Annual Income Tax in Nepal | Tax Rate in Nepal 2082/83

The Annual Budget of Nepal for the Fiscal Year (FY) 2082/83 (corresponding to 2025-26) has been announced, outlining the country's tax policies for the upcoming year. While the core income tax slabs for resident individuals (natural persons) remain unchanged, the Finance Bill 2082 introduces notable amendments, new taxes and important clarifications affecting corporations, digital services and environmental policy.
The Annual Income Tax for Individuals earning more than NPR 5 Lakhs is still 39% as it was previously.
The following are the important changes, new provisions and amendments brought into the Annual Income Tax of Nepal.

Current Income Tax in Nepal 2082/83

Single Income Tax

1. For Income up to NPR 5,00,000, the Income Tax Rate is set at 1%.
2. For Income more than NPR 5,00,000 to NPR 7,00,000, the Income Tax Rate is set at 10%.
3. For Income more than NPR 7,00,000 to 10,00,000, the Income Tax Rate is set at 20%.
4. For Income more than NPR 10,00,000 to NPR 20,00,000, the Income Tax Rate is set at 30%.
5. For Income more than NPR 20,00,000 to NPR 50,00,000, the Income Tax Rate is set at 36%.
6. For Income more than NPR 50,00,000, the Income Tax has been increased to 39%.

Couple Income Tax

1. For Couples with Income up to NPR 6,00,000, the Income Tax Rate is set at 1%.
2. For Couples with Income more than NPR 6,00,000 to NPR 8,00,000, the Income Tax Rate is set at 10%.
3. For Couples with Income more than NPR 8,00,000 to 11,00,000, the Income Tax Rate is set at 20%.
4. For Couples with Income more than NPR 11,00,000 to NPR 20,00,000, the Income Tax Rate is set at 30%.
5. For Couples with Income more than NPR 20,00,000 to NPR 50,00,000, the Income Tax Rate is set at 36%.
6. For Couples with Income more than NPR 50,00,000, the Income Tax has been increased to 39%.

Changes in Annual Income Tax Rate in Nepal 2082/83

While personal tax slabs are stable, the budget introduces changes in other areas:

1. Introduction of Green Tax: A new Green Tax has been introduced on the import of certain goods at customs points, including coal, petroleum oils and petroleum coke, at a rate of Rs 0.50 per kg or per liter.
2. New Tax Exemptions for Key Industries:

• Green Hydrogen: Industries involved in the production of green hydrogen will receive a full income tax exemption for the first five years of operation.
• EV Charging Machines: A full income tax exemption is granted for the first five years to industries manufacturing or assembling electric vehicle charging machines.
• Industrial Zones: A person who establishes and operates an industrial zone or village will receive a full income tax exemption for the first ten years, followed by a 50% exemption for thenext five years.

3. Removal of Advance Tax on Imports: The requirement to pay advance tax on the import of several categories of goods has been removed. This includes items such as live animals, meat, dairy products, fresh flowers, plants and fruits.

Key Deductions and Allowances (Continuing Provisions)

The following major deductions and allowances for natural persons continue from the previous year:

• Remote Area Allowance: Individuals working in designated remote areas can claim an additional deduction from their taxable income of up to NPR 50,000.
• Incapacitated Natural Person: An additional deduction equal to 50% of the first tax slab's threshold (i.e., 50% of NPR 500,000) is allowed.
• Medical Tax Credit: A credit of up to NPR 1,500 or 15% of approved medical expenses is available.
• Life Insurance Premium: A deduction for premiums paid is available up to the lower of the actual premium or NPR 40,000.