Nepal restructured its personal income tax this year, and the change is bigger than most people realise. The single-versus-couple distinction is gone, the top rate fell from 39% to 29%, and the threshold at which the top rate bites moved down from Rs 50 lakh to Rs 40 lakh. If you are budgeting from last year’s table, every number you have is wrong.
The FY 2083/84 Slabs
| Band | Slice of income | Rate | Tax on that slice | Cumulative tax |
|---|---|---|---|---|
| 1 | First Rs 10,00,000 | 1%* | Rs 10,000 | Rs 10,000 |
| 2 | Next Rs 5,00,000 | 10% | Rs 50,000 | Rs 60,000 |
| 3 | Next Rs 10,00,000 | 20% | Rs 2,00,000 | Rs 2,60,000 |
| 4 | Next Rs 15,00,000 | 27% | Rs 4,05,000 | Rs 6,65,000 |
| 5 | Above Rs 40,00,000 | 29%** | — | Rs 6,65,000 + 29% of excess |
* The 1% is the Social Security Tax, deposited to a separate revenue head. ** The 29% is 27% plus a 2% surcharge applied on that rate for income above Rs 40 lakh.
What Changed From Last Year
| FY 2082/83 (old) | FY 2083/84 (now) | |
|---|---|---|
| Single vs couple tables | Two separate schedules | Abolished — one schedule |
| First band | Rs 5,00,000 (single) / Rs 6,00,000 (couple) @ 1% | Rs 10,00,000 @ 1% |
| Top rate | 39% | 29% |
| Top rate starts at | Rs 50,00,000 | Rs 40,00,000 |
| Number of bands | 6 | 5 |
Who Does Not Pay the 1% Social Security Tax
The 1% first-band charge is not universal. It does not apply to:
- Taxpayers registered as sole proprietors
- Pension income
- Income from a contribution-based pension fund
Worked Examples
Annual taxable income of Rs 8,00,000
Entirely inside band 1. Tax = Rs 8,000 (1%).
Annual taxable income of Rs 18,00,000
| Portion | Rate | Tax |
|---|---|---|
| First Rs 10,00,000 | 1% | Rs 10,000 |
| Next Rs 5,00,000 | 10% | Rs 50,000 |
| Remaining Rs 3,00,000 | 20% | Rs 60,000 |
| Total | Rs 1,20,000 |
Annual taxable income of Rs 50,00,000
Cumulative tax at Rs 40,00,000 is Rs 6,65,000. On the remaining Rs 10,00,000 at 29% that is Rs 2,90,000. Total Rs 9,55,000. Under last year’s schedule the same income attracted roughly Rs 14,65,000 — the difference is the point of the reform.
🤝 Not sure which band you fall into, or what you can deduct?
Send us your annual figures and we will walk you through the calculation for the current fiscal year. Digital Solution is not a tax firm — for filing and audit we will tell you when you need a registered practitioner.
One More Change Worth Knowing
Non-Residents
A non-resident individual is taxed at a flat 25%, unchanged from last year. Some specific activities carry their own rates — 5% for shipping, air transport, telecom, postal, satellite and optical-fibre services, 2% for those services provided within Nepal, and 5% on profit repatriation by a foreign permanent establishment.
Where These Figures Come From — and What We Could Not Read
The Finance Act 2083 is enacted — gazetted on Ashadh 30, 2083 (around 15 July 2026) and listed as the current Finance Act by the Inland Revenue Department.
However, we could not open Schedule 1 of the gazetted Act itself, because IRD does not expose a PDF link for it. The slab table above comes from a professional firm’s published tax-rate summary for the year, corroborated across several independent sources. We rate it high confidence — but it is not read off the statute, and we would rather tell you that than imply a certainty we do not have. For a filing decision, confirm with IRD or a registered tax practitioner.
Frequently Asked Questions
What is the income tax rate in Nepal for FY 2083/84?
1% on the first Rs 10 lakh, 10% on the next Rs 5 lakh, 20% on the next Rs 10 lakh, 27% on the next Rs 15 lakh, and 29% above Rs 40 lakh.
Is there still a separate rate for married couples?
No. The single and couple schedules were merged into one for FY 2083/84.
What happened to the 36% and 39% bands?
They are gone. The top rate is now 29%, starting from Rs 40 lakh instead of Rs 50 lakh.
What is the 1% on the first band?
Social Security Tax, deposited to a separate revenue head. It does not apply to sole proprietors, to pension income, or to income from a contribution-based pension fund.
Are SSF contributors exempt from the 1%?
It is widely reported that they are, but our source text on this point is incomplete. Confirm with your payroll or a tax practitioner.
What is the rate for non-residents?
A flat 25%, with specific lower rates for certain transport and telecommunications activities.
How much tax on Rs 10 lakh income?
Rs 10,000, if the whole amount is taxable income and the 1% band applies to you.
Is this on gross salary or after deductions?
On taxable income — after allowable deductions such as retirement contributions and insurance premium. Calculate the deductions first.
Sources
- Finance Act 2083 (आर्थिक ऐन २०८३), gazetted Ashadh 30, 2083 — listed as the current Finance Act by the Inland Revenue Department. Schedule 1 could not be retrieved directly.
- PKF T.R. Upadhya & Co., published tax rate summary for the year, cross-checked against multiple independent secondary sources.
Related Reading
- PAN and VAT registration in Nepal
- Freelancer payment and tax guide
- Social Security Fund: complete guide
Disclaimer: Digital Solution Nepal is an independent educational and digital-service assistance website — not a tax authority, not a chartered accountancy firm and not a law firm. Tax rates and thresholds change with every Finance Act, and individual circumstances differ. Nothing here is tax advice — the Inland Revenue Department, the current Finance Act and a registered tax practitioner are final. Verify before filing or paying.
Rabin Paudel
Rabin Paudel is the Founder of Digital Solution, a Content Creator, and an AI Trainer. He shares practical and easy-to-understand content on Artificial Intelligence, Digital Literacy, Online Services, FinTech, and Technology. His mission is to make technology simple, accessible, and useful for everyone.
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