This document discusses taxation on income from employment in Nepal. It notes that any person who earns income is liable for taxes according to their country's rules. In Nepal, an employer must deduct taxes (called Remuneration Tax) from an employee's salary and allowances according to the Income Tax Act. Employees may be eligible for various tax benefits under the Act each fiscal year. The document then provides more details on tax rates and slabs for individual and couple incomes, available tax benefits like health insurance deductions, retirement contribution limits, and taxation of retirement payments.

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?