Get the latest tax rate in Nepal for FY 2082/83. From salaried workers to freelancers & IT firms, learn how to save more with new slabs, rules & rebates.

Taxes. Just the word can make your heart race, and not in a good way. But the truth is; understanding the tax rate in Nepal isn’t just for accountants or CA aspirants. Whether you're a salaried employee, freelancer, entrepreneur, or small shopkeeper, taxes affect your pocket, and your peace of mind.

And in a country like Nepal, where the tax system is layered with slabs, deductions, rebates, and exemptions, even a minor miscalculation can cost you.

The good news?

The tax rate in Nepal for FY 2082/83 (2025/26) hasn’t changed much from the previous year. That means no surprise rate hikes, no shifting slabs. Only one major update: export-oriented IT companies now enjoy a further 75% tax exemption (increased from the earlier 50%) on top of the existing 20% rebate, effectively bringing their tax burden down to just 5%.

In this detailed guide, we break down everything you need to know about personal income tax slabs, freelancer taxation, corporate tax rates, small business presumptive tax, and more. We’ll also show you how to use deductions and exemptions to reduce your liability legally.

So grab a cup of tea (or calculator), and let’s decode the tax rate in Nepal together, in plain language and with practical examples.

1. Personal Income Tax Rate in Nepal for FY 2082/83 

If you earn money in Nepal; whether through a job, your own small business, or freelance work, you’re expected to pay income tax to the government. But before you panic or get overwhelmed, let’s slow down and break it all down clearly.

The first thing you need to know is that Nepal uses something called a progressive tax system for individuals.

1.1 What Is a Progressive Tax System?

It means the more money you earn, the higher the percentage of tax you’ll pay. But not on the full income.

You’re taxed step-by-step, not all at once.

Think of it like climbing stairs:

• On the first step, the tax is very low.
• As you go up to the next step, the tax rate increases, but only for that portion of your income.

Let’s look at the tax rates step-by-step so you can see exactly how it works.

1.2 Step-by-Step Income Tax Slabs for FY 2082/83 (2025/26)

Here are the latest personal income tax rates in Nepal:

Let’s explain this with an example:

Say your annual income is NPR 1,200,000, and you are a single person.

Here’s how your tax will be calculated:

1. First NPR 500,000 → 1% Social Security Tax = NPR 5,000, but you don’t have to pay this if you’re enrolled in SSF
2. Next NPR 200,000 → Taxed at 10% = NPR 20,000
3. Next NPR 300,000 → Taxed at 20% = NPR 60,000
4. Next NPR 200,000 → Taxed at 30% = NPR 60,000

Total Tax = NPR 145,000 (including SST)

If You’re Married, You Get a Slight Advantage

If you're married and you choose to file jointly with your spouse, you get an extra NPR 100,000 exemption before tax starts.

So instead of being taxed after NPR 500,000 like singles, you are taxed only after NPR 600,000. That’s the government’s way of helping families.

Tip: To claim this benefit, you have to choose joint filing and inform the tax office. It's not automatic.

1.3 What Is Social Security Tax (SST)?

This is a 1% tax you pay on your income, but only on the first slab (up to NPR 500,000 or 600,000 for married).

BUT if you contribute to Nepal’s Social Security Fund (SSF), this tax is waived.

So if your company already deducts money for SSF from your salary every month, you don’t need to pay this extra 1%.

1.4 How Do You Reduce Your Taxable Income?

Let’s say you earn NPR 15,00,000 annually.

You don’t have to pay tax on the whole amount if you qualify for deductions.

Deductions are certain types of expenses or contributions that the government allows you to subtract from your income before calculating tax.

Here are some major deductions available:

1.5 Major Deductions You Can Claim (Legally!)

These deductions reduce your taxable income, which means less tax to pay.

Example with Deductions:

Let’s say you earn NPR 1,500,000 annually and you:

• Contribute NPR 300,000 to retirement
• Pay NPR 20,000 for health insurance
• Pay NPR 40,000 for life insurance

Total deductions = NPR 360,000

So your taxable income becomes:
1,500,000 – 360,000 = 11,40,000

Now you calculate your tax based on 1,140,000, not 1.5 million. That’s how smart planning saves real money.

1.6 What If You’re Not Living in Nepal?

If you’re a Nepali citizen or foreigner who doesn’t stay in Nepal for 183 days or more in a year, you’re called a non-resident for tax purposes.

Non-residents only pay tax on income earned from Nepal.

You don’t get to claim deductions like residents do. But you’re taxed at flat rates on each type of income. Here's a quick summary:

These are final taxes, no need to file additional tax returns unless you have more income from Nepal.

1.7 Tax Rebate for Female Employees

If you’re a woman with income under your own PAN and not part of joint filing, you are entitled to a 10% rebate on the tax calculated under the normal slab rates.

What does this mean in practice?
Let’s say your taxable income is NPR 700,000:

• Normal tax:
  • First NPR 500,000 @1% = NPR 5,000
  • Remaining NPR 200,000 @10% = NPR 20,000
  • Total: NPR 25,000
• Female rebate (10% of 25,000) = NPR 2,500
• So you only pay NPR 22,500

1.8 Quick FAQs for Individual Taxpayers

Q1: I get a salary — isn’t my tax already deducted?
Yes, your employer deducts TDS (Tax Deducted at Source). But if you want to claim deductions or refunds, you still need to file your tax return.

Q2: I earn less than NPR 500,000 — do I still need to file?
Technically no, but it’s recommended. You might need tax proof for things like visas, loans, or grants.

Q3: I’m married. Should I file jointly?
If your spouse doesn’t earn or earns much less, yes! You get an extra NPR 100,000 exemption that can reduce your tax.

1.9 Final Thoughts on Individual Tax Rates

If you’ve never filed taxes before, the terms and slabs might feel confusing at first. But once you understand that:

• You only pay tax on income above the exemption limit
• You can claim deductions to reduce taxable income
• Tax is calculated in layers (step-by-step),

it starts to make sense, and saves you money.

In the next section, we’ll move from salaries to side hustles: freelancers, foreign income, and the final 5% tax, and why your PAN number now matters more than ever.

2. Tax Rate in Nepal for Freelancers

If you’re a freelancer in Nepal earning money from foreign clients; whether it’s from Upwork, Fiverr, direct clients, or international agencies, you may have heard about the 5% tax. But what exactly is this tax? Is it all you need to pay? Do you need to register with the tax office or file a return?

Let’s break it down in the simplest way possible.

2.1 What is the 5% Tax for Freelancers?

In Nepal, freelance income received in foreign currency is subject to a flat 5% tax. This means that 5% of whatever you earn is taken as tax.

Until recently, there was some confusion. Freelancers didn’t know whether this 5% tax was the full amount they needed to pay, or whether they still had to file more paperwork or pay additional tax later.

But now, the government has made things clear.

According to the latest budget for the fiscal year 2082/83, this 5% is final.

So, if the 5% is properly deducted, you don’t have to pay anything extra on that income. That’s it. You're done.

This brings more clarity and simplicity for freelancers, and it confirms that freelancers are officially included under Nepal’s tax system, just with an easier process.

If you’re wondering how this fits into the broader picture of the tax rate in Nepal, think of it like this: while most people are taxed through a step-by-step system (called a progressive tax), freelancers working for foreign clients now have a flat, final rate of 5%.

2.2 Final vs. Non-Final Tax: What’s the Difference?

When you earn income in Nepal, sometimes tax is already deducted at the source—like when a bank, employer, or client withholds a portion before paying you. But is that the end of your tax responsibility? It depends on whether the tax is final or non-final.

A. Final Tax

If it’s a final tax, you’re done.

The tax that’s already been deducted counts as your full tax liability for that income.
You don’t need to file returns or pay more tax on that income.

Example: Freelancers who get 5% tax deducted by banks (under the final tax rule) don’t need to pay more, that 5% is final.

B. Non-Final Tax

If it’s non-final, the tax deducted is just an advance.
You still need to calculate your total income, claim deductions, and file a return.
The tax you already paid will be adjusted against your total liability.

Example: Salary earners may have tax deducted every month, but they might still need to file a return if they have other income.

In short, final tax = end of story.
Non-final tax = more steps to go.

2.3 How Is the Tax Deducted?

You don’t have to visit the tax office or submit tax forms every time you get paid. Here’s what happens instead:

When your foreign client sends you money, it comes into your bank account in Nepal; either directly or through platforms like Payoneer or Wise. The moment that payment is received in your account, your bank automatically deducts 5% from the total amount and deposits that with the tax office.

You don’t have to do anything, the bank handles the deduction and the payment to the government.

So, if your client pays you NPR 1,00,000, you’ll see only NPR 95,000 in your account. The remaining NPR 5,000 is your tax, and it’s already paid.

The tax rate in Nepal for freelancers is designed to be simple and automatic, and this system makes compliance easy for people who work independently.

2.4 Why Your PAN Number Matters

Even though your bank deducts the tax, it’s important that the deduction is recorded under your name.

That’s where your PAN (Permanent Account Number) comes in.

Your bank needs to link your PAN to your account. If this isn’t done, the government might not recognize the 5% tax as paid under your name. This could create problems later, like the system showing you as a non-filer or not applying the final tax rule to you.

So, to be safe, visit your bank and make sure your PAN is properly updated and connected to your account.

Having a PAN is not optional if you want to be recognized as a taxpayer in Nepal. It’s your tax identity. And for freelancers, it ensures that the 5% flat rate is recorded correctly.

2.5 What If You Earn More Than 40 Lakhs?

Here’s one more important point.

The government has set a limit: if your total freelance income is less than NPR 40 lakhs (4 million) in one fiscal year, and the 5% tax has been deducted by the bank, then you don’t have to do anything else.

You are not required to:

• File an income tax return,
• Register a business, or
• Pay any more tax.

But if your total freelance income goes over NPR 40 lakhs in a year, you will have to:

1. File a tax return with the Inland Revenue Department (IRD), using a form called Form D4.
2. Keep records of your income.
3. Possibly register as a tax-paying business, even if you work alone.

The 5% tax still applies, but once your earnings cross this threshold, you are treated more like a formal business in terms of compliance.

This rule is designed to keep things simple for small, individual freelancers, while asking higher-earning professionals to follow more formal tax rules.

This again shows how the tax rate in Nepal aims to encourage digital work and foreign income, while also maintaining structure for growing businesses.

Summary: What Freelancers in Nepal Need to Know About the 5% Tax

• If you’re a freelancer earning from foreign clients, you are taxed at a flat 5%.
• The bank deducts this 5% automatically when your payment is deposited.
• This 5% is now considered final tax, as confirmed by the budget for FY 2082/83.
• If your total freelance income is under NPR 40 lakhs, and your PAN is linked, you don’t need to file any tax return.
• If your income goes above NPR 40 lakhs, you must file a return using Form D4 through the IRD portal.
• Always make sure your PAN is connected to your bank account.

The tax rate in Nepal for freelancers is now one of the most straightforward systems in South Asia. It’s simple, low, and final. Just how taxes should be for independent workers.

Let’s move on to corporate taxes now!

3. Corporate Tax Rates in Nepal

Let’s be honest. The term “corporate tax” might sound boring, but it hides some of the most interesting facts about doing business in Nepal.

At first glance, it seems like every company pays a flat 25% tax on their profits. And yes, that is the standard corporate tax rate in Nepal for most general businesses.

But if you run a business in certain industries, or in specific locations, you might be eligible for a much lower rate.

3.1 The Standard 25% Rate

This applies to most regular companies, manufacturers, and service providers that don’t fall under any special category. It’s the baseline.

3.2 30% Tax for Banks, Insurance & Telecom

Some industries are taxed more heavily due to the scale and nature of their business. If you're running a:

• Commercial bank
• Insurance company
• Telecom provider

then your tax rate in Nepal is 30% instead of 25%.

3.3 Special Industries Pay Less (20%)

Now here’s where things get interesting. If your business falls under the “special industry” category, which includes:

• Hydropower
• Information Technology (IT)
• Agro-based manufacturing
• Tourism services
• Export-based businesses (those exporting more than 50% of their total sales)

Then your corporate tax rate is just 20%.

These sectors are seen as national priorities, so they get rewarded with tax relief to encourage growth and investment.

3.4 IT Exporters: Lowest Tax Rate in Nepal?

If you run an IT company exporting services abroad (think software development, digital consulting, remote tech support), here’s the good news:

• You already qualify for the 20% special industry rate
• And now, as per the 2082/83 Budget, you also get a 75% rebate on IT export income

All this brings your effective tax rate in Nepal on export income down to just 5%. Yes, the rate is similar to the freelancer tax discussed above. But here is the big difference. Here, the tax is on Net Profit and not the total income while in case of freelancer, it’s on the total receipts. So, IT companies enjoy much lower tax. 

This is one of the lowest tax rates available to any industry in Nepal today.

3.5 Startups: 100% Exemption for 5 Years

Startups with annual turnover up to NPR 10 crore now enjoy a full tax holiday for five years from the date of operation. If you're starting something new and innovative, the government wants to give you breathing space to grow.

This tax exemption was introduced through the Economic Act 2080/81 and is a big win for young entrepreneurs.

Here's more on why the 0% tax rate looks great on paper but fails in practice.

3.6 Extra Rebates Based on Business Location

If your special industry is based in a rural or underdeveloped area, you get even more tax relief:

• 30% rebate in remote areas
• 20% rebate in undeveloped areas
• 10% rebate in less developed areas

This rebate applies for up to 10 years after you start operations and is on top of any other concessions you may already be getting.

3.7 And That’s Not All

The tax rate in Nepal varies even more across dozens of other business types. For example:

• Agricultural cooperatives pay 0% tax
• Special Economic Zones (SEZs) enjoy 100% exemption for 5 years, and 50% for the next 3
• Industries that manufacture environment-friendly goods or that generate local employment also receive targeted benefits

Frankly, the list of tax concessions is long and growing. What we’ve covered here are just the most prominent ones.

If you’re running a business, or planning to start one, it’s worth checking whether your company falls into one of these advantaged categories. Because with the right planning, your actual tax rate in Nepal could be a lot lower than you think.

4. How Small Businesses Are Taxed in Nepal: The Simplified Way

Not every business in Nepal is a big corporation with an accounting team. In fact, most businesses in the country are small—think tea shops, tailoring stores, grocery corners, beauty parlors, or your local hardware shop. And let’s be real—expecting these businesses to maintain ledgers, hire tax consultants, and file returns every quarter? That’s just not practical.

Thankfully, Nepal has a simplified method of taxation for small businesses. If your business meets certain criteria, you can pay a fixed or percentage-based tax without having to go through complex accounting rules. It’s designed to save you time, reduce paperwork, and help you stay compliant without headaches.

Let’s explore how the tax rate in Nepal applies to small businesses.

4.1 What is Presumptive Tax?

Presumptive tax is a simple way for small businesses to pay taxes without going through detailed paperwork or filing returns every month.

Instead of calculating tax based on your actual income and expenses, the government sets a fixed amount based on your location and business type. It’s like a shortcut system—designed for people who run small shops, tea stalls, tailoring services, and similar businesses.

4.2 Presumptive Taxation for Micro-Businesses

If you're a sole proprietor running a small shop or local business with low sales, Nepal’s presumptive tax system allows you to pay a fixed annual tax instead of going through detailed accounting and return filing.

But here’s what’s new and noteworthy:

As per Budget 2082/83, if your business has zero transactions in a year, you don’t have to pay any presumptive tax at all.

Previously, even a small tea shop that made no profit or had to shut down temporarily still had to pay a minimum tax—like NPR 7,500 if located in a metropolitan city.
Now, if you’ve had no business activity, your tax is zero.

That’s a welcome relief for struggling micro-businesses, especially those in back alleys, gallis, or rural areas that may not generate income every year.

Here’s what the presumptive tax looks like if your business is active:

To qualify, you must:

• Be a resident individual (not a company or firm)
• Have annual turnover below NPR 30 lakhs
• Earn profit less than NPR 3 lakhs
• Not claim any tax credits like advance TDS or medical rebate

In short:
If your business is small, simple, and not doing major volume, this system lets you stay compliant without audits or paperwork.
And if you're not doing any business at all?
Now you pay nothing.

4.3 Turnover-Based Taxation: For Businesses That Are a Bit Bigger

If your business is growing and makes more than NPR 30 lakhs but still less than NPR 1 crore in sales per year, you’ll have to switch to a turnover-based tax system.

Under this, you still pay the presumptive tax above (e.g., NPR 7,500), but on top of that, you pay a small percentage on your extra turnover, depending on what kind of business you run.

Here’s the rate chart:

Important: You are not eligible for this method if you are a lawyer, doctor, auditor, consultant, actor, engineer, or sportsperson. These professions are considered specialized and must follow the regular tax rules.

Also, you don't need to pay presumptive tax if you're

Eligibility Checklist:

• You must be an individual (not a company or firm).
• Your sales must be above NPR 30 lakhs but below NPR 1 crore.
• Your profit must be less than NPR 10 lakhs annually.

Let’s take a quick example:

Mr. A owns a clothing shop in Kathmandu with NPR 60 lakhs in annual turnover and earns a profit of NPR 6 lakhs.

Here’s how his tax is calculated:

• Presumptive Tax (Metropolitan area): NPR 7,500
• Turnover Tax:
  • 1% on NPR 20 lakhs (from Rs. 30–50 lakhs) = NPR 20,000
  • 0.8% on NPR 10 lakhs (from Rs. 50–60 lakhs) = NPR 8,000
    → Total Turnover Tax = NPR 28,000

Total Tax Payable = NPR 7,500 + NPR 28,000 = NPR 35,500

4.4 A Word of Caution

While the tax rate in Nepal for small businesses may look simple on paper, applying these rules correctly can still get confusing.

• What counts as service vs. trade?
• What if you cross the income or turnover limit?
• How do you handle VAT if you’re still under simplified taxation?

If you can calculate and pay the right tax without hiring anyone to help, great, this method is working for you.
If not, well, the "simplified" system may still need a little more simplification.

Final Thoughts: Know the Rules, Play Smart

Whether you're a salaried employee, a freelancer, a startup founder, or a small business owner. Understanding the tax rate in Nepal isn't just about paying what you owe. It's about knowing the rules, using the right exemptions, and planning smart.

The tax system might look overwhelming at first glance, but once you break it down like we’ve done here, it becomes clear that you have more control than you think.

Not all income is taxed the same
Not all businesses pay the full 25%
And not every TDS is the final word

So don’t just pay your taxes, own them. The more you understand the system, the better positioned you are to save money, stay compliant, and grow.

Need help?

• Use My Salary Slip  to calculate your taxes accurately. It’s one of Nepal’s most intuitive and reliable tax calculator tools, designed specifically for salaried professionals.
• And for everything else; from PAN registration to tax filing and compliance, Khatapana has you covered with expert support and digital services built for individuals and businesses.

Because when it comes to understanding and navigating the tax rate in Nepal, the right tools and the right knowledge make all the difference.

Additional Resources:

• 0% Tax Rate in Nepal for Startups: Real Relief or Just Hype?
• Simplified Method of Taxation for Small Businesses in Nepal
• VAT Scrapped: What It Means for Fonepay & Connect IPS Users
• Nepal Rastra Bank, Credit Cards & the Neo Bank Illusion