments received from foreign clients by individuals not registered as VAT taxpayers — is subject to a 5% flat final withholding tax up to NPR 4,000,000 per fiscal year, designed to bring the small-scale freelance economy into the tax net at a deliberately low effective rate. Amounts above NPR 40 lakhs are taxed under the regular slab structure. Royalty payments, commissions, and contract payments are each subject to category-specific rates set in the Finance Act and the IRD circulars.

How is Non-Resident Nepali (NRN) income taxed?

A Non-Resident Nepali is generally not liable to Nepal income tax on foreign-source income — income earned in the country of residence and not remitted to Nepal in a manner that creates a Nepal tax nexus. An NRN working in the United States, the Gulf, Japan, Australia, the United Kingdom, or any other foreign jurisdiction earning USD or other foreign currency directly from a foreign employer and depositing the income into a foreign bank account has no Nepal income tax obligation on that income; the country of residence has the taxing right under conventional source-and-residence allocation. The NRN does, however, remain liable on any Nepal-source income — rental from a property in Nepal, interest from a Nepal bank account, dividends from a Nepal company, and capital gains on Nepal assets — at the rates and through the withholding-tax mechanism that applies to non-residents.

Where Nepal has signed a Double Taxation Avoidance Agreement with the country of residence (treaty partners include India, the UK, Norway, Korea, China, Thailand, Sri Lanka, Pakistan, Mauritius, Austria, and several others), the DTAA provides relief from double taxation on cross-border income by allocating the taxing right between the two jurisdictions and providing a credit mechanism for any tax paid in the source state. For NRNs whose income flows entirely from the country of residence into a foreign bank account and never enters Nepal, the DTAA is rarely engaged — the income is simply not in Nepal's tax base. The most common confusion involves the freelancer foreign-currency rate: that 5% rate applies to Nepal-resident freelancers earning from foreign clients, not to NRNs earning abroad. NRNs returning to Nepal should plan the change-of-status year carefully — the date of arrival, the establishment of residence under Section 2(ka) of the Income Tax Act, and the apportionment of income across the two residency periods all matter for that year's return.

What are the filing deadlines and the e-filing process?

The Nepal fiscal year runs from Shrawan 1 (mid-July) to Ashad end (mid-July of the following calendar year). The annual income-tax return for FY 2082/83 is therefore for the period Shrawan 1, 2082 BS (16 July 2025) to Ashad end 2083 BS (around 15 July 2026). The statutory filing deadline is Ashoj end of the year following the close of the fiscal year — for FY 2082/83 that means approximately mid-October 2026 (Ashoj end 2083). IRD typically issues a circular fixing the exact deadline a few weeks before, and extension requests can be filed on cause shown, though they are rarely granted as a matter of course.

The filing process is fully online through taxpayerportal.ird.gov.np, the IRD e-filing portal. The taxpayer logs in using PAN credentials, navigates to the annual-return module, enters the income breakdown by source (employment, business, investment, other), claims the applicable rebates and credits (SSF contribution waiver, female-taxpayer rebate, withholding-tax credits), and submits the return with the computation of net tax payable or refundable. Tax payable can be paid through the connected payment gateway (NCHL, esewa, Khalti, or direct bank transfer) or through a deposit slip at any of the IRD-designated commercial banks. A return-acknowledgement number is generated on successful submission. For business taxpayers, the return must be supported by audited financial statements; for individual employees, the employer's payroll certificate (TDS certificate) is the primary supporting document.

What happens if the return is late or incorrect?

Late filing of the annual return attracts interest under Section 119 of the Income Tax Act 2058 — calculated at the prescribed rate on the unpaid tax from the original due date until the date of payment. The interest is in addition to any late-filing penalty under Section 117, which is fixed by category of taxpayer and length of delay. Where the return is filed but the tax declared is later found to be understated through IRD assessment, an additional liability arises for the under-declared amount, with interest and penalty escalation based on whether the under-declaration was a result of error, omission, or wilful concealment.

IRD has assessment powers under Section 101 (self-assessment review), Section 102 (deemed assessment), and Section 105 (amendment of assessment) — the assessment cycle is typically initiated within four years of the return filing, though longer windows apply for cases involving fraud or concealment. The taxpayer is served an assessment notice, given the opportunity to respond, and a final assessment order is issued. The taxpayer may file an administrative review with IRD under Section 115, and on rejection appeal to the Revenue Tribunal under Section 116 — the specialised tribunal established under the Revenue Tribunal Act 2031 to hear tax-related appeals. Further appeal lies to the Supreme Court of Nepal on points of law. The administrative-review-then-tribunal path is the standard route for tax disputes, and the deposit of a percentage of the disputed amount is typically required to stay enforcement during the appeal.

How does the Income Tax Act 2058 framework apply?

The Income Tax Act 2058 (2002) is the consolidating statute that brought Nepal's income-tax regime onto a modern self-assessment framework. The Act defines income comprehensively under Section 5 as the sum of employment income, business income, investment income, and casual income, all assessed in the year of accrual. The residence concept under Section 2(ka) — an individual physically present in Nepal for 183 days or more in a 365-day period, an entity incorporated in Nepal, or an entity effectively managed from Nepal — determines whether the worldwide-income basis or the Nepal-source-only basis applies. Sections 17 through 25 set the deductions framework for business and investment income; Sections 26 through 34 cover special rules for partnerships, trusts, and estates.

The procedural sections — 95 (return filing), 100 (assessment), 102 (deemed assessment), 105 (amendment), 115 (administrative review), 116 (appeal), 117 (penalty), 119 (interest), 120 (recovery) — form the operational machinery. Schedule 1 lists the rates for each category of taxpayer and is the schedule the Finance Act updates annually. Schedule 2 specifies the withholding-tax catalogue. The Income Tax Rules 2059 (2002) provide procedural detail. Taken together, the Act, the Rules, the Finance Act of the year, and the IRD circulars and rulings constitute the operational law — and disagreement at any of those four layers is the source of most assessment disputes.

What planning levers reduce the income tax bill legally?

Across our advisory caseload, the recurring legitimate-planning levers are: SSF enrolment by the employee and the self-employed professional, eliminating the 1% SST and securing benefits; retirement-fund and approved-insurance deductions available under the Income Tax Act for contributions to approved retirement funds and life insurance premiums up to the annual cap; donation deductions for donations to approved charitable institutions, capped at the prescribed percentage of taxable income; female-taxpayer rebate for women filing individually (often missed in joint filing by default); structure choice between single and joint filing for couples — the lower-combined-tax choice is fact-specific and should be modelled each year.

For business owners and professional taxpayers: special-industry classification under Schedule 1 (manufacturing, agro-processing, tourism) reduces the rate from 25% to 20% (IT companies have a separately scheduled 15% rate); backward-area location concession further reduces the rate where the principal industrial unit is in a remote or undeveloped area; startup tax holiday for new ventures with turnover below NPR 10 crore for the first five years; IT-export rebate of 75% on foreign-currency IT-services income; capital-allowance optimisation by selecting the right depreciation method on plant and equipment; group-restructuring elections where multi-entity groups reorganise within the Income Tax Act allowance for tax-neutral restructuring; and DTAA relief for cross-border income flows. Every one of these requires documentation set up correctly at the start of the year — retrospective claims often fail at assessment because the supporting evidence was not maintained contemporaneously.

What are the most common income-tax compliance failures we see?

From our advisory caseload, the recurring failures are: under-declaration of freelancer foreign-currency income on the assumption that foreign payments are not visible to IRD (the foreign-exchange remittance is reported by the receiving bank to NRB which shares with IRD); SSF-contribution evidence not annexed to the return, leading to the 1% SST being assessed even though the taxpayer is on the SSF; withholding-tax credit claims without TDS certificates, leaving the credit unverified and rejected at assessment; capital-gain disclosures missing on real-estate sales where the Land Revenue Office records do not feed back fully to the IRD return; couple filing election made without analysis, leading to higher combined liability than separate filing would have produced; missed startup-holiday claims in the first year because the eligibility documents were not filed alongside the return; and late filing attracting interest under Section 119 plus penalty under Section 117.

At assessment, the recurring disputes are: documentation insufficient to support expense claims (the deduction is disallowed); related-party transactions priced without arm's-length support (transfer-pricing adjustment); foreign-source income exclusion claimed without evidence of foreign tax paid or DTAA cover; and personal-versus-business expenditure misclassification. Each is preventable with disciplined record-keeping from the first month of the fiscal year.

How does Alpine Law Associates handle income tax advisory in Nepal?

Alpine Law Associates conducts a tax-position review at the start of each fiscal year for individual and corporate clients — modelling the single-versus-couple filing choice, identifying the SSF-enrolment status and any pending optimisation, mapping the special-industry classification, locating the applicable rebates and credits, and setting up the documentation discipline for the year. For business and corporate clients, we model the effective tax rate by source, plan capital-allowance and depreciation elections, structure cross-border income flows under DTAA relief, and represent the entity through IRD self-assessment review and Revenue Tribunal appeal when disputes arise. For NRN clients, we map Nepal-source income, ensure correct withholding treatment, and structure repatriation in line with NRB and IRD requirements. For freelancer and gig-economy taxpayers, we structure income flows to take advantage of the 5% foreign-currency rate while keeping clean books for the future regular-slab transition. Speak with our tax lawyers today →