Presentation by Manik Balami

1. Discussion Regarding Benefits on
taxes on Income from Employement
Manik Balami
Chief Finance Administrative Officer

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- Any person who earns income is liable to tax as per rules of country.
- Inregards of employment , an employer shall deduct the TDS ( called as
Remuneration Tax ) during payment of remuneration ( salary and allowances) to
its employees as per rules of Income Tax Act of Nepal 2058
- An employee can have various benefits on such taxes as per the Act during
fiscal year
Please note act shall be changed timely as per necessity of government , usually changes can be seen in
budget declaration yearly
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Overview

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• Tax Rates on income from employments
• Tax benefits in income from employment
• Taxation on Retirement contribution
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Coverage on Topics

4. A: Tax Rates on income from Employment

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Tax Rate on different slabs ( Tax Ceiling)
Individual Couple
Taxable Income
Slab
Employment
Taxable Income
Slab
Employment
First 400,000.00 1% First 450,000.00 1%
Next 100,000.00 10% Next 100,000.00 10%
Next 200,000.00 20% Next 200,000.00 20%
Next 1,300,000.00 30% Next 1,250,000.00 30%
Balance 36% Balance 36%
Note: 1% tax on first ceiling is not taxed if contributed in Social Securities fund ( SSF)
Source: Income Tax Act 2058 ( updated version 2077)

6. B: Tax Benefits in Income from Employment

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Tax Rate on different slabs ( Tax Ceiling)
SN Benefits Particulars Particulars
1 Couple Status Additionals 50000 ( fifty) will be tax free
2 Female Credit 10% rebate on tax liabilities
if she has only income from
employment
3 Life Insurance Premium
maximum upto 25000 or actual W/E is
less
4 Health Insurance Premium
maximum upto 20000 or actual W/E is
less
5 Personal Building Insurance maximum upto 5000 or actual W/E is less
6 Retirement Contribution
maximum upto 500000 ( only 300000
other than SSF), ⅓ of accessible income
or actual W/E is less
7 Medical Tax Credit
maximum upto 750 or 15% of approved
exp W/E is less
8 Incapiciate Person
50% of 400000 or 450000 ( if couple) For differently abled employees
only
9 Remote Area Max up to 50000 Not Applicable in our case

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Regarding provision on retirement contributions
• Income Tax Act of Nepal has allowed a benefits to individuals having contribution at approved
retirement fund to be deducted to be deducted from income of an individuals
( Total income can be deducted with below contribution amount )
• 500,000.00 max limit in a fiscal year
• Actual Contribution in a fiscal year ( It can be mixed up e.g. SSF and other approved fund ( e.g. CIT)
• 1/3rd of total income in fiscal year
Few of Retirement Fund of Nepal
- Social Security Fund ( SSF)
- Provident fund (PF)
- Citizen Investment Trust ( CIT)
- Other fund those are approved from govt. ( Fewer bank of Nepal has their own approved fund)
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9. C: Tax Benefits from Government
Retirement Payments made by Government of Nepal or from Contributory Funds by
Approved Retirement Fund is taxed with 5% TDS for the amount more than 500,000 (
Five lakhs) or 50% of total amount w/e is higher.
Case 1
E.g. Total deposit in CIT 1,800,000.00 which is about to withdraw, so 5% is charged on
50% x 1,200,000.00 = 900,000.00 only
Case 2
E.g. Total deposit in CIT 800,000.00 which is about to withdraw, so not tax will be
charged on withdraw i.e. 50% x 800,000.00 = 400,000.00 which is less than 500,000.00

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We can go to the website of BEEMA SAMITI ( Insurance Authority of Nepal) to find the list of LIfe
Insurance co. and Non life Insurance co.
https://nib.gov.np/affiliated-insurers-2/
List of Life and Non Life Insurance of Nepal

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Link: Tax Calculation Income Sheet
Demo on working TDS calculation Sheet

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Thank You!
Any Questions?