Nepal’s income tax rates for FY 2082/83 (2025/26) were introduced under the Finance Act 2082, presented in May 2025, and apply from mid-July 2025 to mid-July 2026. While personal income tax slabs remained unchanged from the previous fiscal year, the Finance Act introduced specific amendments around startup exemptions and IT services — which do not affect standard employment income tax calculations covered in this guide.
Whether you are an employee, employer, or business owner, understanding the current tax slabs helps you calculate TDS correctly, plan deductions, and stay compliant with IRD requirements.
Income Tax Slab for Individuals (Single) — FY 2082/83
| Tax Band | Income Level (NPR) | Tax Rate |
|---|---|---|
| Band 1 | First 5,00,000 | 1%* |
| Band 2 | Next 2,00,000 | 10% |
| Band 3 | Next 3,00,000 | 20% |
| Band 4 | Next 10,00,000 | 30% |
| Band 5 | Next 30,00,000 | 36%** |
| Additional | Remaining above 50,00,000 | 39%*** |
Income Tax Slab for Couples — FY 2082/83
| Tax Band | Income Level (NPR) | Tax Rate |
|---|---|---|
| Band 1 | First 6,00,000 | 1%* |
| Band 2 | Next 2,00,000 | 10% |
| Band 3 | Next 3,00,000 | 20% |
| Band 4 | Next 9,00,000 | 30% |
| Band 5 | Next 30,00,000 | 36%** |
| Additional | Remaining above 50,00,000 | 39%*** |
*The 1% in Band 1 is Social Security Tax deposited to a separate revenue account. Taxpayers registered as sole proprietors or earning pension/contribution-based pension income are exempt. If you are already depositing to SSF, Social Security Tax does not apply.
**36% = 30% base rate + 20% additional on taxable income above NPR 20,00,000 up to NPR 50,00,000.
***39% = 30% base rate + 30% additional on taxable income above NPR 50,00,000.
How to Calculate Your Income Tax in Nepal
Nepal uses a progressive tax system — each band is taxed at its own rate, not your total income at the top rate.
Example — Single individual earning NPR 10,00,000/year:
| Band | Income | Rate | Tax |
|---|---|---|---|
| Band 1 | 5,00,000 | 1% | 5,000 |
| Band 2 | 2,00,000 | 10% | 20,000 |
| Band 3 | 3,00,000 | 20% | 60,000 |
| Total | 10,00,000 | NPR 85,000 |
Example — Couple with combined income NPR 12,00,000/year:
| Band | Income | Rate | Tax |
|---|---|---|---|
| Band 1 | 6,00,000 | 1% | 6,000 |
| Band 2 | 2,00,000 | 10% | 20,000 |
| Band 3 | 3,00,000 | 20% | 60,000 |
| Band 4 | 1,00,000 | 30% | 30,000 |
| Total | 12,00,000 | NPR 1,16,000 |
Key Tax Deductions in Nepal FY 2082/83
Before calculating your tax, certain deductions reduce your taxable income:
Remote Area Deduction Natural persons working in remote areas are entitled to a deduction of up to NPR 50,000 from their taxable income.
Life Insurance Premium Deduction Resident individuals who have paid life insurance premiums can deduct the actual premium paid or NPR 40,000 — whichever is lower — from their annual taxable income.
Health Insurance Premium Deduction Resident individuals with health insurance can deduct the actual premium paid or NPR 20,000 — whichever is lower — from their annual taxable income.
10% Rebate for Female Employees Female employees whose taxable income is solely from employment are entitled to a 10% rebate on their total tax liability — applied after calculating the tax, not on the income.
Example — Female employee earning NPR 8,00,000/year:
| Band | Income | Rate | Tax |
|---|---|---|---|
| Band 1 | 5,00,000 | 1% | 5,000 |
| Band 2 | 2,00,000 | 10% | 20,000 |
| Band 3 | 1,00,000 | 20% | 20,000 |
| Subtotal | 45,000 | ||
| 10% Rebate | -4,500 | ||
| Total Tax | NPR 40,500 |
TDS for Employers: What You Need to Know
Employers in Nepal are responsible for deducting TDS (Tax Deducted at Source) from employee salaries each month and depositing it to the IRD. Key points:
- TDS must be calculated based on the employee’s projected annual income and applicable slab
- Monthly TDS = estimated annual tax ÷ 12
- TDS must be deposited to IRD within the prescribed deadline each month
- Employers must issue tax certificates to employees at year end
[INTERNAL LINK: “Incorrect TDS calculation or late deposits attract penalties from IRD” → Payroll Services page]
Frequently Asked Questions
What is the income tax slab for FY 2082/83 in Nepal?
For single individuals, tax starts at 1% on income up to NPR 5,00,000 and goes up to 39% on income above NPR 50,00,000. For couples, the first band covers up to NPR 6,00,000 at 1%. Both rates are unchanged from FY 2081/82.
Is the 1% tax in Band 1 income tax or social security tax?
The 1% in Band 1 is Social Security Tax, deposited to a separate government revenue account. It does not apply to sole proprietors, pension income earners, or those already contributing to SSF.
What is the 10% rebate for female employees in Nepal?
Female employees whose only source of taxable income is employment are entitled to a 10% rebate on their calculated tax liability, reducing the final amount owed.
Can I deduct life insurance premiums from my taxable income in Nepal?
Yes. Resident individuals can deduct the actual life insurance premium paid or NPR 40,000 — whichever is lower — from their taxable income each fiscal year.
What happens if an employer miscalculates TDS in Nepal?
Incorrect TDS calculation or late deposit to IRD can result in penalties and interest charges. Employers are responsible for accurate monthly deductions and timely remittance.
Are the tax slabs the same for FY 2082/83 as FY 2081/82?
Yes. The income tax bands and rates for FY 2082/83 are unchanged from the previous fiscal year for both individuals and couples, as confirmed under the Finance Act 2082.
What changes did the Finance Act 2082 introduce?
While personal income tax slabs remained stable, the Finance Act 2082 introduced specific amendments around startup exemptions and IT services. These do not affect standard employment income tax calculations.
Need Help Managing Payroll and TDS in Nepal?
Calculating TDS correctly across a team, staying on top of IRD deadlines, and handling year-end tax certificates can be complex — especially for growing businesses and foreign companies operating in Nepal. See how we handle payroll and TDS for businesses in Nepal