IRD Income Tax Tables in Nepal for 2023-2024

There are multiple tax laws applicable in Nepal, including the Excise Act, the Finance Act, and the Income Tax Act. The official tax body in Nepal is the Inland Revenue Department (IRD) which sits within the Ministry of Finance. In addition to tax collection, the IRD drafts tax policies and laws on a range of taxes including income tax, value-added tax, and excise tax. Nepal is also signatory to a double taxation treaty (DTT) with the People’s Republic of Bangladesh. 

What is income tax? Income tax refers to payments that individuals or companies are required to make to the government based on earnings derived from various sources. These earnings or income may include employment wages, pensions and investments. 

The Income Tax Act, 2058 (2002) provides guidance to individuals and businesses in the form of income tax tables. Familiarizing yourself with these tax tables which identify applicable income tax slabs and income tax rates is essential for effective tax planning and to remain compliant with the tax laws of Nepal. Different tax brackets on income may apply depending on the business structure and vehicle used. 

Here you will learn more about:

• personal income tax (PIT) slabs 
• personal income tax for small taxpayers
• corporate income tax (CIT) rates
• capital gains tax rates
• value-added tax rates

Personal Income Tax (PIT) Tables in Nepal 2023-2024

Nepal operates a self-assessment tax system. The principal taxes in Nepal are income tax and indirect taxes. Indirect taxes include value-added tax, customs duty and excise duties. Income tax laws provide for the general anti-avoidance rule (GAAR), transfer pricing and controlled foreign entities. 

There are four types of taxable income: 

• employment
• business
• investment
• windfall gain

The income tax slabs in Nepal provide for different tax brackets depending on whether the taxpayer is an individual, a married couple or a small taxpayer.

The taxable income of a non-resident natural person (individual) is taxed at 25%.

Personal Income Tax for Small Taxpayers

A resident individual whose income is derived only from business sources based in Nepal and whose annual business turnover is up to Rs.30,00,000 and whose net income is below Rs.3,00,000 shall pay tax as a small taxpayer, whether or not they are registered for value-added tax (VAT).

A resident individual is not able to claim a medical tax credit or advance tax arising from tax withheld by a withholding agent.

Corporate Income Tax Rates in Nepal 2023-2024

Capital Gains Tax in Nepal

Capital gains form part of normal business income and, therefore, are chargeable for capital gains tax (CGT). Individuals may also be charged on gains on any non-business chargeable assets such as investment assets.

Value Added Tax Rates in Nepal

Export and some specific supplies listed in Schedule 2 of Value Added Tax Act are subject to 0% VAT rate including goods exported from Nepal and services to be supplied to persons outside Nepal.