Income Tax Slabsआयकर दर
Nepal's personal income tax is charged at marginal rates across annual income bands. For FY 2083/84 the first NPR 1,000,000 is taxed at 1%, rising through the bands to a top marginal rate of 29%.
Also called: tax slab Nepal, income tax rate Nepal, salary tax slab, aayakar dar
Key facts
- Up to NPR 1,000,000
- 1%The 1% social security tax. Waived for anyone contributing to the SSF.
- NPR 1,000,001 to NPR 1,500,000
- 10%
- NPR 1,500,001 to NPR 2,500,000
- 20%
- NPR 2,500,001 to NPR 4,000,000
- 27%
- Above NPR 4,000,000
- 29%
Marginal, not flat
The rates above apply band by band, not to the whole income. Someone earning just over the first threshold does not pay the second band's rate on everything they earn: they pay 1% on the first band and the higher rate only on the amount above it.
This is worth stating plainly because the opposite belief is common, and it leads employees to turn down raises they think will cost them money.
What changed in the current schedule
- The separate schedules for single and couple filers were merged into one table for all resident natural persons.
- The 1% first band was widened to NPR 1,000,000.
- The top marginal rate was reduced to 29%.
The first band is a social security tax
The 1% charged on the first band is the social security tax rather than ordinary income tax. Employees who contribute to the Social Security Fund have it waived, because their SSF contribution already covers that obligation. On a payslip this shows up as a slightly lower TDS for SSF-enrolled employees at the same salary.
What is taxed
The slabs apply to taxable income, not gross. Retirement contributions come off first, up to the lower of NPR 500,000 and one third of assessable income, along with any approved insurance premium deduction. A 33% CIT election on top of PF is the usual way an employee reaches that ceiling.
Income Tax Slabs, answered
The rates are marginal across bands: 1% on the first NPR 1,000,000, rising through the middle bands to a top marginal rate of 29% on income above the highest threshold. The 1% band is a social security tax and is waived for SSF contributors.
Not in the current schedule. The separate single and couple tables were merged into one uniform table for all resident natural persons.
No. The rates are marginal, so the higher rate applies only to the portion of income above the threshold. Everything below it is still taxed at the lower rates.
- Income Tax Act 2058 as amended by the FY 2083/84 budget. The rates on this page are generated from lib/nepal-payroll.ts, the same source the site's calculators use.
This page explains general practice in Nepal. It is not legal or tax advice, and statutory figures are revised from time to time. Check the current Act, rule or notice before acting on it.
Related terms
- TDS (Tax Deducted at Source)स्रोतमा कर कट्टीTDS is income tax withheld by the employer from an employee's salary each month and deposited with the Inland Revenue Department on the employee's behalf. It is calculated on annual projected income and spread across the year, not charged month by month in isolation.
- Social Security Tax (SST)सामाजिक सुरक्षा करThe social security tax is the 1% charged on the first NPR 1,000,000 of a resident individual's annual income. It is collected through payroll like ordinary income tax, and it is waived for employees who contribute to the Social Security Fund.
- Citizen Investment Trust (CIT)नागरिक लगानी कोषThe Citizen Investment Trust is a voluntary retirement savings scheme employees can join on top of PF or SSF. An employee elects to contribute up to 33% of basic salary, and the contribution reduces taxable income within the shared retirement ceiling.
- Nepali Fiscal Yearआर्थिक वर्षNepal's fiscal year runs from the first of Shrawan to the last day of Ashad in the Bikram Sambat calendar, which is roughly mid-July to mid-July in the Gregorian calendar. Tax slabs, leave accrual, bonuses and annual returns all follow it.
- Net Payखुद तलबNet pay is the amount that actually reaches an employee's bank account: gross salary minus the retirement contribution, any voluntary CIT election, monthly TDS, and any other authorised deduction such as a salary advance.
- Inland Revenue Department (IRD)आन्तरिक राजस्व विभागThe Inland Revenue Department is Nepal's tax administration, responsible for income tax, VAT and excise. For payroll it is the body that publishes the tax slabs, issues PANs, receives monthly withholding deposits and defines the eTDS format.
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