Nepal Income Tax Slabs FY 2083/84 (2026/27 A.D.): Complete Guide to Personal, Corporate, and Salary Tax Rates
Navigating Nepal’s tax landscape is crucial for civil servants, private sector professionals, freelancers, entrepreneurs, and multinational enterprises. In the Fiscal Year 2083/84 B.S. (2026/27 A.D.), the Ministry of Finance and the Inland Revenue Department (IRD) introduced a overhauled personal income tax framework designed to boost consumer spending, protect middle-income earners from inflation, and streamline tax compliance.
Nepal operates a progressive personal income tax system with rates ranging from 1% to 29%, a standard corporate income tax rate of 25%, and a flat Value Added Tax (VAT) rate of 13%.
This comprehensive guide breaks down the new tax slabs, exemptions, corporate tax structures, withholding tax (TDS) rates, capital gains tax, and practical step-by-step tax calculation examples.
Key Highlights of Nepal Income Tax FY 2083/84
1% Minimal-Tax Threshold Doubled: The minimal-tax band for individual single filers now covers income up to Rs. 10,00,000, up from the previous Rs. 5,00,000 threshold.
Top Marginal Rate Capped at 29%: The previous 39% upper marginal rate (which included heavy surcharges) has been capped at 29% for income exceeding Rs. 40,00,000.
Social Security Fund (SSF) Waiver: Employees actively contributing to the Social Security Fund remain exempt from the 1% Social Security Tax (SST) on their first slab.
Standard Corporate Tax: Kept stable at 25%, with higher rates (30%) for financial institutions and telecommunications, and preferential rates for export-oriented IT sectors.
Flat 13% VAT: Maintained across all non-exempt goods and services.
Nepal Salary Tax Calculator (FY 2083/84)
🇳🇵 Nepal Unified Salary & Income Tax Calculator (FY 2083/84)
Calculate revised 21% salary scales, IRD tax slabs, SSF, and net monthly take-home pay.
Personal Income Tax Slabs FY 2083/84 (2026/27 A.D.)
Nepal uses a progressive tax system. Under a progressive tax structure, each tax rate applies only to the specific slice of income falling within that particular band. Crossing into a higher slab does not increase the tax on the income already earned in lower bands.
1. Individual (Single) Tax Slabs FY 2083/84
For resident individual taxpayers filing as single, the annual taxable income is assessed under five distinct bands:
| Annual Taxable Income Slab (NPR) | Income Tax Rate | Maximum Tax Payable in Band (NPR) | Cumulative Base Tax (NPR) |
| Up to Rs. 10,00,000 | 1% (Social Security Tax)* | Rs. 10,000 | Rs. 10,000 |
| Rs. 10,00,001 to Rs. 15,00,000 | 10% | Rs. 50,000 | Rs. 60,000 |
| Rs. 15,00,001 to Rs. 25,00,000 | 20% | Rs. 2,00,000 | Rs. 2,60,000 |
| Rs. 25,00,001 to Rs. 40,00,000 | 27% | Rs. 4,05,000 | Rs. 6,65,000 |
| Above Rs. 40,00,000 | 29% | No Upper Limit | Rs. 6,65,000 + 29% on excess |
*Note on Social Security Tax (SST): The 1% tax on the first Rs. 10,00,000 is classified as Social Security Tax. It is deposited into dedicated government revenue account 11211. However, taxpayers who contribute to the Social Security Fund (SSF), sole proprietors, or retirees drawing pension income are fully exempt from this 1% SST, making the first slab 0% taxable.
2. Couple (Married) Tax Slabs FY 2083/84
Married individuals choosing to file jointly as a couple receive an adjusted base threshold to account for family dependents:
| Annual Taxable Income Slab (NPR) | Income Tax Rate | Maximum Tax Payable in Band (NPR) |
| Up to Rs. 11,00,000 | 1% (Social Security Tax) | Rs. 11,000 |
| Rs. 11,00,001 to Rs. 16,00,000 | 10% | Rs. 50,000 |
| Rs. 16,00,001 to Rs. 26,00,000 | 20% | Rs. 2,00,000 |
| Rs. 26,00,001 to Rs. 41,00,000 | 27% | Rs. 4,05,000 |
| Above Rs. 41,00,000 | 29% | Base Rs. 6,66,000 + 29% on excess |
FY 2082/83 vs. FY 2083/84: Structural Tax Comparison
To understand the scale of reform in FY 2083/84, compare it directly against the previous fiscal year's structure:
| Metric | FY 2082/83 (Old System) | FY 2083/84 (New System) | Net Impact |
| 1% Tax Threshold | Rs. 5,00,000 (Single) / Rs. 6,00,000 (Couple) | Rs. 10,00,000 (Single) / Rs. 11,00,000 (Couple) | Threshold Doubled |
| Top Marginal Rate | 39% (30% + 30% Surcharge) | 29% Flat Top Rate | 10% Tax Cut for High Earners |
| Number of Slabs | 6 Slabs (1%, 10%, 20%, 30%, 36%, 39%) | 5 Slabs (1%, 10%, 20%, 27%, 29%) | Simplified Filing |
| Middle Class Relief | Income between 5L–10L taxed up to 20% | Income up to 10L taxed at only 1% | Up to Rs. 75,000 annual tax savings |
Allowances, Deductions & Tax Rebates in Nepal
Taxpayers in Nepal can legally reduce their total assessable taxable income by leveraging statutory deductions under the Income Tax Act, 2058:
1. Retirement Fund Contributions (SSF, EPF, CIT)
Taxpayers contributing to government-approved retirement funds—such as the Social Security Fund (SSF), Employees' Provident Fund (EPF / Karmachari Sanchaya Kosh), or Citizen Investment Trust (CIT / Nagarik Lagani Kosh)—can deduct contributions from gross salary.
Maximum Deduction Allowed: Lower of:
Actual Contribution Amount
One-Third (1/3rd) of Assessable Salary Income
Rs. 5,00,000 per fiscal year
2. Life Insurance Premium Allowance
Deduction Limit: Actual premium paid or Rs. 40,00, whichever is lower.
Requirements: Policy must be under the name of the resident taxpayer.
3. Health Insurance Premium Allowance
Deduction Limit: Actual premium paid or Rs. 20,000, whichever is lower.
Requirements: Paid to a registered resident insurance company in Nepal.
4. Remote Area Allowance (Section 11)
Natural persons residing or working in designated remote districts receive additional annual deductions depending on the district classification:
Category A Districts: Rs. 50,000 deduction
Category B Districts: Rs. 40,000 deduction
Category C Districts: Rs. 30,000 deduction
Category D Districts: Rs. 20,000 deduction
Category E Districts: Rs. 10,000 deduction
5. Medical Tax Credit (Section 51)
Taxpayers paying personal medical treatment expenses can claim a Medical Tax Credit:
Rebate Rate: 15% of approved medical expenses.
Maximum Cap: Rs. 750 per year. Unclaimed credits can be carried forward.
6. Special Rebates & Exemptions
Female Sole Earners: Women with salary income as their sole source receive a 10% direct rebate on total calculated tax liability.
Disabled Individuals: Differently-abled resident individuals receive an additional 50% increase in their initial 1% base tax threshold band.
Foreign Currency IT/Software Export Services: Natural persons earning foreign exchange by providing software, digital services, or consultancy to entities outside Nepal are taxed at a concessional flat 1% to 5% TDS rate on total receipts, serving as a final tax in specific categories.
Corporate Income Tax Rates FY 2083/84
Corporate tax rates in Nepal depend on sector classification, industry incentives, and foreign alignment:
| Industry / Entity Category | Corporate Income Tax Rate | Key Regulatory Provisions |
| General / Standard Corporations | 25% | Applies to private limited companies, traders, manufacturers, and general service providers. |
| Banks & Financial Institutions (BFIs) | 30% | Encompasses Commercial Banks, Development Banks, Finance Companies, and Microfinances. |
| Insurance & Reinsurance Companies | 30% | Life, General Insurance, and Reinsurance firms operating under Insurance Authority regulations. |
| Telecommunications & Internet Service Providers (ISPs) | 30% | Telecom operators, ISPs, and network infrastructure providers. |
| Tobacco, Alcohol, & Petroleum Entities | 30% | Manufacturers, importers, and distributors of liquor, cigarettes, and petroleum. |
| Export-Oriented IT & BPO Industries | 10% Effective Rate | Enjoys 20% to 50% rebates on base corporate tax for software export and digital services. |
| Special Industries (Manufacturing) | 20% | Manufacturing industries operating year-round receive a 20% tax concession off standard rates. |
| Entities in Special Economic Zones (SEZ) | 0% to 12.5% | 100% tax exemption for first 5 years, followed by 50% exemption for subsequent years. |
| Small Presumptive Businesses (< Rs. 30L Turnover) | Rs. 2,500 – Rs. 7,500 Flat | Rural Muni: Rs. 2,500; Urban Muni: Rs. 4,000; Metro City: Rs. 7,500 annually. |
Value Added Tax (VAT) & Withholding Taxes (TDS)
Value Added Tax (VAT)
Nepal maintains a single, flat VAT rate of 13% managed under the Value Added Tax Act, 2052.
Registration Threshold:
Goods: Rs. 50,00,000 annual turnover.
Services / Mixed: Rs. 20,00,000 annual turnover.
Exempt Items: Essential agricultural products, unprocessed foods, basic health services, educational tuition, public transport, and printed books.
Tax Deducted at Source (TDS) Summary Rates
| Payment Type / Transaction Nature | Applicable TDS Rate | Remarks |
| Dividends | 5% | Final withholding tax for natural persons. |
| House / Property Rent | 10% | Paid to individual landlords (Collected by Local Level). |
| Interest Income (Resident Banks) | 5% | Final withholding for natural persons. |
| Contractual Works (> Rs. 50,000) | 1.5% (VAT Registered) / 15% (Non-VAT) | Payment to VAT-registered contractors incurs 1.5% TDS. |
| Consultancy & Service Fees | 15% | Non-VAT invoices incur 15% withholding. |
| Software Export Payments (Foreign FX) | 1% | Withheld directly by commercial banks processing foreign inward remittances. |
Capital Gains Tax (CGT) Structure
Capital Gains Tax in Nepal applies to transactions involving immovable property (real estate) and financial securities (stocks):
1. Real Estate & Immovable Property
Property held for 5 years or more: 5% CGT.
Property held for less than 5 years: 7.5% CGT.
2. SEBON Listed Shares (Stock Market)
Resident Individual (Holding > 365 days): 5% CGT.
Resident Individual (Holding ≤ 365 days): 7.5% CGT.
Entities / Institutional Investors: 10% CGT.
3. Non-Listed Corporate Entities
Resident Individuals: 10% CGT.
Resident Corporate Entities: 15% CGT.
Step-by-Step Salary Tax Calculation Examples
To demonstrate how the progressive tax system works in practice under FY 2083/84 rules, consider three scenarios for single filers participating in the Social Security Fund (exempt from 1% SST):
Scenario A: Mid-Level Professional (Gross Annual Salary: Rs. 12,00,000)
Gross Annual Income: Rs. 12,00,000
Deductions:
SSF Contribution (1/3rd rule / actual): Suppose Rs. 1,50,000
Life Insurance Premium: Rs. 40,000
Total Taxable Income: Rs. 12,00,000 – Rs. 1,90,000 = Rs. 10,10,000
Tax Slab Computation:
Slab 1 (First Rs. 10,00,000 @ 1%): Rs. 0 (Exempt due to SSF contribution)
Slab 2 (Rs. 10,00,001 to Rs. 10,10,000 = Rs. 10,000 @ 10%): Rs. 1,000
Total Annual Tax: Rs. 1,000
Monthly TDS: Rs. 83.33
Scenario B: Senior Tech Lead (Gross Annual Salary: Rs. 30,00,000)
Gross Annual Income: Rs. 30,00,000
Deductions:
SSF & Provident Fund: Maximum cap Rs. 5,00,000
Life Insurance: Rs. 40,000
Health Insurance: Rs. 20,000
Total Taxable Income: Rs. 30,00,000 – Rs. 5,60,000 = Rs. 24,40,000
Tax Slab Computation:
Slab 1 (First Rs. 10,00,000 @ 1%): Rs. 0 (SSF Exempt)
Slab 2 (Next Rs. 5,00,000 [10L to 15L] @ 10%): Rs. 50,000
Slab 3 (Next Rs. 9,40,000 [15L to 24.4L] @ 20%): Rs. 1,88,000
Total Annual Tax Liability: Rs. 2,38,000
Monthly TDS Withheld: Rs. 19,833.33
Scenario C: High Earner / Executive (Gross Annual Salary: Rs. 50,00,000)
Gross Annual Income: Rs. 50,00,000
Deductions: Maximum combined deductions = Rs. 5,60,000
Total Taxable Income: Rs. 50,00,000 – Rs. 5,60,000 = Rs. 44,40,000
Tax Slab Computation:
Slab 1 (First Rs. 10,00,000 @ 1%): Rs. 0 (SSF Exempt)
Slab 2 (Next Rs. 5,00,000 [10L to 15L] @ 10%): Rs. 50,000
Slab 3 (Next Rs. 10,00,000 [15L to 25L] @ 20%): Rs. 2,00,000
Slab 4 (Next Rs. 15,00,000 [25L to 40L] @ 27%): Rs. 4,05,000
Slab 5 (Excess above Rs. 40,00,000 = Rs. 4,40,000 @ 29%): Rs. 1,27,600
Total Annual Tax Liability: Rs. 7,82,600
Monthly TDS Withheld: Rs. 65,216.67
Tax Filing Process & IRD Online Compliance
In Nepal, income tax filing is digitized through the Inland Revenue Department (IRD) Taxpayer Portal (taxportal.ird.gov.np).
Key Filing Deadlines:
Monthly e-TDS Submissions: Employers must deposit withheld TDS and submit e-TDS returns by the 25th day of every Nepalese month following withholding.
Estimated Tax Return Filings (Businesses):
1st Installment (40% of estimated annual tax): Due by end of Poush (Mid-January).
2nd Installment (70% cumulative tax): Due by end of Chaitra (Mid-April).
3rd Installment (100% cumulative tax): Due by end of Ashadh (Mid-July).
Annual Tax Return Submission: Taxpayers and corporate entities must file their final income tax returns within 3 months from the end of the fiscal year (i.e., by end of Ashwin / Mid-October).
Frequently Asked Questions (FAQs)
1. Is income up to Rs. 10,00,000 completely tax-free in FY 2083/84?
No, income up to Rs. 10,00,000 is not zero-tax. It attracts a 1% Social Security Tax (SST), resulting in a maximum tax of Rs. 10,000 for single filers earning Rs. 10,00,000. However, if you contribute to the Social Security Fund (SSF), sole proprietorship, or earn pension income, this 1% SST is 100% waived, making it tax-free.
2. Who is eligible for the couple filing tax slab?
Married resident individuals can elect to file under couple status. Filing as a couple raises the initial 1% base threshold from Rs. 10,00,000 to Rs. 11,00,000.
3. What is the maximum life insurance deduction I can claim?
The maximum life insurance premium deduction allowed under Income Tax rules is Rs. 40,000 per fiscal year.
4. How are IT freelancers and remote workers taxed in Nepal?
Individual freelancers providing digital, software, or consultancy services to foreign clients and receiving income in foreign currency incur a flat concessional TDS rate (typically 1% to 5%) processed via inward banking channels, acting as a final tax in qualified frameworks.
5. What is the corporate tax rate for standard IT companies in Nepal?
While standard general corporations pay 25% corporate tax, export-oriented IT industries enjoy tax concessions and rebates reducing their effective corporate tax rate to 10%.
Conclusion
The tax reforms introduced in FY 2083/84 (2026/27 A.D.) mark a significant shift toward simplifying tax compliance and lowering taxes for middle-class employees and export-driven businesses. By expanding the 1% threshold to Rs. 10,00,000 and capping the upper marginal rate at 29%, Nepal aligns its fiscal policies more closely with international practices.
Whether managing individual payroll or corporate compliance, leveraging available statutory deductions—such as SSF, CIT, life insurance, and medical credits—allows taxpayers to optimize tax liabilities while remaining fully compliant with IRD regulations.
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