For fiscal year 2083/84 (from 17 July 2026), resident individuals in Nepal pay income tax at 1% on the first Rs 10 lakh, then 10%, 20% and 27%, with a 2% surcharge above Rs 40 lakh. The separate slab for couples has been removed, so the same rates apply to everyone.
Income tax rates in Nepal for FY 2083/84
| Annual taxable income | Tax rate |
|---|---|
| Up to Rs 10,00,000 | 1% |
| Rs 10,00,001 – 15,00,000 | 10% |
| Rs 15,00,001 – 25,00,000 | 20% |
| Rs 25,00,001 – 40,00,000 | 27% |
| Above Rs 40,00,000 | 27% + 2% surcharge |
These are the slabs for resident natural persons in Schedule 1 of the Income Tax Act, 2058, as amended for fiscal year 2083/84. They apply to income earned from Shrawan 1, 2083 (17 July 2026). The budget describes the change as doubling the exemption limit to Rs 10 lakh and cutting the maximum personal rate by ten percentage points, to 29%.
Who does not pay the 1%
The 1% on the first slab is the social security tax. Under the Act it is not charged on:
- pension income,
- a person contributing to a pension fund or the Social Security Fund (SSF), and
- the income of a sole proprietorship firm.
Read more in social security tax in Nepal.
How the slabs work
Each rate applies only to the part of your income that falls inside that slab — moving into a higher slab never increases the tax on the income below it.
Income tax at common income levels
| Annual taxable income | Tax (1% applies) | Tax (SSF / pension contributor) |
|---|---|---|
| Rs 6,00,000 | Rs 6,000 | Rs 0 |
| Rs 10,00,000 | Rs 10,000 | Rs 0 |
| Rs 12,00,000 | Rs 30,000 | Rs 20,000 |
| Rs 15,00,000 | Rs 60,000 | Rs 50,000 |
| Rs 20,00,000 | Rs 1,60,000 | Rs 1,50,000 |
| Rs 25,00,000 | Rs 2,60,000 | Rs 2,50,000 |
| Rs 30,00,000 | Rs 3,95,000 | Rs 3,85,000 |
| Rs 40,00,000 | Rs 6,65,000 | Rs 6,55,000 |
| Rs 50,00,000 | Rs 9,55,000 | Rs 9,45,000 |
Figures are for taxable income after deductions. Income above Rs 40 lakh is calculated at 29% (27% plus the 2% surcharge), the top rate announced in the budget.
What changed from FY 2082/83
In 2082/83 the first slab was Rs 5 lakh for a single person and Rs 6 lakh for a couple, the rates rose to 30%, and surcharges of 20% and 30% applied above Rs 20 lakh and Rs 50 lakh. On Rs 12 lakh of taxable income a single person paid Rs 1,45,000; in 2083/84 the same income is taxed Rs 30,000.
See the full old-versus-new tables in Budget 2083/84: what changed in income tax.
What is taxable income?
Your assessable income from employment, business and investment is added together. Some income is taxed by final withholding at source and is not taxed again. From that total, the Act allows specific deductions and exemptions. Examples confirmed for 2083/84:
- Private building insurance: the premium for a building you own, insured with a resident insurer — up to Rs 10,000 (was Rs 5,000).
- Donations to organisations eligible under section 12 — up to the lower of Rs 3,00,000 (was Rs 1,00,000) or 5% of adjusted taxable income.
- Retirement contributions to approved retirement funds or the SSF, within the limits set by the Act.
- Small deposit interest: up to Rs 25,000 a year of interest from deposits in microfinance institutions, rural development banks, postal savings banks and cooperatives covered by section 11(2Ka) is exempt; interest above Rs 25,000 is taxable.
Other deductions — such as life and health insurance premiums — have their own limits and conditions. Check the current rules before you apply them.
Paying and filing
- Employees: your employer deducts tax from your salary every month. See remuneration (salary) tax in Nepal.
- Business and other income: you may need to pay advance tax in three instalments (Poush, Chaitra, Ashadh) and file an income tax return by the end of Ashwin. See tax deadlines in Nepal.
- You need a PAN to file — see PAN in Nepal.
Income tax is only as accurate as the books behind it. KhataIN records income and expenses with BS dates by fiscal year, so the totals you file come straight from your records.
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.