Nepal Income Tax Slab Rates for FY 2077-78 B.S.

(2020-21)
Taxation is one critical area that is closely related to the public and the nation’s economic
development. Under the new revenue policy for FY 2020-21, the government proposed to
have a future-oriented, transparent and business-friendly taxation system. The government
called for enhanced participation of taxpayers and efficient revenue management through
health and friendly tax administration

Nepal Income Tax Slab Rates 2077-78 (2020-21), Provisions and Concessions

For Individuals

1) Personal Tax

 Residents: Natural Person

A) Employed Individuals

Income Level (NPR) Tax (FY 2020-21)

Up to 4 Lakh 1%

Next 1 Lakh 10%

Next 2 Lakhs 20%

Next 1,300,000 30%

Additional Tax: Above 2,000,000 36%***

 B) Employed Couple

Income Level (NPR) Tax (FY 2020-21)

First 450,000 1%

Next 100,000 10%

Next 200,000 20%

Next 1,250,000 30%

Additional Tax: Above 2,000,000 36%***

 Non-Residents

Source of Income Tax

2
 (2020-
21)

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%

2) Corporate Income Tax

Type of Business Normal Rebate Applicable

Tax

3
 Rate 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% 12.5%

Having export income from a source in Nepal 25%*** 20% 20%

Banks and financial institutions 30%*** – 30%

General Insurance 30%*** – 30%

Engaged in tobacco, alcohol and related products 30%*** – 30%

Telecom and Internet Services 30%*** – 30%

Capital market, securities, and related 30%*** – 30%

  For Entities – Company/Firm/Industry

 Tax Concessions-1

Tax Concessions
Type of employment provided
(FY 2020-21)

4
Direct employment to 100 or more Nepalese citizens throughout the year *10 % of AR/NR

Direct employment to 300 or more Nepalese citizens throughout the year *20% of AR/NR

Direct employment to 500 or more Nepalese citizens throughout the year *25% of AR/NR

Direct employment to 1,000 or more Nepalese citizens throughout the year *30% of AR/NR

 Tax Concessions-2

Concessions to special
Tax Concessions (FY 2020-21)
industries, by geography

Very underdeveloped areas 90% of the AR (for 10 yrs from the date of commercial production)

Undeveloped areas 80% of the AR (for 10 yrs from the date of commercial production)

Less developed areas 70% of the AR (for 10 yrs from the date of commercial production)

Likewise, there are concessions to industries by investment amount, presence in SEZs, and
special areas.

2) Customs Duty

Micro, cottage and small industries will get 50 percent exemption on machinery imports
Increase in customs duty on petroleum product imports from NPR 15,200 to NPR 25, 200
Increase in customs duty on import of gold or semi-manufactured forms or in powder
from NPR 5,000 to NPR 8,500 per tola

5
3) Value-Added Tax (VAT)

13 percent VAT on goods and services remains unchanged from the previous year
VAT on goods exports shall remain ‘zero’ percent
VAT paid by UN on its products and services for Covid-19 response shall be
refunded
Individuals operating without VAT registration, even after recommended, may be
penalized with 50 percent of payable tax
Transportation, tourism and movie theatres may now pay tax on a trimester basis

4) Other Key Taxes and Fees

a) Education Services

Students going abroad for higher education at 2% of the foreign exchange facility availed from
Banking and Financial Institutions (BFIs)

b) Infrastructure Development

Petrol and diesel imports into Nepal will be subjected to this tax at Rs. 10 per liter for
development at the customs point

c) Pollution Control

Petrol and diesel sales within Nepal will be paying these taxes at NPR 1.5 per liter

d) Telecom Services

New connections or ownership transfer on fixed-line services will be charged Rs 500 per
connection, and mobile phone recharges will pay an additional 2% of the total value

e) Casino Royalty

Licensed casino operators, per license, will pay NPR 40 million per annum and operating
modern machine and equipment will pay NPR 10 million per annum

6
In Conclusion
There are also other tax rates, provisions and concessions under different taxation sections for
individuals and entities across varying levels of income.

Edited by: Sajjal Ghimire

sajjalghimire@gmail.com