House Rent Tax Nepal: Who Collects and How Much

📅 Which fiscal year is this? Nepal’s current fiscal year is FY 2083/84, which began on Shrawan 1, 2083 (17 July 2026). Tax rates change with each Finance Act, and a great many Nepali tax pages online still display older figures. Every rate below states the year it belongs to — and where we could only verify an earlier year, we say so instead of pretending otherwise.

Ask three people in Nepal who collects tax on house rent and you will get three answers. The confusion is not the public’s fault — a lot of Nepali tax pages state this wrongly, including some that publish annual rate tables. Here is the actual position.

⚠ The error you will find everywhere. Many sites list “Rent to individual — 10%” in their TDS tables. That is wrong. House rent paid to a natural person is specifically excluded from federal TDS under Section 88(4) of the Income Tax Act, and the professional rate tables say so explicitly: the 10% applies to rent except house rent to a natural person. If your tenant has been deducting 10% TDS from your house rent and depositing it to IRD, something is wrong.

Who Actually Collects It

Your municipality or rural municipality does — not the Inland Revenue Department. The Constitution places house rent tax in the local levels’ list of powers, and each local level sets its own rate through its annual Economic Act (आर्थिक ऐन). This is why there is no single national figure to look up.

	Federal (IRD)	Local level
House rent from an individual landlord	No TDS	Yes — this is where it is taxed
Other rent (equipment, vehicles, commercial arrangements)	10% TDS	Varies
Landlord is a company or entity	10% TDS applies	Municipal tax may also apply
Who sets the rate	Finance Act	Each local level’s own Economic Act

The genuine double-charge problem. Where the landlord is a company or entity rather than an individual, the federal 10% TDS applies and the municipal rent tax can apply to the same income, because municipal Economic Acts typically say “all taxpayers” without carving out entities already subject to TDS. For an individual landlord there is no such conflict — only the local tax applies. If you own rental property through a company, this is worth raising with a practitioner.

What Rate Will You Pay?

10%The most commonly applied rate

10–17%Reported range across local levels

753Local levels, each setting its own

Kathmandu Metropolitan City, for instance, has set 10% of rent in its Economic Act. Rates elsewhere differ, and the reported spread runs to around 17%.

So the only correct answer to “what is the house rent tax rate in Nepal” is: check your own municipality’s current Economic Act. Any article — including this one — that gives you a single national number is oversimplifying. Ask at your ward office, or look for your local level’s आर्थिक ऐन for the current year.

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What We Could Not Verify — and Why That Matters to You

We are being explicit here because this is an area where confident-sounding articles are frequently wrong:

Whether the local house rent tax is a final tax — we found no authoritative statement either way.
Whether residential and commercial property attract different rates at local level — unverified.
The landlord’s exact compliance steps — whether you must register, obtain a PAN for rental income, issue receipts in a prescribed form, or register a written tenancy agreement. Every source we could reach on this was inaccessible or content-thin.

The practical consequence: the single most useful thing you can do is visit your ward or municipality office and ask three questions — what is the current rate, what do I need to register, and what receipt or return do you want from me. Ten minutes there beats any amount of reading.

A Structural Point Worth Understanding

Because there is no federal TDS on house rent paid to an individual, that rent does not automatically enter the IRD system at all. There is no withholding agent generating a record. This is exactly why the local-level charge functions as the operative tax in practice — and why compliance rests almost entirely on the landlord declaring it.

For tenants: if a landlord asks you to deduct and deposit 10% TDS on house rent, ask them to show you the provision. If the landlord is an individual, that deduction is not the federal rule. If the landlord is a company, it is. The distinction is worth getting right before you withhold anything from a payment.

Frequently Asked Questions

Who collects house rent tax in Nepal?

The local level — your municipality or rural municipality — under powers given by the Constitution, at a rate set in its own annual Economic Act.

Is there TDS on house rent?

Not when the landlord is a natural person. House rent to a natural person is specifically excluded from federal withholding. Other categories of rent attract 10%.

What is the house rent tax rate?

Commonly 10%, but it is set by each local level and reported figures range up to around 17%. Check your own municipality’s Economic Act.

What if my landlord is a company?

Then the federal 10% TDS applies, and the municipal tax may apply as well — a genuine overlap worth taking advice on.

Do I need a PAN to rent out my house?

We could not verify the registration requirements for an individual landlord. Ask your ward or municipality directly.

Is the local rent tax final?

We found no authoritative statement either way. Confirm with your local level.

Do I need a written rental agreement?

We could not verify whether one is required or must be registered. Having one in writing is sensible regardless.

My tenant deducted TDS from my rent. What now?

If you are an individual landlord, check the basis with them — that deduction is not the federal position for house rent. Take advice before treating it as settled tax.

Sources

Income Tax Act 2058, Section 88(4) — exclusion of house rent from withholding.
Published professional tax-rate summary for FY 2083/84 — TDS table entry excluding house rent to a natural person.
Constitution of Nepal, Schedule 8 — house rent tax as a local-level power; Local Government Operation Act 2074.
Kathmandu Metropolitan City Economic Act as a worked example of a local rate.

House Rent Tax in Nepal: Your Municipality Collects It, Not the IRD