Remuneration (salary) in Nepal is taxed as employment income using the income tax slabs — for FY 2083/84, 1% up to Rs 10 lakh, then 10%, 20% and 27%. Your employer estimates your yearly tax and deducts it from your pay each month.
What counts as remuneration?
Employment income generally includes everything an employer pays or provides because of your job:
- basic salary and grade,
- allowances (dearness, transport, communication and similar),
- overtime, bonuses and the Dashain (festival) allowance,
- leave encashment, and
- benefits provided by the employer, unless the Act specifically exempts them.
How salary tax is calculated, step by step
- Estimate annual income: monthly salary × 12, plus bonus, festival allowance and other payments expected in the fiscal year.
- Subtract allowed deductions: for example retirement contributions within the legal limit and qualifying insurance premiums.
- Apply the slabs to the taxable income that remains.
- Spread the tax over the months of the fiscal year. The employer withholds it under section 87 of the Income Tax Act and deposits it with the Inland Revenue Department.
Salary tax examples for FY 2083/84
The table uses monthly salary × 12, before deductions. If you contribute to the SSF or an approved retirement fund, your contribution also reduces taxable income within the legal limit, so your real tax will be lower.
| Monthly salary | Annual income | Yearly tax (1% applies) | Per month | Yearly tax (SSF contributor) |
|---|---|---|---|---|
| Rs 50,000 | Rs 6,00,000 | Rs 6,000 | Rs 500 | Rs 0 |
| Rs 1,00,000 | Rs 12,00,000 | Rs 30,000 | Rs 2,500 | Rs 20,000 |
| Rs 1,50,000 | Rs 18,00,000 | Rs 1,20,000 | Rs 10,000 | Rs 1,10,000 |
| Rs 2,50,000 | Rs 30,00,000 | Rs 3,95,000 | about Rs 32,917 | Rs 3,85,000 |
How much less than last year?
For a single person with the same salary and no deductions:
| Annual income | FY 2082/83 | FY 2083/84 |
|---|---|---|
| Rs 6,00,000 | Rs 15,000 | Rs 6,000 |
| Rs 12,00,000 | Rs 1,45,000 | Rs 30,000 |
| Rs 18,00,000 | Rs 3,25,000 | Rs 1,20,000 |
The new slabs apply from Shrawan 1, 2083 (17 July 2026), so salary paid for Shrawan 2083 onward uses them.
Remuneration that is not a salary
Payments to people who are not your employees — consultants, freelancers, board or meeting allowances, commissions — are not taxed through the salary slabs at the payer's end. They are subject to separate withholding (TDS) rules with their own rates. For example, from 2083/84 commission paid to an insurance agent who is a resident individual is withheld at 20% (previously 15%).
Do employees need to file a return?
Many employees whose tax is fully withheld by one resident employer are not required to file a separate return. If you also earn business income, rent, or salary from more than one employer, you may have to file — check with the Inland Revenue Department.
For employers
- Deduct tax from every salary payment and deposit it monthly.
- Report it through the IRD's e-TDS system with each employee's PAN.
- Give employees a record of salary and tax deducted for the year.
KhataIN keeps salary payments, deductions and bank payments in one set of books, dated in BS.
Frequently asked questions
Is salary up to Rs 10 lakh tax-free in Nepal?
Not for everyone. Income up to Rs 10 lakh is taxed at 1%, unless you contribute to the SSF or a pension fund or the income is pension income, in which case the 1% is not charged.
Is the Dashain allowance taxable?
Yes. It is part of employment income and is added to your annual salary.
Is the tax rate different for married couples?
Not from FY 2083/84. The separate slab for couples has been removed.
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.