The Government of Nepal, through the Financial Act, has established the income tax rates for the fiscal year 2080/81. Understanding these brackets is essential for every salaried professional and business owner to plan their finances and ensure compliance.
1. Income Tax Rates for Individuals (Single)
For individuals filing as single, the following progressive tax rates apply based on their annual taxable income:
| Income Range (NPR) | Tax Rate (%) |
|---|---|
| Up to 5,00,000 | 1% (Social Security Tax) |
| 5,00,001 to 7,00,000 | 10% |
| 7,00,001 to 10,00,000 | 20% |
| 10,00,001 to 20,00,000 | 30% |
| Above 20,0,0,000 | 36% |
2. Income Tax Rates for Couples
Couples choosing to file jointly benefit from slightly higher thresholds for the lower tax brackets:
| Income Range (NPR) | Tax Rate (%) |
|---|---|
| Up to 6,00,000 | 1% (Social Security Tax) |
| 6,00,001 to 8,00,000 | 10% |
| 8,00,001 to 11,00,000 | 20% |
| 11,00,001 to 20,00,000 | 30% |
| Above 20,0,0,000 | 36% |
3. Key Takeaways for Taxpayers
- Social Security Tax (1%): This is mandatory for all resident individuals. However, if you are already contributing to the Social Security Fund (SSF), this 1% might be categorized differently.
- Deductions: You can claim deductions for health insurance premiums (up to NPR 2,500) and life insurance premiums (up to NPR 40,000).
- Retirement Contributions: Contributions to the Provident Fund (EPF) and Citizen Investment Trust (CIT) can reduce your taxable income up to NPR 3,00,000 or 1/3rd of your total income.
Staying updated with these rates helps in accurate salary processing and tax filing. Use tools like KhataIn to track your income and automatically estimate your tax liabilities throughout the year.
