Income Tax Rates

1.

Personal tax

1.1

For Residents
FY 2009/10

FY 2010/11

FY 2011/12

Particulars
Rs

Tax Rate

Rs

Tax Rate

Rs

Tax Rate

(a) First Tax Slab

160,000

1%

160,000

1%

160,000

1%*

(b) Next

100,000

15%

100,000

15%

100,000

15%

(c) Balance

260,000

25%

260,001 to
2,500,000

25%

260,001 to
2,500,000

25%

Individual

(d) Balance Exceeding

(e) Additional tax on tax
derived under (d) above

2,500,001

25%

2,500,001

25%

Tax as per
(d) above

40%

Tax as per
(d) above

40%

Couple
(a) First Tax Slab

200,000

1%

200,000

1%

200,000

1%*

(b) Next

100,000

15%

100,000

15%

100,000

15%

(c) Balance Exceeding

300,000

25%

300,000

25%

300,000

25%

(d) Balance Exceeding

2,500,001

25%

2,500,001

25%

Tax as per
(d) above

40%

Tax as per
(d) above

40%

(e) Additional tax on tax

derived under (d) above

Note 1: Natural person working at remote areas are entitled to get deduction from taxable income to a maximum of
Rs 50,000.
Note 2: Natural person with pension income included in the taxable income shall be entitled to deduct from taxable income an
additional 25% of amount prescribed under first tax slab.
Note 3: Incapacitated natural person shall be entitled to get deduction from taxable income an additional 50% of amount
prescribed under first tax slab.
Note 4: A natural person who has procured life insurance and paid premium amount thereon shall be entitled to a deduction
of actual annual insurance premium or Rs 20,000 whichever is less from taxable income.
Note 5: In case of the employee employed at the foreign diplomatic of Nepal only 25% of the foreign allowances are to be
included in the income from salary.
Note 6: In case of women having only remuneration income, they are allowed rebate of 10% on the tax liability calculated as
other natural person
Note 7: In case of individual having income from export, tax rate of 15% is applicable in place of 25%
Note 8: In case of decision of the organization to provide group retirement to its employees (in the event of merger or
acquisition) except to the payment made as per the employment term or the payment made by retirement fund, a
rebate of 25% on tax rate is provided for the purpose of computation of tax liability.
* This is the Social Security Tax to be deposited in a separate revenue account provided for this purpose.
1.2

For Non-Residents
Nature of transaction

FY 2009/10

FY 2010/11

FY 2011/12

1.

Income earned from normal transactions

25% flat rate

25% flat rate

25% flat rate

a)

Income earned providing shipping, air or telecom

services, postage, satellite, optical fiber project.

5%

5%

5%

b)

Income earned providing shipping, air or telecom

services through the territory of Nepal.

2%

2%

2%

c)

Repatriation by Foreign Permanent Establishment.

5%

5%

5%

This document has been compiled in summary form exclusively for the information of clients and staff of T R Upadhya & Co.
It should not be relied upon as a substitute for detailed advice or a basis for formulating business decisions.

Income Tax Rates

2.

Corporate tax
Nature of entity
1
1.1

FY 2010/11

FY 2011/12

25%

25%

25%

20%
(Normal Rate)

20%
(Normal Rate)

20%
(Normal Rate)

90% of normal
rate
80% of normal
rate
80% of normal
rate

90% of normal
rate
80% of normal
rate
80% of normal
rate

90% of normal
rate
80% of normal
rate
80% of normal
rate

Domestic income
Normal Rate (NR)

1.2

FY 2009/10

Company/ Firm/Industry

Other

Special industries (mainly manufacturing other than

alcoholic & tobacco producing industry)

ii

Providing direct employment to Nepalese citizens:

a)
for 300 or more by Special industries and
information technology industries
b)
for 1200 or more by Special industries
c)
to 100 Nepalese including 33% women, dalit
& disabled by Special industries

iii

Industries established in very undeveloped area (Sec

11.3.b), as defined in Industrial Enterprise Act

50% of the
normal rate (for
10 yrs from the
year of
establishment)

10% of the
normal rate (for
10 yrs from the
year of
establishment)

10% of the
normal rate (for
10 yrs from the
year of
establishment)

iv

Industries establishment in undeveloped areas (sec

11.3.b ), as defined in Industrial Enterprise Act

70% of the
normal rate (for
10 yrs from the
year of
establishment)

20% of the
normal rate (for
10 yrs from the
year of
establishment)

20% of the
normal rate (for
10 yrs from the
year of
establishment)

Established in underdeveloped areas ( Sec 11.3.b ),

as defined in Industrial Enterprise Act

75% of the
normal rate (for
10 yrs from the
year of
establishment)

30% of the
normal rate (for
10 yrs from the
year of
establishment)

30% of the
normal rate (for
10 yrs from the
year of
establishment)

vi

Industry established in 'Special Economic Zone'

recognized in mountain areas or hill areas by the
GON

Up to 10 yrs
100% exempt
and 50% rebate
in subsequent
years

Up to 10 yrs
100% exempt
and 50% rebate
in subsequent
years

Up to 10 yrs
100% exempt
and 50% rebate
in subsequent
years

vii

Industry established in 'Special Economic Zone'

other than above locations

100% exempt up
to first 5 yrs and
50% rebate in
subsequent years

100% exempt up
to first 5 yrs and
50% rebate in
subsequent years

100% exempt
up to first 5 yrs
and 50% rebate
in subsequent
years

viii

Dividend distributed by the industry established in

special economic zone

100% exempt for

first 5 years and
50% rebate on
subsequent 3
years

100% exempt for

first 5 years and
50% rebate on
subsequent 3
years

100% exempt
for first 5 years
and 50% rebate
on subsequent 3
years

ix

Income derived by the foreign investors from

investment in Special Economic Zone ( Source of
income-use of foreign technology, management
service fee and royalty)

50% of
applicable tax
rate

50% of
applicable tax
rate

50% of
applicable tax
rate

This document has been compiled in summary form exclusively for the information of clients and staff of T R Upadhya & Co.
It should not be relied upon as a substitute for detailed advice or a basis for formulating business decisions.

Income Tax Rates

Nature of entity

FY 2009/10

FY 2010/11

FY 2011/12

100% exempt for

first 10 yrs

75% of normal
tax rate

50% of normal
tax rate

50% of normal
tax rate

Industry established in remote areas

xi

Import income of Information Technology

Industries at IT Park as declared by government

xii

Institution having license to generate, transmit, and

distribute electricity shall be allowed if the
commercial electricity generation, generation and
transmission, generation and distribution or
generation, transmission, distribution commences
before BS 2075 Chaitra

100% exempt up
to seven years
and 50% rebate
on subsequent 3
years

100% exempt up
to seven years
and 50% rebate
on subsequent 3
years

100% exempt
up to seven
years and 50%
rebate on
subsequent 3
years

xiii

Hydropower project which has started construction

within Bhadra 7, 2071 BS, shall be allowed
electricity is generated before BS 2075 Chaitra

100% exempt
up to ten years
and 50% rebate
on subsequent 5
years

xiv

Income from export of manufactured goods by

Manufacturing Industries

75% of normal
tax rate

75% of normal
tax rate

xv

Income from construction and operation of Bridge,

Airport and Tunnel and income from investment in
tram and trolley bus

60% of
applicable tax
rate (20%)

60% of
applicable tax
rate (20%)

xvi

Income of Manufacturing Industry, tourism service

industry and hydropower generation, distribution
and transmission industry listed in capital market

90% of
applicable tax
rate

90% of
applicable tax
rate

xvii

Industry established in least developed areas

producing brandy, wine, cider from fruits.

40% exempt up
to ten years

40% exempt up
to ten years

xviii

Royalty from export of intellectual asset by a person

25% exempt

25% exempt

xix

Income from sale of intellectual asset by a person

through transfer

50% exempt

50% exempt

1.3

Banks and Financial Institutions

30%

30%

30%

30%

30%

30%

30%

30%

30%

20%

20%

20%

Commercial Banks, Development Banks and

Finance Companies
1.4

Insurance Business
General insurance business

1.5

Petroleum Industries
Entity engaged in petroleum business Under Nepal
Petroleum Act, 2040

1.6

Other business entities

-

Entity involve in construction of roads, bridges,

tunnels, rope-ways, suspension bridges etc.
Income earned by the natural person wholly
involved in special industry
Income earned by the natural person relating to
Export activities

Note 1: No additional tax is to be levied on the taxable income. (Deleted by Finance Act 2065)
Note 2: if any company is entitled to more than one privilege U/S-11 only one will be entitled as opted by the entity

This document has been compiled in summary form exclusively for the information of clients and staff of T R Upadhya & Co.
It should not be relied upon as a substitute for detailed advice or a basis for formulating business decisions.

Income Tax Rates

3.

TDS withholding in other payments

Nature of transaction

FY
2009/10

FY
2010/11

FY
2011/12

Interest income from deposit up to Rs 10,000 under 'Micro Finance Program',

'Rural Development Bank', ' Postal Saving Bank' & Co- operative (u/s-11(2))
in rural areas

Exempt
from tax

Exempt
from tax

Exempt
from tax

ii

Wind fall gains

25%

25%

25%

iii

Payment of rent made by resident person having source in Nepal

10%

10%

10%

iv

Profit and gain from transaction of commodity future market

10%

Nil

10%

On Dividend paid by the resident entity.

To Resident person
To Nonresident Person

5% for
both

5% for
both

5% for
both

vi

On payment of gain in investment insurance

5%

5%

5%

vii

On payment of gain from unapproved retirement fund

5%

5%

5%

viii

On payment of interest or similar type having source in Nepal to natural person

[not involved in any business activity] by Resident Bank, financial institutions
or debenture issuing entity, or listed company

5%

5%

5%

ix

Payment made by natural person relating to business activity or other

payments relating to house rental except house rent

No TDS

No TDS

No TDS

Payment for articles published in Newspaper, question setting, answer

evaluation

No TDS

No TDS

No TDS

xi

Interest payment to resident bank, other financial institutions

No TDS

No TDS

No TDS

xii

Interregional interchange fee paid to credit card issuing bank

No TDS

No TDS

No TDS

xiii

Interest or fees paid by GoN under bilateral agreement

No TDS

No TDS

No TDS

xiv

On payment of general insurance premium to resident insurance company

No TDS

No TDS

No TDS

xv

On payment of premium to nonresident insurance company

1.5%

1.5%

1.5%

xvi

Contract payments exceeding Rs 50,000

1.5%

1.5%

1.5%

xvii

Payment of consultancy fee:

to resident person against VAT invoice
to resident person against Non -VAT invoice

1.5%
15%

1.5%
15%

1.5%
15%

Payment on contract to Non Resident person

On service contract
On repair of aircraft & other contract

10%
5%

15%
5%

15%
5%

10%
15%
10%
15%

10%
15%

5%
10%

10%
15%

10%
15%

xviii

xix

Gain on disposal of Interests in any resident entity (listed) exchange (Taxable

amount is gain calculated under section 37)
To resident natural person
To others including non resident
Gain on disposal of Interests in any resident entity (unlisted) exchange
(Taxable amount is gain calculated under section 37)
To resident natural person
To others including non resident

This document has been compiled in summary form exclusively for the information of clients and staff of T R Upadhya & Co.
It should not be relied upon as a substitute for detailed advice or a basis for formulating business decisions.

Income Tax Rates

4.

Income from investment

Particulars

FY 2009/10

FY 2010/11

FY 2011/12

5%

5%

2.5%

10%

10%

5%

Normal Rate

Normal Rate

Normal Rate

FY 2009/10

FY 2010/11

FY 2011/12

Mini bus, Mini Truck, Truck and Bus

Rs 1,500

Rs 1,500

Rs 1,500

Car, Jeep, Van, Micro Bus

Rs 1,200

Rs 1,200

Rs 1,200

Three Wheeler, Auto Rickshaw, Tempo

Rs 850

Rs 850

Rs 850

Tractor and Power Tiller

Rs 750

Rs 750

Rs 750

Metropolitan, Sub-Metropolitan

Rs 5,000

Rs 3,500

Rs 3,500

Municipal Areas

Rs 2,500

Rs 2,000

Rs 2,000

Other than municipal areas

Rs 1,500

Rs 1,250

Rs 1,250

Individual
Tax withholding on capital gain for natural person on
transaction exceeding Rs 3 million (to be made by Land
revenue office at the time of registration):
- disposal of land or land & building owned for more
than 5 years
- disposal of land or land & building owned for less than
5 years
Corporate
Income from disposal of non-business chargeable assets
(Capital gain)

5.

Presumptive taxation
Particulars
Vehicle Tax

Small Tax Payer

Note: Small tax-payer means natural person whose annual turnover is less than Rs 2 million and income not exceeding

Rs 200,000.

Contact for further information

T R Upadhya & Co.
Chartered Accountants
House No. 61, Anamika Galli
P. O. Box 4414
Baluwatar, Kathmandu, Nepal
www.trunco.com.np
Phone: +977 1 4410927, 4414695
Fax: +977 1 4413307
Email: trunco@ntc.net.np

T R Upadhyay
Partner
trupadhya@trunco.com.np
Shashi Satyal
Partner
ssatyal@trunco.com.np
Sanjeev Kumar Mishra
Partner
smishra@trunco.com.np

This document has been compiled in summary form exclusively for the information of clients and staff of T R Upadhya & Co.
It should not be relied upon as a substitute for detailed advice or a basis for formulating business decisions.