Nepal personal income tax for resident individuals, couples, employees, sole proprietors, and freelancers filing with the Inland Revenue Department (IRD).
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Accountant-authored. Written and published by Ashish Bista, an accountant approved on OpenAccountants. Their licence number (ICAN: 1765) is published on their profile, so you can check it against the register yourself. General reference material, not advice on your specific facts; don't file, pay, or take a position on it without a professional reviewing your situation.
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Every figure is drawn from this skill and cited to its source.
First 500,000 — 1% (Social Security Tax) slab
First 1,000,000 at 1%Finance Act 2083
Next 200,000 (500,001–700,000) at 10% slab
Next 500,000 (1,000,001–1,500,000) at 10%Finance Act 2083
Next 300,000 (700,001–1,000,000) at 20% slab
Next 1,000,000 (1,500,001–2,500,000) at 20%Finance Act 2083
Next 1,000,000 (1,000,001–2,000,000) at 30% slab
Next 1,500,000 (2,500,001–4,000,000) at 27%Finance Act 2083
Next 3,000,000 (2,000,001–5,000,000) at 36% slab
Above 4,000,000 at 29%Finance Act 2083
Above 5,000,000 at 39% slab
N/A — Top tier is now above NPR 4,000,000 at 29%; 39% rate eliminated.Finance Act 2083
Resident individual — couple: First band at 1% threshold
NPR 1,000,000 (uniform for all — separate couple slab structure removed)Finance Act 2083
Resident individual — couple: Remaining bands
Same as single: 10 / 20 / 27 / 29% — couple slabs eliminated; uniform rates apply.Finance Act 2083
1% first-band SST — deposit account
Deposited to separate IRD revenue account (code 11211)IRD revenue codes (PKF/khatapana)
SST exemptions
Does NOT apply to sole proprietors, pension income, contribution-based pension fund income, or SSF contributorsPKF; Baker Tilly
Slabs unchanged from fiscal year reference
FY 2083/84 (2026/27)Finance Act 2083
Income year / fiscal year period
Shrawan 1 – Ashad end (BS); FY 2083/84 ≈ mid-Jul 2026 – mid-Jul 2027Income Tax Act 2058
Annual return / instalment due dates
Advance tax instalments due: Poush end, Chaitra end, Ashad end; final annual return due: Ashwin endIncome Tax Act 2058 s. 94 & 96
Residency test
183 days or more in Nepal in any 365-day periodIncome Tax Act 2058 s. 2(q)
R-NP-1
Assessment status unknown. "Single vs couple assessment changes the slab thresholds. This skill cannot compute tax without it. Please confirm before proceeding."
R-NP-2
Companies / partnerships. "This skill covers resident natural persons and sole proprietors only. Private/public companies and partnership firms file separate returns at entity rates. Escalate to a Nepali tax professional."
R-NP-3
Non-resident taxation. "Non-resident natural persons are taxed at a flat rate on Nepal-source income [RESEARCH GAP — reviewer to confirm rate, commonly cited as 25%]. Out of scope for the resident slab tables. Escalate to a Nepali tax professional."
R-NP-4
Capital gains / property disposals. "Capital gains on land, buildings, or shares have separate rates and are outside the natural-person slab computation. Escalate to a Nepali tax professional."
R-NP-5
Arrears / enforcement. "Client has outstanding tax arrears or is subject to IRD enforcement. Late-payment interest under §119 accrues monthly. Do not advise. Escalate to a Nepali tax professional immediately."
R-NP-6
VAT return requested. "This skill covers income tax (D-01) only. Nepal VAT is a separate return — escalate or use a dedicated VAT skill."
R-NP-7
Excluded professionals using a small-business scheme. "Doctors, engineers, auditors/accountants, lawyers, consultants, sportspersons, and actors CANNOT use presumptive or turnover-based schemes. They must file normal returns at slab rates. Do not apply a presumptive/turnover computation for these professions."
Income-production test
A business expense is deductible only if incurred in the production of income. Mixed-use expenses must be apportioned on a reasonable, documented basis. Private and capital expenditure is excluded.Income Tax Act, 2058
SST first slab rule
The first slab rate of 1% on resident natural persons with remuneration income is the SST — a flat, final levy into a separate SSF account; it is not creditable.SSF rules; Wikipedia "Social Security Fund (Nepal)"; lawsagar; primelawnepal
SSF enrolled — 1% waived
For employees enrolled in the SSF, the 1% SST is waived because it is already captured within the 11% employee SSF contribution (see Section 6 contribution table).SSF rules; Wikipedia "Social Security Fund (Nepal)"; lawsagar; primelawnepal
Confirm SSF enrolment
Always confirm SSF enrolment before deciding whether the 1% band applies.SSF rules; Wikipedia "Social Security Fund (Nepal)"; lawsagar; primelawnepal
Couple election
A married couple may elect couple assessment, which raises the first (SST/exempt) band to NPR 600,000 and the 10% band ceiling accordingly (see Section 1). The election is per the slab table; confirm the couple is eligible and has elected.Section 1 slab table
Depreciation pooling
Business assets are pooled and depreciated under the Income Tax Act, 2058 (Schedule 2). Capital items are NOT expensed in full in the year of purchase. [RESEARCH GAP — reviewer to confirm pool categories and rates from the Act's Schedule 2 / PKF Trunco PDF before computing depreciation.]Income Tax Act, 2058, Schedule 2
Presumptive tax eligibility
Presumptive (fixed) tax — turnover ≤ NPR 3,000,000 and income ≤ NPR 300,000, Nepal-source business income only, not an excluded profession.PKF Trunco FY2082-83; notarynepal; commonlaw.com.np
Zero transactions rule
Zero transactions in the year → no presumptive tax (FY 2082/83 update). Filed on Form D-01.PKF Trunco FY2082-83; notarynepal; commonlaw.com.np
Turnover-based tax eligibility
Turnover-based tax — turnover NPR 3,000,000 to NPR 10,000,000, profit ≤ NPR 1,000,000.PKF Trunco FY2082-83; notarynepal; commonlaw.com.np
Excluded professionals cannot use small-business schemes
Excluded professionals (doctors, engineers, auditors/accountants, lawyers, consultants, sportspersons, actors) cannot use (a) or (b); they file normal returns at slab rates.PKF Trunco FY2082-83; notarynepal; commonlaw.com.np
Basis and registration deadline
Computed on basic salary only (allowances excluded). Employer must register a new employee with the SSF within 3 months of joining.Wikipedia "Social Security Fund (Nepal)"; lawsagar; primelawnepal; companydartanepal
Home office deduction rules
Apportion utilities/rent by the dedicated business-use area (floor area or room count). A dual-use space (living room, kitchen) does not qualify. Conservative default: 0% until the arrangement is confirmed. Flag for reviewer: confirm dedicated area basis and documentation.
Motor vehicle business use rules
Only the business-use percentage of fuel, insurance, maintenance, and depreciation is deductible. Requires a logbook (business vs total km). Conservative default: 0% until logbook provided.
Phone/internet mixed use rules
Business-use portion only. Conservative default: 0% until business percentage confirmed.
Female-taxpayer rebate eligibility rules
10% rebate applies to resident women with employment/remuneration income only. Flag for reviewer: confirm the income is employment-only and the taxpayer qualifies before applying.
Small-business scheme eligibility rules
Confirm turnover and profit thresholds AND that the taxpayer is not an excluded professional before applying presumptive or turnover-based tax. Flag for reviewer: scheme choice materially changes the computation.
Bad debt write-off rules
Deductible only if income was previously declared, recovery steps taken, and the debt is genuinely irrecoverable. Flag for reviewer to confirm all conditions.
Prohibitions list
- NEVER apply a slab table without knowing single vs couple assessment. - NEVER apply the 1% SST band to an SSF-enrolled employee — it is waived. - NEVER apply the 10% female rebate without confirming employment-only income and eligibility. - NEVER apply a presumptive or turnover scheme to an excluded professional (doctor, engineer, auditor/accountant, lawyer, consultant, sportsperson, actor). - NEVER treat employment salary (talab) as self-employment business income. - NEVER allow personal living, entertainment, fines, or income tax itself as a business deduction. - NEVER expense a capital item in full — depreciate it under Schedule 2. - NEVER include VAT collected on sales in business income for VAT-registered clients. - NEVER treat advance/installment tax as a business expense — it is a credit. - NEVER rely on a figure marked [RESEARCH GAP] without reviewer confirmation. - NEVER present tax calculations as definitive — always label as estimated.
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
Tier 2 — research-verified, pending accountant sign-off. Figures below are drawn from the Income Tax Act, 2058 (2002), Inland Revenue Department (IRD) guidance, the Social Security Fund (SSF), and the PKF Trunco "Tax Rates for FY 2082-83 (2025-26)" publication. Items marked [RESEARCH GAP — reviewer to confirm] could not be locked to a primary source and MUST be confirmed by a Nepali tax professional before filing.
No independent accountant check is recorded for this version. Items flagged for further clarification are tracked separately and excluded here.
_map
| Skill | slug | version |
|---|---|---|
| Income Tax (Individuals) | nepal-income-tax | 1.0 |
| Corporate Income Tax | nepal-corporate-tax | 1.0 |
| TDS (Withholding) | nepal-tds | 1.0 |
| Payroll (Salary TDS + SSF) | nepal-payroll | 1.0 |
| VAT (IRD Return) | nepal-vat | 2.1 |
Quick Reference
| Field | Value |
|---|---|
| Country | Nepal (Federal Democratic Republic of Nepal) |
| Tax | Income Tax (आयकर) on natural persons |
| Currency | NPR (Nepalese Rupee) only |
| Tax year | Bikram Sambat fiscal year: Shrawan 1 -- Ashad end (~mid-July to mid-July) |
| Current tax year | FY 2082/83 BS = 2025/26 AD (started ~17 July 2025) |
| Primary legislation | Income Tax Act, 2058 (2002) |
| Supporting rules | Contribution-Based Social Security Act (SSF); annual Finance/Budget Act (slabs); IRD circulars |
| Tax authority | Inland Revenue Department (IRD), ird.gov.np |
| Filing portal | taxpayerportal.ird.gov.np |
| Individual return form | D-01 (natural persons; also presumptive) |
| Filing deadline | Within 3 months of FY end → end of Ashoj (~mid-October); extendable +3 months to end of Poush (~mid-January) |
| Validated by | Pending — requires sign-off by a Nepali tax professional |
| Validation date | No independent accountant check is recorded for this version. |
| Skill version | 0.1 |
The first-band rate of 1% is the Social Security Tax (SST) — a flat, final levy paid into a separate SSF account. It is not creditable against other tax and is waived for employees who contribute to the SSF (see Section 5.2). The top rates are built by surcharging the 30% bracket: 36% = 30% × 1.20 and 39% = 30% × 1.30 (Income Tax Act mechanism; PKF Trunco FY2082-83).
Single (individual) — cumulative tax assumes the 1% SST applies (non-SSF taxpayer).
Single (individual) slab table (PKF Trunco "Tax Rates for FY 2082-83 (2025-26)"; notarynepal; fewalaw; taxadvisornepal.)
| Taxable income band (NPR) | Width | Rate | Tax on band | Cumulative tax at top |
|---|---|---|---|---|
| 0 -- 500,000 | 500,000 | 1% (SST) | 5,000 | 5,000 |
| 500,001 -- 700,000 | 200,000 | 10% | 20,000 | 25,000 |
| 700,001 -- 1,000,000 | 300,000 | 20% | 60,000 | 85,000 |
| 1,000,001 -- 2,000,000 | 1,000,000 | 30% | 300,000 | 385,000 |
| 2,000,001 -- 5,000,000 | 3,000,000 | 36% | 1,080,000 | 1,465,000 |
| 5,000,001+ | — | 39% | — | — |
Married couple (electing couple assessment) slab table (PKF Trunco "Tax Rates for FY 2082-83 (2025-26)"; notarynepal; fewalaw; taxadvisornepal.)
| Taxable income band (NPR) | Width | Rate | Tax on band | Cumulative tax at top |
|---|---|---|---|---|
| 0 -- 600,000 | 600,000 | 1% (SST) | 6,000 | 6,000 |
| 600,001 -- 800,000 | 200,000 | 10% | 20,000 | 26,000 |
| 800,001 -- 1,100,000 | 300,000 | 20% | 60,000 | 86,000 |
| 1,100,001 -- 2,000,000 | 900,000 | 30% | 270,000 | 356,000 |
| 2,000,001 -- 5,000,000 | 3,000,000 | 36% | 1,080,000 | 1,436,000 |
| 5,000,001+ | — | 39% | — | — |
SSF taxpayers: Where the employee contributes to the SSF, the 1% SST band is waived. The first NPR 500,000 (single) / 600,000 (couple) is then effectively taxed at 0% for the income-tax computation, and progressive rates begin at the 10% band. Confirm SSF enrolment before deciding whether the 1% applies.
D-01 Return key lines
| Line | Description |
|---|---|
| Assessable income | Employment + business + investment income (Nepal-source for non-residents) |
| Less: approved retirement contribution | Lower of 1/3 of assessable income or NPR 500,000 |
| Less: life insurance premium | Up to NPR 40,000 |
| Less: health insurance premium | Up to NPR 20,000 |
| Less: donations | Up to 5% of adjusted taxable income or NPR 100,000 (lower) |
| Taxable income | Assessable income less allowable deductions |
| Tax per slab | From the single/couple slab table above |
| Less: female-taxpayer rebate | 10% of computed tax (resident women, employment income only) |
| Less: TDS / advance tax / installments | Credits against final liability |
| Tax payable / refund | Net of credits |
Conservative Defaults table
| Ambiguity | Default |
|---|---|
| Unknown assessment status (single vs couple) | STOP — do not apply a slab table without it |
| Unknown SSF enrolment | Assume NOT SSF-enrolled → apply 1% SST (more tax; reviewer confirms) |
| Unknown residency | Assume resident only if ≥183 days confirmed; else STOP (non-resident flat rate differs) |
| Unknown business-use % (vehicle, phone, home) | 0% deduction |
| Unknown expense category | Not deductible |
| Unknown whether female-rebate applies | Do NOT apply the 10% rebate until confirmed |
| Unknown small-business scheme eligibility | Normal-return slab rates (most conservative) |
| Senior-citizen extra exemption | Do NOT apply unless age 65+ confirmed |
Minimum viable — bank statement for the full fiscal year (Shrawan–Ashad) in CSV, PDF, or pasted text, plus confirmation of assessment status (single/couple), residency, and SSF enrolment.
Recommended — sales/purchase invoices, salary slips, SSF contribution statements, TDS certificates (E-TDS), PAN, prior-year D-01 or assessment, VAT registration status.
Ideal — complete income and expenditure statement, asset/depreciation register, advance/installment tax receipts, life/health insurance and donation receipts, senior-citizen / female-taxpayer status.
Refusal if minimum is missing — SOFT WARN. No bank statement at all = hard stop. Bank statement without invoices = proceed with reviewer warning: "This D-01 was produced from bank statement alone. The reviewer must verify that all deductions are supported by valid documentation and that business expenses meet the income-production test of the Income Tax Act, 2058."
This is the deterministic pre-classifier. When a bank statement transaction matches a pattern below, apply the treatment directly. If none match, fall through to Tier 1 rules in Section 5. Match by case-insensitive substring on the counterparty/description. If multiple match, use the most specific. Nepali bank statements frequently mix Nepali (Devanagari/romanised) and English terms.
Income patterns table
| Pattern | D-01 Treatment | Notes |
|---|---|---|
| Client name + TRANSFER, DEPOSIT, PAYMENT RECEIVED, BHUKTANI | Business income | Core self-employment revenue |
| PARAMARSHA, CONSULTANCY, PROFESSIONAL FEE, SEWA SHULKA | Business income | Service fees |
| ESEWA, KHALTI, IMEPAY PAYOUT | Business income | Digital-wallet settlement — match to invoices |
| FONEPAY, CONNECTIPS SETTLEMENT | Business income | Payment-gateway settlement |
| UPWORK, FIVERR, PAYONEER, WISE PAYOUT | Business income (foreign-source) | Freelance platform — confirm FX and remittance docs |
| TALAB, SALARY, PARISHRAMIK, [employer] | Employment income | Goes to assessable employment income, not business |
| GHAR BHADA, RENT RECEIVED | Rental/investment income | Separate head; often subject to TDS |
| BYAJ, INTEREST RECEIVED | Investment income | Bank interest, usually TDS-deducted |
| LAABHANSH, DIVIDEND | Investment income | Dividend (5% TDS, final) [verify rate vs IRD] |
| TAX REFUND, IRD REFUND | EXCLUDE | Prior-year refund, not income |
Deductible business expenses table
| Pattern | Category | Treatment | Notes |
|---|---|---|---|
| KARYALAYA BHADA, OFFICE RENT | Office rent | Deductible | Dedicated business premises (rent TDS may apply) |
| LEKHAPAL, AUDITOR, ACCOUNTANT, CA FEE | Accountancy/audit fees | Deductible | Business-related |
| KANUNI, LAWYER, LEGAL, ADVOCATE | Legal fees | Deductible | Must be business-related |
| STATIONERY, OFFICE SUPPLIES | Office supplies | Deductible | |
| MARKETING, GOOGLE ADS, META ADS, FACEBOOK ADS | Advertising | Deductible | |
| TRAINING, SEMINAR, CONFERENCE | Training | Deductible | Must relate to current business |
| BANK CHARGE, SERVICE CHARGE, SPEJJEZ | Bank charges | Deductible | Business account only |
| ESEWA FEE, KHALTI FEE, GATEWAY FEE | Payment-processing fees | Deductible | |
| DOMAIN, HOSTING, AWS, DIGITALOCEAN | IT infrastructure | Deductible | Capitalise if a long-lived asset |
Software / SaaS table
| Pattern | Category | Treatment | Notes |
|---|---|---|---|
| GOOGLE WORKSPACE, MICROSOFT 365 | Software subscription | Deductible | Recurring = operating expense |
| ADOBE, CANVA, FIGMA, NOTION, ZOOM, SLACK | Software subscription | Deductible | |
| ANTHROPIC, OPENAI, GITHUB, ATLASSIAN | Software subscription | Deductible |
Utilities table
| Pattern | Category | Tier | Notes |
|---|---|---|---|
| NEA, NEPAL ELECTRICITY, BIDYUT | Electricity | T2 if home office | 100% if dedicated office; proportional if home |
| KHANEPANI, WATER BOARD | Water | T2 if home office | Apportion |
| NTC, NCELL, WORLDLINK, VIANET, SUBISU | Telecoms/broadband | T2 | Business-use portion only; default 0% if mixed |
Travel table
| Pattern | Category | Treatment | Notes |
|---|---|---|---|
| BUDDHA AIR, YETI AIRLINES, NEPAL AIRLINES | Flights | Deductible if business travel | Wholly business purpose |
| HOTEL, BOOKING.COM, RESORT | Accommodation | Deductible if business travel | |
| PATHAO, INDRIVE, TAXI | Local transport | Deductible if business purpose | |
| PETROL, DIESEL, FUEL, NOC, PUMP | Vehicle fuel | T2 — business % only | Requires logbook |
| PARKING | Parking | T2 — business % only |
Not deductible table
| Pattern | Category | Treatment | Notes |
|---|---|---|---|
| RESTAURANT, BHOJANALAYA, PARTY, ENTERTAINMENT | Entertainment/personal meals | NOT deductible | Private/entertainment |
| BHANSAGHAR, GROCERIES, SUPERMARKET, BHATBHATENI | Personal living | NOT deductible | Private cost |
| FINE, JARIWANA, PENALTY | Fines/penalties | NOT deductible | Public policy |
| IRD PAYMENT, INCOME TAX, KAR BHUKTANI | Income tax paid | NOT deductible | Tax cannot reduce income |
| DRAWINGS, PERSONAL WITHDRAWAL, ATM (personal) | Drawings | NOT deductible | Not an expense |
Capital items table
| Pattern | Category | Treatment | Notes |
|---|---|---|---|
| LAPTOP, COMPUTER, MACBOOK, DESKTOP | Computer hardware | Capitalise & depreciate | Pool-based depreciation [RESEARCH GAP — reviewer to confirm pool rates under Schedule 2] |
| PRINTER, SCANNER, COPIER | Office equipment | Capitalise & depreciate | As above |
| FURNITURE, DESK, CHAIR | Furniture/fittings | Capitalise & depreciate | As above |
| VEHICLE, CAR, BIKE (business) | Motor vehicle | Capitalise & depreciate (business %) | As above |
Exclusions table
| Pattern | Treatment | Notes |
|---|---|---|
| INTERNAL TRANSFER, OWN ACCOUNT | EXCLUDE | Own-account transfer |
| LOAN REPAYMENT, KARJA, EMI (principal) | EXCLUDE (principal) | Interest portion may be deductible if business loan |
| SSF, SOCIAL SECURITY, EPF, CIT | Retirement deduction | Goes to the retirement-contribution deduction, not business expense |
| VAT PAYMENT, IRD VAT | EXCLUDE | VAT liability, not an income-tax expense |
| ADVANCE TAX, INSTALLMENT TAX | Tax credit | Credit against final liability, not an expense |
Bank statement format table
| Bank | Common Patterns | Notes |
|---|---|---|
| Nepal Rastra Bank-regulated commercial banks (NABIL, NIC ASIA, Global IME, Nepal Investment Mega) | TRANSFER, DEPOSIT, CHARGE, FONEPAY, CONNECTIPS | PDF/CSV; date often in BS and/or AD |
| eSewa / Khalti / IME Pay (wallet statements) | LOAD, PAYMENT, CASHBACK, SETTLEMENT | CSV; wallet top-ups are not income |
| connectIPS | INTERBANK TRANSFER | Clearing rail; check underlying purpose |
Input line:
2082-05-10 ; FONEPAY CREDIT ; HIMAL TRADE CONCERN ; INV 2082-014 ; +118,000.00 ; NPR
Reasoning: Settlement of a sales invoice. If the client is VAT-registered, the NPR 118,000 includes 13% VAT. Net of VAT = 118,000 / 1.13 = NPR 104,424.78; VAT = NPR 13,575.22 (a liability to IRD, excluded from income). If not VAT-registered, the full NPR 118,000 is business income.
Classification: Business income = NPR 104,424.78 (VAT-registered) or NPR 118,000 (non-VAT). VAT excluded.
Input line:
2082-04-25 ; CARD PAYMENT ; ADOBE ; CREATIVE CLOUD ; -4,200.00 ; NPR
Reasoning: Recurring monthly software subscription used for the business. Fully deductible as an operating expense.
Classification: Deductible business expense = NPR 4,200.00.
Input line:
2082-06-02 ; CARD ; BHATBHATENI SUPERSTORE ; ; -9,800.00 ; NPR
Reasoning: Supermarket spend is personal living cost. Not incurred in the production of business income. No partial deduction.
Classification: NOT deductible. Exclude entirely.
Input line:
2082-04-31 ; DD ; SOCIAL SECURITY FUND ; SSF CONTRIBUTION ; -6,600.00 ; NPR
Reasoning: Approved retirement-fund contribution. Deductible as a retirement contribution (not a business expense), capped at the lower of one-third of assessable income or NPR 500,000 (combined EPF/CIT/SSF). Confirm the annual aggregate against the cap.
Classification: Retirement-contribution deduction = NPR 6,600.00 (subject to annual cap).
Input line:
2082-05-01 ; CREDIT ; KATHMANDU TECH PVT LTD ; TALAB SHRAWAN ; +60,000.00 ; NPR
Reasoning: Monthly salary. This is employment (remuneration) income, assessed under the same slab table but as employment income, with employer TDS already withheld. Do NOT treat as self-employment business income.
Classification: Employment income = NPR 60,000.00 (TDS credit per salary slip).
Scenario: Resident sole proprietor running a retail shop in Kathmandu Metropolitan City. Annual turnover NPR 2,400,000 (≤ NPR 3,000,000), business income only, not an excluded profession.
Reasoning: Turnover ≤ NPR 3,000,000 → eligible for the presumptive (fixed) tax. Location = Metropolitan City → fixed annual tax NPR 7,500 (PKF Trunco; notarynepal). No slab computation; filed on Form D-01 (presumptive). If there had been zero transactions in the year, no presumptive tax would be due (FY 2082/83 update).
Classification: Fixed presumptive tax = NPR 7,500 for the year.
Scenario: Single resident freelancer, NOT SSF-enrolled. Assessable business income NPR 1,500,000. Allowable business expenses NPR 300,000. Life-insurance premium paid NPR 40,000. No SSF/retirement contribution.
Step 1 — Taxable income: 1,500,000 − 300,000 (expenses) − 40,000 (life insurance) = NPR 1,160,000.
Step 2 — Apply single slabs (1% SST applies, non-SSF):
Tax = 5,000 + 20,000 + 60,000 + 48,000 = NPR 133,000.
No female rebate (not confirmed female with employment-only income). Tax payable before TDS/advance-tax credits = NPR 133,000.
Deductions and rebates table
| Item | Figure | Source |
|---|---|---|
| Female-taxpayer rebate | 10% reduction on computed tax (resident women, employment/remuneration income only) | notarynepal |
| Senior-citizen extra exemption (age 65+) | Additional NPR 100,000 added to the basic exemption | sanjeev-shrestha; taxconsultantnepal |
| Remote-area allowance | NPR 10,000 – 50,000 (category A–E) | notarynepal |
| Approved retirement contribution (EPF/CIT/SSF combined) | Lower of 1/3 of assessable income or NPR 500,000 | notarynepal |
| Life-insurance premium | Up to NPR 40,000/yr | notarynepal |
| Health (medical) insurance premium | Up to NPR 20,000/yr | notarynepal |
| Donation | Up to 5% of adjusted taxable income or NPR 100,000 (lower) | Income Tax Act, 2058 |
Non-deductible items table
| Item | Reason |
|---|---|
| Personal living expenses | Not business-related |
| Entertainment of a private nature | Not in production of income |
| Fines and penalties | Public policy |
| Income tax itself | Tax on income |
| Capital expenditure | Depreciated, not expensed |
| Drawings / personal withdrawals | Not an expense |
Presumptive (fixed) tax by location (PKF Trunco FY2082-83; notarynepal; commonlaw.com.np)
| Location | Fixed presumptive tax (NPR) |
|---|---|
| Metropolitan / Sub-Metropolitan City | 7,500 |
| Municipality | 4,000 |
| Rural Municipality (Gaunpalika) | 2,500 |
Turnover-based tax rates (PKF Trunco FY2082-83; notarynepal; commonlaw.com.np)
| Business type | Rate on turnover |
|---|---|
| Low-margin goods (gas, cigarettes, etc.) | 0.25% |
| Other goods / trade / products | 0.30% – 1.00% (commonly 0.75%) |
| Service business | 2.00% |
[RESEARCH GAP — reviewer to confirm each rate against IRD / PKF Trunco PDF before relying on it.] Values below are standard Act rates that could not be confirmed line-by-line from the binary PDF.
TDS common rates table
| Payment | Rate | Note |
|---|---|---|
| Dividend | 5% (final) | [verify] |
| Interest (bank/financial) | 5%–15% | depends on payee [verify] |
| Rent (house/land), natural person | 10% | commercial rent [verify] |
| Service fee | 15% | [verify] |
| Commission | 15% | [verify] |
| Contract/agreement payments | 1.5% | [verify] |
| Meeting/sitting fees, casual | 15% | [verify] |
Filing and deadlines table
| Item | Detail | Source |
|---|---|---|
| Individual / presumptive return | Form D-01 | taxadvisornepal; notarynepal |
| Annual return deadline | Within 3 months of FY end → end of Ashoj (~mid-October) | taxadvisornepal; estartupnepal |
| Extension | Up to +3 months on application → end of Poush (~mid-January) | taxadvisornepal |
| Advance/installment tax | 3 installments: end of Poush 40%, end of Chaitra 70%, end of Ashad 100% | Income Tax Act §94 |
| Employer TDS deposit | Monthly, by 25th of the following Nepali month | notarynepal |
| Online filing | taxpayerportal.ird.gov.np | IRD |
Registration thresholds table
| Item | Threshold | Source |
|---|---|---|
| PAN | Mandatory for all taxpayers before filing | notarynepal |
| VAT registration — goods only | Turnover > NPR 5,000,000 | nepsetrading; bizsewa |
| VAT registration — services / mixed | Turnover > NPR 3,000,000 | nepsetrading |
| VAT standard rate | 13% | notarynepal |
SSF contribution table (Wikipedia "Social Security Fund (Nepal)"; lawsagar; primelawnepal; companydartanepal)
| Contributor | Rate | Components |
|---|---|---|
| Employee | 11% of basic salary | 10% Provident Fund + 1% Social Security Tax |
| Employer | 20% of basic salary | 10% Provident Fund + 8.33% Gratuity + 1.67% additional/SSF |
| Total | 31% of basic salary | 20% PF + 8.33% Gratuity + 1.67% additional + 1% SST |
Arithmetic check: Employee 10 + 1 = 11. Employer 10 + 8.33 + 1.67 = 20. Total 11 + 20 = 31 (= 20 PF + 8.33 + 1.67 + 1 = 31). ✓
[RESEARCH GAP — reviewer to confirm] the component sub-breakdown (8.33% gratuity, 1.67%, and per-scheme allocation: medical/maternity ~1%, accident/disability ~1.4%, dependent-family, old-age) against an official SSF circular before publishing as exact.
Sources: Wikipedia "Social Security Fund (Nepal)"; lawsagar; primelawnepal; companydartanepal.
NEPAL INCOME TAX -- D-01 WORKING PAPER
Fiscal Year (BS): 2082/83 AD: 2025/26
Client: ___________________________ PAN: __________
Assessment: Single / Couple Resident: Y/N SSF-enrolled: Y/N
A. ASSESSABLE INCOME
A1. Business income (net of VAT if registered) ___________
A2. Employment income (talab) ___________
A3. Rental income ___________
A4. Investment income (interest, dividend) ___________
A5. TOTAL assessable income ___________
B. ALLOWABLE BUSINESS EXPENSES (production-of-income test)
B1. Office rent ___________
B2. Accountancy / audit / legal fees ___________
B3. Office supplies / stationery ___________
B4. Software subscriptions ___________
B5. Advertising / marketing ___________
B6. Bank / payment-processing charges ___________
B7. Travel (business) ___________
B8. Utilities (business %) ___________
B9. Home office (% of utilities/rent) ___________
B10. Vehicle (business %) ___________
B11. Depreciation (Schedule 2 pools) ___________
B12. Other allowable expenses ___________
B13. TOTAL business expenses ___________
C. RETIREMENT & INSURANCE DEDUCTIONS
C1. Approved retirement (lower of 1/3 income or 500,000) ___________
C2. Life insurance (max 40,000) ___________
C3. Health insurance (max 20,000) ___________
C4. Donation (max 5% / 100,000) ___________
C5. Senior-citizen extra exemption (if 65+) ___________
C6. TOTAL deductions ___________
D. TAXABLE INCOME (A5 - B13 - C6) ___________
E. TAX COMPUTATION (pass to deterministic engine — single/couple slabs)
E1. SST band (1% — waive if SSF-enrolled) ___________
E2. Progressive slab tax ___________
E3. Gross tax ___________
E4. Less: female-taxpayer rebate (10%, if eligible) ___________
E5. Less: TDS / advance / installment credits ___________
E6. Tax payable / refund ___________
REVIEWER FLAGS:
[ ] Assessment status confirmed (single/couple)?
[ ] Residency confirmed (≥183 days)?
[ ] SSF enrolment confirmed (1% SST waived or applied)?
[ ] Female-rebate eligibility confirmed?
[ ] Senior-citizen exemption confirmed (65+)?
[ ] Home office / vehicle / phone business % confirmed?
[ ] Depreciation pools/rates confirmed (Schedule 2)?
[ ] Small-business scheme eligibility confirmed?
[ ] Retirement contribution within cap?
Bank statement formats table
| Source | Format | Key Fields | Notes |
|---|---|---|---|
| Commercial banks (NABIL, NIC ASIA, Global IME, Nepal Investment Mega) | PDF, CSV | Date (BS/AD), Description, Debit, Credit, Balance | Description holds counterparty + reference |
| eSewa / Khalti / IME Pay | CSV | Date, Type, Amount, Remarks | Wallet load ≠ income; settlement may be income |
| connectIPS / Fonepay | CSV/PDF | Date, Channel, Amount, Reference | Clearing rail; check underlying purpose |
Key terms table
| Term | English | Classification Hint |
|---|---|---|
| भुक्तानी / BHUKTANI | Payment | Check direction for income/expense |
| तलब / TALAB / PARISHRAMIK | Salary / remuneration | Employment income |
| बहाल / GHAR BHADA / KIRAYA | Rent | Rental income or office-rent expense |
| ब्याज / BYAJ | Interest | Investment income (often TDS-deducted) |
| लाभांश / LAABHANSH | Dividend | Investment income |
| कर / KAR | Tax | Tax payment (not deductible) |
| जरिवाना / JARIWANA | Fine / penalty | Not deductible |
| कर्जा / KARJA / EMI | Loan | Principal excluded; business interest may deduct |
| सेवा शुल्क / SEWA SHULKA | Service charge / fee | Business income or bank charge — check context |
If the client provides a bank statement but cannot answer onboarding questions immediately:
ONBOARDING QUESTIONS -- NEPAL INCOME TAX
1. Assessment status: single or electing couple assessment?
2. Residency: were you in Nepal 183+ days this fiscal year?
3. Are you enrolled in the Social Security Fund (SSF)?
4. Profession: are you a doctor, engineer, auditor/accountant, lawyer,
consultant, sportsperson, or actor? (affects small-business schemes)
5. Annual turnover and profit (for presumptive/turnover scheme eligibility)?
6. Female taxpayer with employment income only? (10% rebate)
7. Age 65+? (senior-citizen extra exemption)
8. Home office: dedicated space? What % of floor area?
9. Vehicle/phone/internet: what % is business use? Logbook kept?
10. Retirement contributions (EPF/CIT/SSF), life and health insurance paid?
11. TDS certificates and advance/installment tax receipts?
12. PAN and VAT registration status?
Legislation references table
| Topic | Reference |
|---|---|
| Income tax rates / slabs | Income Tax Act, 2058 + annual Finance Act; PKF Trunco FY2082-83 |
| Allowable deductions | Income Tax Act, 2058 |
| Depreciation | Income Tax Act, 2058, Schedule 2 [RESEARCH GAP — confirm rates] |
| Advance/installment tax | Income Tax Act, 2058, §94 |
| Non-filing penalty | Income Tax Act, 2058, §117 |
| Installment underpayment | Income Tax Act, 2058, §118 |
| Late-payment interest | Income Tax Act, 2058, §119 |
| False/misleading statement | Income Tax Act, 2058, §120 |
| SSF contributions | Contribution-Based Social Security Act; SSF (ssf.gov.np) |
| Filing portal / deadlines | IRD (ird.gov.np; taxpayerportal.ird.gov.np) |
Penalties and interest table
| Provision | Charge | Source |
|---|---|---|
| §117 — Non-filing / failure to maintain documents | NPR 100 per month OR 0.10% of assessable income, whichever is higher | actnepal §117 |
| §118 — Underpayment of installment tax | Interest (normal rate) on shortfall vs required installment | actnepal §118 |
| §119 — Late payment of tax | Interest at the normal rate, per month/part-month, on unpaid tax (normal rate commonly cited at 15% p.a. [RESEARCH GAP — confirm vs IRD circular]) | actnepal §119 |
| §120 — False/misleading statement | 50%–100% of underpaid tax depending on intent | actnepal §120 |
| §90 — Withholding return non-filing | 2.5% per annum (per month/part-month) of the tax amount | rpandeyassociates |
| Installment return penalty | NPR 5,000 per return OR 0.01% of income, whichever higher | rpandeyassociates |
Minimum wage table
| Item | Amount (NPR) |
|---|---|
| Monthly minimum wage | 19,550 (= 12,170 basic + 7,380 dearness allowance) |
| Daily minimum wage | 754 (= 469 basic + 285 dearness allowance) |
Arithmetic check: 12,170 + 7,380 = 19,550 ✓; 469 + 285 = 754 ✓. ~13% rise from NPR 17,300/month. Source: PKF Trunco Flash Alert on Minimum Wages; lawgandhi; wageindicator.
Non-residents and capital gains table
| Item | Treatment | Status |
|---|---|---|
| Non-resident natural person | Flat 25% on Nepal-source income | [RESEARCH GAP — confirm vs PKF Trunco PDF] |
| Listed shares (resident) | 5% | [RESEARCH GAP — confirm] |
| Land/buildings owned >5 yrs | 5% | [RESEARCH GAP — confirm] |
| Land/buildings owned ≤5 yrs | 7.5% | [RESEARCH GAP — confirm] |
Test 1 — Single, non-SSF, mid-range. Input: Single, NOT SSF-enrolled, taxable income NPR 1,160,000. Expected: 5,000 (1% on 500k) + 20,000 (10% on 200k) + 60,000 (20% on 300k) + 48,000 (30% on 160k) = NPR 133,000.
Test 2 — Single at exactly the top of the 20% band. Input: Single, taxable income NPR 1,000,000. Expected: cumulative tax = NPR 85,000 (5,000 + 20,000 + 60,000).
Test 3 — Married/couple at top of 30% band. Input: Couple assessment, taxable income NPR 2,000,000. Expected: cumulative tax = NPR 356,000 (6,000 + 20,000 + 60,000 + 270,000).
Test 4 — Female-taxpayer rebate. Input: Single resident woman, employment income only, computed tax NPR 133,000. Expected: rebate 10% = 13,300; tax after rebate = NPR 119,700.
Test 5 — SSF taxpayer (1% SST waived). Input: Single, SSF-enrolled, taxable income NPR 700,000. Expected: 0–500,000 at 0% (SST waived) + 200,000 @ 10% = NPR 20,000. (vs NPR 25,000 if non-SSF.)
Test 6 — Presumptive small taxpayer, metro. Input: Sole proprietor, Kathmandu Metropolitan City, turnover NPR 2,400,000, not an excluded profession. Expected: fixed presumptive tax = NPR 7,500 (Form D-01).
Test 7 — Turnover-based service business. Input: Service business, turnover NPR 6,000,000, profit ≤ NPR 1,000,000. Expected: turnover tax = 2.00% × 6,000,000 = NPR 120,000.
Test 8 — Excluded professional cannot use presumptive. Input: Lawyer, turnover NPR 2,000,000. Expected: REJECT presumptive/turnover scheme → file normal return at slab rates.
This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.
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