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.

Rates and thresholds

See the approval status above.

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
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.