Are you aware about the income tax on your salary as an employee or you are okay with the tax deducted at source (TDS) by accountant of your employer?

All the income from the employment, business and investment are taxable in Nepal. The tax rates may vary depending on the sources of income and concessions provided by the government of Nepal. So, every income earned by a person in Nepal is taxable in Nepal.

Income Tax Slabs on Salary income in Nepal

The salary tax is calculated on the basis of slab in Nepal which means that every slabs has different slab rates which are mentioned below:

Income slabs rates applicable for Single natural person in Nepal

Up to 5,00,000                                   1%

5,00,001 to 7,00,000                        10%

7,00,000 to 10,00,000                     20%

10,00,001 to 20,00,000                   30%

 20,00,001 to 50,00,000                  36%

Above 50,00,000                               39%

Income slabs rates applicable for couple elected natural person in Nepal

Up to 6,00,000                                   1%

6,00,001 to 8,00,000                        10%

8,00,001 to 11,00,000                     20%

11,00,001 to 20,00,000                   30%

 20,00,001 to 50,00,000                  36%

Above 50,00,000                               39%

If you want to calculate your salary tax, then you can visit https://www.estartupnepal.com/tax-calculator/ where you can download your copies in Pdf.

Deductions allowed by the tax before calculating salary tax in Nepal

The government of Nepal has provided the following deductions to the employed person which is used by the person as the legal tax saving ways in Nepal:

1. Enrolling in the government schemes like provident fund or Social Security Fund.
2. Getting insurance packages like life insurance, health insurance and house insurance.
3. Working in the remote areas of Nepal.
4. Claiming medical expenses during the year.
5. Rebate obtained by the person working on diplomatic missions.
6. Obtaining women tax credit by employed females of Nepal.

How to file salary income tax return in Nepal?

An employed person should not file a salary income tax return unless he works with more than one employer and earns more than 40 lakhs in a fiscal year. D-4 tax return should be filed by such persons.

How to pay Salary income tax in Nepal?

Unlike business tax, salary tax is deducted by the employer as TDS and deposited at the Inland revenue department within 25 days of completion of every month. The tax will show in the taxpayer login of the employer after E-TDS done by the employer.

Person filing D-4 tax return should pay the tax if excess tax is calculated.