Income tax rates in Nepal vary based on the type of taxpayer (individuals, couples, Companies) and the nature of income (business, salary, etc.). As of 2081, the income tax rates in Nepal have been structured to address both individuals and corporate entities. Below is a detailed overview of the tax rates applicable for the fiscal year 2080/81:
Individual Income Tax Rates
For Resident Individuals:
- For Unmarried Individuals:
- First NPR 500,000: 1%
- Next NPR 200,000: 10%
- Next NPR 300,000: 20%
- Above NPR 1,000,000: 30%
- For Married Individuals:
- First NPR 600,000: 1%
- Next NPR 200,000: 10%
- Next NPR 300,000: 20%
- Above NPR 1,100,000: 30%
Additional Details:
- A 1% social security tax is applicable on the total income.
- The first NPR 100,000 (unmarried) or NPR 200,000 (married) is subject to a 1% tax for individuals earning only from remuneration.
Corporate Income Tax Rates
- Normal Business:
- Corporate Entities (including banks, financial institutions, etc.): 25%
- General Companies (other than banks, and financial institutions): 20%
- Special Industries (engaged in manufacturing): 20%
- Export Income of Manufacturing Industries: 20%
- Specific Businesses:
- Insurance Companies: 30%
- Telecommunication, Internet Service Providers, and Money Transfer Services: 30%
- Liquor, Cigarette, and Tobacco Manufacturing Companies: 30%
- Petroleum Companies: 30%
Other Tax Rates
- Non-Resident Individuals: 25% of total taxable income.
- Dividend Distribution: 5% final withholding tax on dividends distributed by resident companies.
- Capital Gains Tax:
- For Individuals:
- On the sale of land and building:
- Held for less than 5 years: 5%
- Held for more than 5 years: 2.5%
- On the sale of securities: 7.5% for individuals; 10% for firms and companies
- For Companies:
- 10% on the sale of land and building
- 10% on the sale of securities
- Interest Income: 5% final withholding tax on interest income from deposits.
Exemptions and Deductions
- Various deductions are available for individuals, including contributions to retirement funds, life insurance premiums, and medical expenses.
- Tax rebates are provided for women, senior citizens, and differently-abled individuals.
Filing and Payment
- The tax year in Nepal follows the Nepali fiscal year, which runs from mid-July to mid-July.
- Tax returns must be filed annually, with quarterly advance payments required for businesses.
Contact Information
- Inland Revenue Department (IRD)
- Address: Lazimpat, Kathmandu, Nepal
- Website: Inland Revenue Department
- Telephone: +977-1-4415802
Tax rates and regulations are subject to change, so it is advisable to consult with a tax professional or the Inland Revenue Department for the most current information.
