Tax Rate In Nepal For FY 2077/78 [FY 2020-21]

June 14, 2020 | Investopaper

Yubraj Khatiwada, the finance minister of Nepal, presented the budget for the fiscal year 2077/78 [FY 2020-21] on May 28, 2020. The income tax rate in Nepal as per the new budget as well as the Fiscal Bill 2076 is shown below.

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Income Tax Rate In Nepal For Individual (Unmarried)

Up to Rs 4 Lakh of Annual Income, You have to pay 1 percent income tax i.e maximum Rs. 4,000.

For Income of Rs. 4 lakhs to 5 lakhs, you have to pay 10 percent income tax for additional 1 lakh income above Rs. 4 lakh. Thus, maximum income tax is 4000+10,000 (for additional 1 lakh income)= Rs. 14,000.

For the income of Rs. 500,000 to Rs. 700,000, you have to pay 20 percent income tax for additional income above Rs. 5 lakh. Hence, your maximum total income tax becomes 14,000+40,000 (for additional 2 lakh income)= Rs. 54,000.

For Income between Rs. 700,000 and Rs. 20,00,000, you have to pay 30 percent income tax for additional income above Rs. 7 lakh. Hence, your maximum total income tax becomes 54,000+390,000 (for additional 13 lakh income)= Rs. 444,000

For those earning more than Rs 20 lakh, you have to pay income tax at the rate of 36 percent, for additional income above Rs. 20 lakh. This means that those earning Rs 25 lakh will have to pay Rs 444,000+Rs.180,000 (for additional income above Rs. 20 lakh at 36%) =Rs. 624,000

The table below shows the income tax rates in Nepal for unmarried individual.

Income Tax Rate In Nepal For Unmarried Individual
Annual Income Income Tax Rate (FY 2077/78)
Up to Rs 4,00,000 1%
Additional Rs 1,00,000 10%
Additional Rs 2,00,000 20%
Additional Rs 1,300,000 30%
Additional Tax Above Rs 2,000,000 36%

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Income Tax Rate In Nepal For Married Couple

Up to Rs 4.5 Lakh of Annual Income, you have to pay 1 percent income tax i.e maximum Rs. 4,500.

For Income of Rs. 4.5 lakhs to 5.5 lakhs, you have to pay 10 percent income tax for additional 1 lakh income above Rs. 4.5 lakhs. Thus, maximum income tax is 4,500+10,000 (for additional 1 lakh income)= Rs. 14,500.

For the income of Rs. 5,50,000 to Rs. 7,50,000, you have to pay 20 percent income tax for additional income above Rs. 5.5 lakhs. Hence, your maximum total income tax becomes 14,500+40,000 (for additional 2 lakhs income)= Rs. 54,500.

For Income between Rs. 7,50,000 and Rs. 20,00,000, you have to pay 30 percent income tax for additional income above Rs. 7.5 lakh. Hence, your maximum total income tax becomes 54,500+375,000 (for additional 12.5 lakhs income)= Rs. 429,500

For those earning more than Rs 20 lakh, you have to pay income tax at the rate of 36 percent, for additional income above Rs. 20 lakh. This means that those earning Rs 25 lakh will have to pay Rs 429,500+Rs.180,000 (for additional income above Rs. 20 lakh at 36%) =Rs. 609,500.

The table below presents the income tax rates in Nepal for married couple.

Income Tax Rate In Nepal For Married Couple
Annual Income  Tax Rate In Nepal (FY 2077/78)
Up to  Rs 450,000 1%
For Additional Rs 100,000 10%
For Additional  Rs 200,000 20%
For Additional Rs 1,250,000 30%
Additional Tax Above Rs 2,000,000 36%

Tax Rate In Nepal For Non-Residents

Source of Income Tax Rate
Normal transactions 25%
Through shipping, air or telecom services, postage, satellite and optical fiber project 5%
Shipping, air or telecom services through the territory of Nepal 2%
Repatriation of profit by Foreign Permanent Establishment 5%

Corporate Income Tax In Nepal

Type of Business Normal Tax Rate Rebate Applicable Tax Rate
Normal Business 25% 25%
Special Industry under section 11 for the whole year 25% 20% 20%
Constructing and operating ropeway, cable car, railway, tunnel or sky bridge 25% 40% 15%
Constructing and operating roads, bridges, tunnel, railway, and airports 25% 50% 12.50%
trolley bus or trams 25% 40% 15.00%
Entities with export income from a source in Nepal 25% 20% 20%
Banks and financial institutions (A,B & C Class) 30% 30%
General Insurance (Non-Life Insurance) 30% 30%
Tobacco, alcohol, cigarette and related products 30% 30%
Telecom and Internet Services 30% 30%
Capital market, Securities, Merchant banking, Commodity future market, Securities & Commodity broker 30% 30%
Money transfer 30% 30%
Petroleum business under Nepal Petroleum Act, 2040 30% 30%

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2 thoughts on “Tax Rate In Nepal For FY 2077/78 [FY 2020-21]

  • September 23, 2020 at 2:38 am
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    Please check the tax calculation for Married couple as the 30% is calculated wrong it should be 375000 instead of 375500. But the total is correct.

    Reply

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