Income Tax Guide for Nepal

Income tax is levied on income from employment, business, investment, and other sources. Tax rates are progressive for individuals and flat for companies.

• Individuals (Single): First NPR 5 lakh exempt
• Individuals (Married): First NPR 6 lakh exempt
• 1% on next NPR 2 lakh
• 10% on next NPR 1 lakh
• 20% on next NPR 2 lakh
• 30% on next NPR 15 lakh
• 36% above NPR 20 lakh
• Companies: 25% flat rate

• Life insurance premium: Up to 25% of taxable income
• Provident fund contribution: Full deduction
• Medical insurance: Up to NPR 20,000
• Remote area allowance: Up to 50% exempt
• Retirement gratuity: Up to NPR 5 lakh exempt

Income tax returns must be filed by Poush End (mid-January) for the previous fiscal year (Shrawan to Ashad). Late filing attracts penalties and interest.

• Salary certificate / Form 16 (for employees)
• Audited financial statements (for businesses)
• Investment proofs for deductions
• TDS certificates
• Bank statements
• Rent receipts (if claiming deduction)