From FY 2083/84, no person in Nepal may make a single cash payment of more than Rs 25,000, except in circumstances the law specifies. Business expenses paid in cash above that limit are not deductible for income tax.
What changed
| FY 2082/83 | FY 2083/84 | |
|---|---|---|
| Who the limit applies to | People with annual turnover above Rs 20 lakh | Everyone |
| Maximum cash payment per transaction | Rs 50,000 | Rs 25,000 |
The change is in section 21(2) of the Income Tax Act, 2058, effective from Shrawan 1, 2083 (17 July 2026).
Why it matters
If you pay a business expense in cash above Rs 25,000 in a single transaction, that expense can't be deducted when your taxable income is calculated — you pay tax as if the expense never happened.
Don't split payments to get around it
Breaking one Rs 60,000 bill into three Rs 20,000 cash payments to the same supplier for the same purchase is still one transaction in substance and can be challenged. Pay by bank transfer, cheque, card or wallet instead.
Practical steps for small businesses
- Tell suppliers you'll pay anything above Rs 25,000 through the bank.
- Keep bank proof with every large bill.
- Use digital payments for salaries and rent where possible.
- Review your cash book monthly for payments above Rs 25,000.
KhataIN records how every bill was paid — cash, bank or wallet — so large cash payments are easy to spot before the year closes.
Sources
- Institute of Chartered Accountants of Nepal (ICAN), Highlights of Federal Budget of Nepal FY 2083/84 — amendments to the Income Tax Act, 2058 and the Value Added Tax Act, 2052.
- Inland Revenue Department, ird.gov.np — Acts, rules, notices and the taxpayer portal.
Last checked: 15 September 2026 (Bhadra 30, 2083). Tax law changes with each Finance Act — confirm your own situation with the Inland Revenue Department or a registered tax professional.