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Salary Income Tax Calculator
Salary Income tax is imposed on individuals and businesses based on their income over a month or year. Government-established tax brackets determine the amount of tax owed. Taxpayers are required to file an Income Tax Return annually. Failure to file an income tax return can result in significant penalties.
Taxes are levied under the Income Tax Act 2002 provisions, which mandate the imposition and collection of taxes on company income. Resident companies are taxed on their worldwide income, while non-residents must pay tax on their net income earned or sourced in Nepal. The tax is applied to net income after deductions for specific expenses and allowances as specified in the ITA.
| Tax Banding | Tax Rate | |||
| Unmarried Person | 2023-24 (FY 2080-81) | 2022-23 (FY 2079-80) | ||
| (a) Band 1 | First 500,000 | 1%* | First 500,000 | 1%* |
| (b) Band 2 | Next 200,000 | 10% | Next 200,000 | 10% |
| (c) Band 3 | Next 300,000 | 20% | Next 300,000 | 20% |
| (d) Band 4 | Next 1,000,000 | 30% | Next 10,00,000 | 30% |
| (e) Band 5 | Next 3,000,000 | 36%** | Remaining above 2,000,000 | 36%** |
| (f) Additional Tax | Remaining above 5,000,000 | 39%*** | ||
| Married Person | ||||
| (a) Band 1 | First 600,000 | 1%* | First 600,000 | 1%* |
| (b) Band 2 | Next 200,000 | 10% | Next 200,000 | 10% |
| (c) Band 3 | Next 300,000 | 20% | Next 300,000 | 20% |
| (d) Band 4 | Next 9,000,000 | 30% | Next 9,000,000 | 30% |
| (e) Band 5 | Next 3,000,000 | 36%** | Remaining above 2,000,000 | 36%** |
| (f) Additional Tax | Remaining above 5,000,000 | 39%*** | ||
Deductions from Salary Income Tax in Nepal
| A. Deductions on Income | Remarks |
| Natural persons working in remote areas are entitled to Remote Area Allowance | Additional deduction from taxable amount up to Rs 50,000. (A-50,000, B-40,000, C- 30,000, D-20,000, E-10,000). |
| A natural person with pension income included in the taxable income | An additional deduction equal to 25% of the amount prescribed under the first tax band or actual pension receipts, whichever is lower shall be allowed from taxable income. |
| Incapacitated natural person | Additional deduction from the taxable amount equal to 50% of the amount prescribed under the first tax band or actual income whichever is lower. |
| B. Reduction in Income | |
| Life insurance premium | A natural person who has procured life insurance and paid the premium amount thereon shall be entitled to a deduction from the taxable income the lower of the actual annual insurance premium or Rs 40,000. |
| Medical insurance | A natural person who has been insured with a resident insurer/insurance company for health insurance shall be entitled to a deduction from the taxable income the lower of the actual premium paid or Rs 20,000. |
| Insurance of private building | A resident natural person who has insured a private building in his/her ownership with a resident insurer/insurance company shall be entitled to a deduction of the actual annual premium paid for such insurance or Rs 5,000 whichever is lower. |
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