Latest Tax Rate in Nepal (Genuine) for Each and every business sectors.

Introduction

In context of Nepal, various acts( Income Tax Act, VAT Act, Customs Act, Excise Act and their rules and regulations) are subject to revision and amendment with the Issue of Finance Act every year. Taxpayer needs to be updated whenever there is a change in these acts and regulations. This post explains the Latest Tax rate in Nepal for applicable for the latest fiscal year.

Classification of Persons as per Income Tax Act.

Before diving into the tax rates, it is very crucial for reader to understand that each and every businesses and organizations along with Natural Person are termed as “Person” in Income Tax Act. The word “Person” includes :

  • Natural Person
  • Entity

Who are Natural Person for Tax Purposes?

Natural Person are the Living person ( Human Beings) for Tax Purposes.

Who are “Entity” for Tax Purposes?

Entity includes Partnership Firm, Trust, company, VDC, Municipalities of all levels, Nepal Government, State Government, Local Level Government, International Organizations established as a treaty with the Government and Foreign Permanent Establishment (FPE), Cooperatives, Unit Trust, Federations, Committee, any organizations established as per Relevant Regulatory Body.

Latest Tax Rate in Nepal for Natural Person.

There is no Absolute Tax Rate in Nepal for natural person. Tax for natural person is levied on the basis of slab/group rates where the income is categorized under different slabs/groups. Each section has a different tax rate in an increasing order. The rate Ranges from 0-36%. The details of Tax rate are provided in the Section 1 of the Schedule 1 of Income Tax Act 2052.

Two different tax rates are applicable for Natural Person as:-

  • Latest Tax Rate in Nepal for Individual Natural Person
  • Latest Tax Rate in Nepal for Couple Natural Person.
Tax Rate in Nepal.

Tax Rate for Individual Natural Person.

Individual Natural Person means the Natural Person who is either unmarried or isn’t a widow or widower taking care of a dependent Person. Tax Rate in Nepal for Individual Natural Person is tabulated below:

Single Natural Person
Single Natural Person
Tax Rate in FY 2079 80 Tax Rate in FY 2078 79 Yearly Income Individual Natural Person in 2078 79 Yearly Income Individual Natural Person in 2079 80  
1% 1% Income up-to Rs. 4 Lakhs. Income up- to Rs 5 Lakhs.  
10% 10% Income above Rs 4 lakhs but up-to Rs 5 Lakhs. Income above Rs 5 lakhs but up-to Rs 7 Lakhs.  
20% 20% Income above Rs 5 Lakhs but up-to Rs 7 Lakhs. Income above Rs 7 Lakhs but up-to Rs 10 Lakhs.  
30% 30% Income above Rs 7 lakhs and up-to Rs 20 lakhs. Income above Rs 10 lakhs and up-to Rs 20 lakhs.  
36% 36% Income above Rs 20 Lakhs. Income above Rs 20 Lakhs.  
Income Tax Rate of Individual Natural Person for fiscal year 2078 79 and 2079 80

..

NOTE:- There is an Exempt of 1% tax for the income up-to Rs 4 Lakhs for the person whose income is only from the business.

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Tax Rate for Couple Person.

Who are couple for Tax Purposes?

Section 50 of Income Tax Act 2052 sates the couple as:

  • Married Resident Natural Person and elected as a couple in the Revenue Department.
  • A widow or widower taking care of a dependent person.

Tax Rate in Nepal for Couple Natural Person is tabulated below:

Tax Rate in FY 2079 80 Tax Rate in FY 2078 79 Yearly Income Couple Natural Person in 2079 80 Yearly Income Couple Natural Person in 2078 79  
1% 1% Income up-to Rs. 4.5 Lakhs. Income up- to Rs 6 Lakhs.  
10% 10% Income above Rs 4.5 lakhs but up-to Rs 5.5 Lakhs. Income above Rs 6 lakhs but up-to Rs 8 Lakhs.  
20% 20% Income above Rs 5.5 Lakhs but up-to Rs 7.5 Lakhs. Income above Rs 8 Lakhs but up-to Rs 11 Lakhs.  
30% 30% Income above Rs 7.5 lakhs and up-to Rs 20 lakhs. Income above Rs 11 lakhs and up-to Rs 20 lakhs.  
36% 36% Income above Rs 20 Lakhs. Income above Rs 20 Lakhs.  
Income Tax Rate of Couple Natural Person for fiscal year 2078 79 and 2079 80
Couple Natural Person
Couple Natural Person

Tax Rate for Non- Resident Natural Person.

Who are Non- Resident Natural Person for Tax Purposes?

Non Resident Natural Person are those Natural Person whose :-

  • Normal/ General Place of abode is in Nepal. ( Has family in Nepal, Has primary business in Nepal)
  • Has stayed in Nepal for 183 days either continuously or intermittently.( Regardless of Citizenship)
  • Is an Employee of Government of Nepal sent to Foreign Nation.

The Latest Tax rate in Nepal for Non- Resident Natural Person is 25%.

Tax Rate for Entity.

Look the details above to understand who are entity for Tax purposes.

General Tax Rate for Entity.

Section 2 of Schedule 1 of Income Tax Act 2052 states the tax rates applicable to Entity. The Tax Rate for General Tax Entities is 25%.

Tax Rate in Nepal for Special Entity.

What is the Tax Rate for Cooperatives registered as per Cooperatives Act 2049?

The Tax Rates of Cooperatives registered as per Cooperatives Act 2049 are as follows:-

SN Cooperative Location Tax Rate In Fiscal year 2078 79 Tax Rate In Fiscal year 2079 80
1 Municipality 5% 7.5%
2 Sub- Metropolitan City 7% 10%
3 Metropolitan City 10% 15%
Updated Income Tax Rate applicable to Cooperatives.

Tax Rate in Nepal for other Specific Entity.

  • The Tax rate of Banks and Financial is 30%.
  • The Tax Rate of Insurance Company is 30%
  • The Tax Rate of Securities Company, Share Broker, Capital market business and Commodity Future Market is 30%
  • The Tax Rate of Telecommunication and Internet Service is 30%.
  • The Tax Rate of Money Transfer Business is 30%
  • The Tax Rate of Petroleum business is 30%.

Tax Rate for Schools and Universities registered as ” Guthis”.

Such Guthis are taxed at 20%.

Tax Rate for Foreign Permanent Establishment Repatriating Income

FPE repatriating its income is Taxed at 5%.

Tax Rate for Non Resident entity providing various services in Nepal.

  • Non Resident Entity providing water transport services in Nepal are taxed at 5% if the destination is within the territory of Nepal.
  • Non Resident Entity providing air transport services in Nepal are taxed at 5% if the destination is within the territory of Nepal.
  • Non Resident Entity providing Telecommunication Services in Nepal are taxed at 5%
  • However, in case of water transport and air transport where the destination is outside Nepal, the tax rate is 2%.

Exceptional Tax Rate for Entity.

Tax Rate of a Trust taking care of Property of Incapacitated Persons.

Any Trust safeguarding the property of a Incapacitated or Demised person are taxed as an Individual Natural Person rather than as an Entity.

New Tax Base and Rate added by Finance Ordinance of 2079 Jestha.

Entity earning foreign income by outsourcing business processes, software and programming, cloud computing services, and other services related to Information Technology are taxed at 1%.

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