This document outlines income tax rates and deductions for individuals and corporations in Nepal. For individuals, tax rates range from 1% to 35% depending on income level. Married couples and disabled individuals receive higher exemption limits. Tax deductions are provided for life insurance premiums, foreign employment allowances, and remote area benefits. Corporate tax rates range from 20-30% for most entities and industries, with tax holidays and rebates provided for industries establishing in special economic zones or creating many jobs.

1. Tax Rates:
Nepal Income Tax Rates for Individuals
Tax exemptionlimitisRs.2,00,000 for individualsandRs.2,50,000 forcouples:
Tax ratesfor residentindividuals
Income (Rs.) Tax Rate
0 – 2,00,000 1%
Next1,00,000 15%
Up to 2500000 25%
Restamount 35%
Tax ratesfor Married(includingwidow&widower)
Income (Rs.) Tax Rate
0 – 2,50,000 1%
next100000 15%
up to 2500000 25%
restamount 35%
Tax ratesfor ProprietorshipFirm –single( BusinessandInvestment)
Income (Rs.) Tax Rate
0 – 2,00,000 0%
next100000 15%
up to 2500000 25%
Restamount 35%
Tax rates for Proprietorship Firm – married (Business and Investment)
Income (Rs.) Tax Rate
0 – 2,50,000 0%
next100000 15%
up to 2500000 25%
Restamount 35%
 HavingonlyBusinessIncome withAnnualTurnoveruptoRs 20 Lacs and Annual Income upto
Rs. 2 Lacs
- In the MetropolitanorSubMetropolitanCitiesRs. 3500
- In the MunicipalitiesRs. 2000
- In the restof Nepal Rs. 1250

2. Tax Rate for NonResident Natural Person:Taxableincome of anonresidentnatural personshall
be taxedat 25%.
Notes
- ResidentDisabledIndividualshall getanadditional 50% of ExemptionLimit(i.e.50% of Rs.
2, 50,000 incase of couple & Rs. 2, 00,000 in case of single).
- ResidentWoman,havingonlyRemunerationIncome,shall be entitledtoaTax Rebate of 10%.
- IndividualhavingLife Insurance Policyshall getanadditional exemptionfromhidTaxable
- Income tothe extentof Rs.20,000 or PremiumAmount,whicheverislower.
- Husbandand Wife,havingseparate incomesource,are givenoptioneithertogetassessed
separatelyorjointlyasfamily.
- Annual Remote AreaAllowance uptoRs.50,000 is exemptedfromtax.(A-50000, B-40000,
C-30000, D- 20000, E- 10000)
- EmployeesworkinginNepalese Missionabroadare allowed75% exemptiononForeign
Allowances.
- There isno levy of anyAdditional Income Tax
-Rebate onTax LiabilityforResidentFemale withonlyemploymentincome - A female resident
natural personhavingonlyremunerationincome fromemploymentshall be providedwitha
rebate of 10% on the tax liabilityontax calculatedasabove.
-Tax on NonBusinessChargeable Assets - Gainfromdisposal of NonBusinessChargeableAssets
are taxedat 10% aftertakingintoconsiderationexemptionlimit.Incase of landandbuildings,if
the disposedland&buildingshasbeenownedformore than5 years,tax rate of 5% shall apply.
Gain fromNonBusinessChargeable Assetsincludes
- gainfrom sale of sharesof companies,
- gainfrom sale of landand buildingownedandresidedforlessthan10 years anddisposedfor
more than Rs.50 lakhs.
Special Tax Rates for Natural Persons
Particulars Applicable Tax Rates
For incomes earned from operating special industries 20% where 25% tax rate applies
For incomes earned from export business 20% where 25% tax rate applies

3. Tax Deductionsand FacilitiesforResidentPersons
Life Insurance Premium - While calculatingtaxable income,life Insurancepremiumpaidbya resident
natural personisdeductible uptothe limitof Rs20,000.
EmployeesworkinginDiplomaticAgencies - 75% of foreignallowanceare deductedfromtaxable
income incase of an employeeemployedatdiplomaticagenciesof Nepalsituatedatforeigncountries.
Incapacitatednatural persons - Incase of incapacitatednatural persons,the minimumexemptionlimit
(Rs.2,00,000 for individualandRs.2,50,000 for couples) isincreasedbyadditional50%.
Remote AreaBenefit - Incase of residentnatural personsworkinginremote areas,minimumexemption
limitshall be increasedbyRs50,000, Rs 4,0000, Rs 30,000, Rs 20,000 or Rs 10,000 dependingonremote
area categoryof A, B, C, D and E prescribedinIncome Tax Rules2059.
Additional limitforpensionincome- If income of a residentnatural personincludespensionincome,the
taxable income isfirstreducedbyadditional 25% or pensionamountincludedinincome whicheveris
lowerandthentax liabilityiscalculatedonbalance income.
Tax Credits for Resident Persons
Medical Tax Credit- In case of approvedmedical expenses,medical tax creditisavailabletoresident
natural personsas deductionfromtax liabilities.The limitprescribedisRs.750 or 15% of Approved
medical expense oractual approvedmedical expense incurredwhicheverislower.Anyunutilized
expensescanbe carriedforwardto nextyear.
ForeignTax Credit- If foreignincome isincludedintaxableincome of aresidentperson,foreigntax
creditfor tax paidin foreigncountryinrespectof thatincome.The foreigntax paidcan eitherbe
deductedasexpense ortax liabilityinNepal canbe reducedbysuchtax paid upto average rate of tax
applicable inNepal,dependingonthe optionof tax payer.

4. Nepal Corporate Tax Rates
The standard rate of corporate tax inNepal is25%. However,differententitiesare taxedatdifferent
rates:
Particulars/Tax Rate
- Bank,Finance Company,General Insurance Company,PetroleumEntities:30%
- Cigarette,Tobacco,BeerandAlcohol Company:30%
- Special Industries&IT Industries:20%
- Entitiesengagedinconstruction&operationof Road,Bridge,Tunnel,Ropeway,Trolley BusandTram:
20%
- Co-operativeInstitutionregisteredunderCo-operative Act,2048 (otherthan co- operativesdealingin
exceptdealersinExemptedTransaction):20%
- Entitywhollyengagedinthe (BOOT) projectsconductedsoasto buildpublicinfrastructure,own,
operate andtransferit tothe HMG & in powergeneration,transmission,ordistribution:20%
- Non-residentpersonProvidingShipping,AirTransportorTelecommunicationsServicesinNepal:5%
- Private LimitedCo.,LimitedCo.,PartnershipFirmnotspecificallymentionedabove:25%
- Airline Serviceshavingoffice inandbusinessinNepal flightswithinNepal:2%
- All ExportEntities:20%
- Repatriationof income of aForeignPermanentEstablishmentof a Non-ResidentsituatedinNepal:5%
Reduced Tax Rates
Corporate Groups Applicable tax rate
- Special Industries and Information Technology Industries providing direct employment to 300
or more Nepalese citizens during a period: 90% of applicable rate
- Special Industries providing direct employment to 1200 or more Nepalese citizens during a
period: 80% of applicable rate
- Special Industries providing direct employment to more than 100 Nepalese citizens during a
period 33% of which are women, incapacitated and dalits: 80% of applicable rate
- Special Industries operating in very undeveloped(Remote) area: 10% of applicable rate
- Special Industries operating in undeveloped area: 20% of applicable rate
- Special Industries operating in underdeveloped area: 30% of applicable rate
- Industries established in Special Economic Zone of mountain district as specified by the
government and hilly district: 0% for 10 years & 50% thereafter
- Industries established in Special Economic Zone of other areas: 0% for 5 years and 50%
thereafter (In case of dividend of such industries, dividend tax is exempt for first five years of
operation and 50% concession is provided for dividend tax in next three years)
- Income from foreign technology, management fee and royalty earned by foreign investor

5. from industries established in special economic zone: 50% of applicable rate
- Industries established in remote areas: 0% for 10 years
- Information Technology based industries established at prescribed Information Technology
park: 75% of Normal Rate
- Licensed Industries engaged in production and distribution of electricity, if the production and
distribution is completed by the end of Chaitra 2075: 100% exemption for first 7 years, 50% for
next 3 years.
Tax ConcessionandRebates
- 10 Years Tax Holidayfromdate of operationand50% Tax Rebate thereaftertoindustriesestablishedin
Special EconomicZone (SEZ) of HimalayanDistrictsandotherprescribedHillyDistrict.
- 5 YearsTax Holidayfromdate of operationand50% Tax Rebate thereaftertoindustriesestablished in
otherSpecial EconomicZone (SEZ).
- 100% Rebate forfirst5 Yearsfrom date of operationandthen50% Rebate fornext3 Yearson dividend
distributedbyindustriesestablishedinSpecial EconomicZone (SEZ).
- 50% Rebate on Income Tax on income fromForeignTechnologyorManagementConsultancyor
Royaltyearnedbyforeigninvestorsof industryestablishedinSEZ.
- 10 Years Tax Holidayfromdate of operationtoindustriesestablishedinremote areas.
- 25% Tax Rebate to IT IndustriesestablishedinprescribedInformationTechnologyPark.
- Entitieshavinglicense forElectricitygeneration,transmission&distribution,if commencesgeneration
/ generation&transmission/generation&distribution/generation,transmission&distributionof
Hydro-electricitycommercial mannerbyChaitraend,2075; suchentitiesshall have Tax Holidayfora
periodof first7 Years and 50% Tax Rebate thereafterfor3 Years,from date of such commencementof
generation,transmission&distribution.Suchfacilitiesshall alsobe applicableforElectricitygenerated
fromSolar/Wind/OrganicMaterials.
However,entitiesalreadyhavingstartedcommercial productionof electricitybefore Shrawan01,2066
shall be eligible forfacilityasprevalentatthe time of obtaininglicense
- 50%, 30% & 25% Rebate onIncome Tax for10 Yearsincludingthe yearof operationtoSpecial
IndustriesoperatinginHighlyUndeveloped,Undeveloped&Under-developedareasrespectively.
- 10 % Rebate onIncome Tax to Special IndustriesandITIndustrieswhichprovide directemploymentto
300 Nepalesenationalsthroughoutthe year.[Earlier,itwas500 Nepalese].
- 20 % Rebate onIncome Tax to Special Industrieswhichprovide directemploymentto1200 Nepalese
nationalsthroughoutthe year.
- 20 % Rebate onIncome Tax to Special Industrieswhichprovide directemploymentto100 Nepalese
nationalsincluding33percentwomen,dalits(the downtrodden) orthe handicapped,throughoutthe
year