Nepal Tds

Nepal — TDS / Withholding Tax — Skill v1.0

Produced by OpenAccountants (openaccountants.com). Research-grade (tier 2) for FY 2082/83. Source provenance: figures derive from Nepali professional-firm publications (PKF T.R. Upadhya, Union Nepal) reflecting the Income Tax Act 2058 §87–§88 and Finance Act 2082 — not re-anchored to primary IRD pages. A Nepali CA must confirm against the statute before reliance. Not tax advice.

Verified rates & thresholds (accountant-reviewed)

Reviewed against the cited tax authorities by Ashish Bista on 2026-06-06. Items flagged for further clarification are tracked separately and excluded here.

TDS (Withholding)

• Rent (paid by a resident person) — 10% (Income Tax Act 2058 s.88 (PKF s.7.1))
• Dividend (resident company/partnership) — 5% (resident AND non-resident) (PKF s.7.1)
• Interest (Nepal source) — natural person not in business — 6% (PKF s.7.1; Union Nepal)
• Interest (Nepal source) — entities — 15% (PKF s.7.1)
• Contract/agreement payment to a non-resident — 5% (PKF s.7.1)
• Resident contract/supply payments exceeding NPR 50,000 — 1.5% (PKF s.7.1)
• Flat 15% Section 88 on interest/rent/service — REFUTED — do not use; the effective rates above govern (PKF s.7.1)
• 10% dividend TDS — 5% (10% figure refuted) (PKF s.7.1)
• Non-resident service/royalty/technical fees + DTAA — 15% standard TDS (subject to lower rates if a DTAA applies) (Income Tax Act 2058 s.88)
• TDS deposit / return due dates — 25th of the following Nepali month (Income Tax Act 2058 s.90)
• Consultancy & Service Fees (Resident) — 1.5% (if VAT registered) / 15% (if not VAT registered) (Income Tax Act 2058 s.88)
• Freight & Transportation Services — 1.5% (if VAT registered) / 2.5% (if not VAT registered) (Income Tax Act 2058 s.88)
• Windfall Gains (Prizes, Lottery) — 25% (Final withholding) (Income Tax Act 2058 s.88)

Section 1 — Quick reference (rates, FY 2082/83 — "no change" from FY 2024-25)

Payment type / Rate / Notes

Payment type	Rate	Notes
Rent (paid by a resident person)	10%
Dividend (paid by resident company / partnership)	5%	Same to resident AND non-resident
Interest (Nepal source, from resident banks / FIs / cooperatives / debenture issuers / listed companies)	6% to a natural person (not in business); 15% to entities
Contract / agreement payment to a non-resident	5%
Contract payments exceeding NPR 50,000	1.5%	Resident contract/supply payments

Field / Value

Field	Value
Country / authority	Nepal — Inland Revenue Department (IRD), ird.gov.np
Statute	Income Tax Act 2058 (2002) §87–§88, as amended by Finance Act 2082
Income year	Shrawan 1 – Ashad end (BS); FY 2082/83
Validated by	Pending — Nepali CA / registered tax practitioner
Skill version	1.0

Refuted / do NOT use: a flat 15% Section 88 TDS on interest/rent/service, and a 10% dividend TDS — both appear in some secondary commentary but were adversarially refuted; the effective FY 2082/83 rates above govern.

Conservative defaults

Ambiguity / Default

Ambiguity	Default
Recipient natural person vs entity (interest)	Treat as entity (15%) and flag
Resident vs non-resident recipient	Flag; non-resident service/royalty/technical fees beyond the 5% contract rate are VERIFY
Contract payment near NPR 50,000 threshold	Apply 1.5% if it exceeds 50,000

Section 2 — Refusal catalogue

• R-NP-TDS-1 — Salary TDS — Employment withholding sequences with SSF — use nepal-payroll.
• R-NP-TDS-2 — Non-resident service/royalty/technical fees + DTAA — Beyond the 5% non-resident contract rate, the full non-resident Section 88 schedule and treaty overrides were NOT established — VERIFY; escalate.
• R-NP-TDS-3 — Full Section 88 schedule — Many payment categories exist beyond those listed; this skill covers the common ones. Confirm the full §88 table for FY 2082/83.

Section 3 — Tier 1 rules

• Tier 1 rules intro —

3.1 Rent — 10%

• Rent — TDS of 10% on rent paid by a resident person.

3.2 Dividend — 5%

• Dividend — TDS of 5% on dividends paid by a resident company/partnership — to both resident and non-resident recipients.

3.3 Interest — 6% / 15%

• Interest — On Nepal-source interest paid by resident banks, financial institutions, cooperatives, debenture issuers, or listed companies: 6% to a natural person who is not deriving the interest in the course of business; 15% to entities.

3.4 Contracts

• Contracts — Payment under a contract/agreement to a non-resident: 5%. Resident contract/supply payments exceeding NPR 50,000: 1.5%. Source: PKF Trunco "Tax Rates 2082-83" §7.1 (each marked "No change"); Union Nepal TDS guide. (PKF Trunco "Tax Rates 2082-83" §7.1; Union Nepal TDS guide)

Section 4 — Worked examples

• Rent NPR 200,000 to a resident landlord → TDS = 10% × 200,000 = NPR 20,000.
• Bank interest NPR 100,000 to an individual (not in business) → TDS = 6% × 100,000 = NPR 6,000.
• Dividend NPR 500,000 → TDS = 5% × 500,000 = NPR 25,000.
• Resident supply contract NPR 300,000 → TDS = 1.5% × 300,000 = NPR 4,500.

Section 5 — Filing

TDS is deducted at payment and deposited to the IRD with a credit certificate to the payee. Deposit/return due dates — VERIFY against the IRD calendar (not established by the research).

Section 6 — Sources

Research-grade, FY 2082/83. Secondary firm publications — re-anchor to primary IRD/statute (§87–§88):

1. PKF T.R. Upadhya & Co. "Tax Rates 2082-83" §7.1 — https://pkf.trunco.com.np/files/publications/1748841198_Tax%20Rates%202082-83_Final_250601_213028.pdf
2. Union Nepal — TDS in Nepal — https://unionnepal.com/tds-in-nepal
3. Income Tax Act 2058 (2002) §88 — confirm at https://ird.gov.np

Known gaps / VERIFY: full §88 schedule; non-resident service/royalty/technical-fee rates + DTAA; deposit/return due dates.

Prohibitions

• NEVER use the refuted flat 15% (interest/rent/service) or 10% dividend rates — use the rates in §1.
• NEVER apply the 6% interest rate to an entity recipient — entities are 15%.
• NEVER assert non-resident service/royalty/technical-fee TDS this skill flags as VERIFY.
• NEVER present these as primary-IRD-confirmed — flag for verifier re-anchoring.
• NEVER file or instruct filing — working paper for practitioner review only.

Disclaimer

For informational and computational purposes only; not tax, legal, or financial advice. All outputs must be reviewed and signed off by a qualified Nepali professional (CA / registered tax practitioner) before filing or acting upon. Latest verified version at openaccountants.com.