Income Tax Rate in Nepal 2082/83

Tax season is here again, and if you're living, working, or running a business in Nepal, knowing the current tax rates for FY 2082/83 (2025/26) is crucial.

Whether you’re earning a monthly salary, freelancing for international clients, or running a local grocery store, understanding how tax applies to you can help you save money, avoid penalties, and plan better for the future.

In this guide, we’ll walk you through the latest tax rates for individuals, freelancers, companies, and small businesses in Nepal—with updated rebates, exemptions, and helpful examples to make things easy to follow.

1. Personal Income Tax in Nepal: FY 2082/83

Nepal uses a progressive tax system—meaning your income is taxed in slabs. The more you earn, the more you pay, but not all at once.

1.1 Income Tax Slabs (FY 2082/83)

SST Note: This 1% tax is waived if you're contributing to Nepal’s Social Security Fund (SSF).

1.2 New Example: Income NPR 1,800,000 (Single)

Here’s how your tax would break down:

• First NPR 500,000 → 1% SST = NPR 5,000

• Next NPR 200,000 → 10% = NPR 20,000

• Next NPR 300,000 → 20% = NPR 60,000

• Next NPR 800,000 → 30% = NPR 240,000
  Total Tax Payable: NPR 325,000

If you're married and choose joint filing, the first NPR 600,000 is charged SST only. That extra NPR 100,000 saves you NPR 10,000–20,000, depending on your income.

2. Tax Deductions: Reduce What You Owe

Before calculating tax, you're allowed to subtract certain expenses from your income. These are deductions, and they reduce your taxable income.

Common Deductions (FY 2082/83)

Example:

Let’s say you earn NPR 2,000,000 annually.

You’ve:

• Deposited NPR 400,000 into EPF and SSF,

• Paid NPR 20,000 for medical insurance,

• Paid NPR 30,000 for life insurance.

That’s NPR 450,000 in deductions.

Your taxable income becomes:
NPR 2,000,000 - 450,000 = NPR 1,550,000

You calculate tax based on this lower amount — that’s real savings.

3. Special Tax Benefits for Female Taxpayers

If you're a woman with a PAN in your name, you get 10% off your total income tax (not SST). But you must file individually, not jointly with your spouse.

Example:

• Tax before rebate: NPR 100,000

• Female rebate: 10% of 100,000 = NPR 10,000

• Final tax payable: NPR 90,000

4. Freelancers in Nepal: Simple 5% Final Tax

Freelancers who earn from foreign clients (like Upwork, Fiverr, direct payments) pay a flat 5% tax. The best part? It’s final—no need to file tax returns (if income is under NPR 40 lakhs/year).

Example:

You receive NPR 500,000 from a US client.
Your bank deducts 5% = NPR 25,000
You receive NPR 475,000. Done.

Make sure your PAN is linked to your bank account. Otherwise, the tax paid won’t be recorded in your name.

5. What If You Earn More Than NPR 40 Lakhs from Freelancing?

Then, you’ll need to:

• File a return using Form D4

• Maintain proper income records

• Possibly register as a business

You’ll still pay the 5% tax—but now under formal compliance.

6. Corporate Tax Rates in Nepal: FY 2082/83

Standard Business Tax Rates

IT Export Businesses: Just 5% Tax

• Base rate: 20%

• Export rebate: 75% (of tax)

• Final tax: 5% on net profit

Note: Unlike freelancers, this is on profit, not total receipts.

Startups: 0% Tax for First 5 Years

If your annual turnover is under NPR 10 crore:

• You get a five-year tax holiday

• This applies to newly registered startups from the date of operation

Location-Based Rebates

These apply for up to 10 years after registration.

7. Small Businesses: Presumptive and Turnover-Based Tax

Nepal offers simplified tax options for local shops, tailors, hardware stores, and other micro businesses.

7.1 Presumptive Tax

If:

• Your annual turnover is under NPR 30 lakhs

• Profit is under NPR 3 lakhs

• No VAT, no tax credits claimed

Then you pay a fixed amount:

FY 2082/83 Update: If you had zero transactions, your tax is now NPR 0.

7.2 Turnover-Based Tax (Sales between NPR 30L–1Cr)

Example: Local Clothing Shop with NPR 70 Lakhs Turnover

• Location: Kathmandu

• Type: Trading

• Turnover tax:

  • 1% on first 20L = NPR 20,000
  • 0.8% on next 20L = NPR 16,000

• Presumptive Tax: NPR 7,500
  Total Tax: NPR 43,500

8. Non-Resident Tax Rates (Flat)

Flat, final, and no deductions allowed.

9. Budget 2082/83 Highlights & New Reforms

• 75% tax exemption for IT exporters (final 5%)

• VAT waived on hearing aids and digital payment services

• 1% customs duty on machinery for:

  • Organic fertilizer
  • EV charging
  • Green hydrogen production

• VAT defaulters get waivers on penalties if paid in time

• Expansion of e-invoice system and digital service tax

• No minimum tax for businesses with zero transactions

Key Takeaways

• Salaried? Claim all legal deductions
• Freelancer? Flat 5%, no headache
• IT business? Just 5% tax on exports
• Startup? No tax for 5 years
• Small shop? Pay NPR 7,500 or less
• Female PAN holder? Get 10% off tax
• Non-resident? Know the flat rates

Need Expert Help?

At Notary Kathmandu, we assist with:

• PAN registration

• Tax filing and consultation

• Freelance income documentation

• Salary slip breakdowns

• Business compliance support

We also offer certified notary and translation services for all your legal documentation needs—quick, reliable, and fully compliant.