| Slab | Income Range | Taxable Amount | Rate | Tax |
|---|
How to Calculate Salary Tax in Nepal
Nepal uses a progressive tax system under the Income Tax Act 2058. Your salary tax is calculated in these steps:
- Start with Gross Annual Income — total of basic salary + allowances + bonus.
- Subtract allowable deductions — SSF (11% of basic, no cap), EPF/PF, CIT (max Rs 3L), life insurance (max Rs 40K), medical insurance, medical allowance (max Rs 1.2L/yr).
- Arrive at Taxable Income — gross minus deductions.
- Apply progressive slabs — each portion of income is taxed at its respective rate (1% → 10% → 20% → 30% → 36% → 39%).
- Apply rebates — 10% rebate for female employees (FRTC), 10% for senior citizens.
- Divide by 12 for monthly TDS that your employer deducts each month.
Note: The 1% tax on the first slab is the Social Security Tax. It is waived if you contribute to SSF (Social Security Fund).
Nepal Income Tax Slabs FY 2082/83
The Government of Nepal maintained the same progressive tax slabs for FY 2082/83 as the previous year. The couple bracket gives an extra Rs 1 lakh of income in the first two slabs.
👤 Single Individual
| Annual Income (NPR) | Rate |
|---|---|
| Up to 5,00,000 | 1% |
| 5,00,001 – 7,00,000 | 10% |
| 7,00,001 – 10,00,000 | 20% |
| 10,00,001 – 20,00,000 | 30% |
| 20,00,001 – 50,00,000 | 36% |
| Above 50,00,000 | 39% |
👫 Married Couple
| Annual Income (NPR) | Rate |
|---|---|
| Up to 6,00,000 | 1% |
| 6,00,001 – 8,00,000 | 10% |
| 8,00,001 – 11,00,000 | 20% |
| 11,00,001 – 20,00,000 | 30% |
| 20,00,001 – 50,00,000 | 36% |
| Above 50,00,000 | 39% |
⚠️ An additional 3% surcharge applies on income between Rs 20L–50L (totalling 39%) for certain brackets. The tool uses the exact IRD formula.
Allowable Deductions in Nepal Salary Tax
- SSF (Social Security Fund) — 11% of basic salary, fully deductible with no upper limit. Also waives the 1% social security tax.
- EPF / Provident Fund — Employee's contribution is deductible. Combined retirement deduction (SSF+PF+CIT) cannot exceed 1/3 of taxable income or Rs 5,00,000.
- CIT (Citizen Investment Trust) — Deductible up to Rs 3,00,000 annually.
- Life Insurance Premium — Deductible up to Rs 40,000 per year.
- Medical Insurance Premium — Deductible (specific limits apply per IRD rules).
- Medical Allowance — Up to Rs 10,000/month (Rs 1,20,000/year) is tax-exempt when supported by actual expenses.
- Remote Area Allowance — Additional Rs 50,000 deduction for workers in remote areas.
- Dashain Bonus — Up to one month's basic salary is tax-exempt; amounts above this are taxable.
Frequently Asked Questions
After deductions, income up to Rs 5,00,000 is taxed at just 1% (social security tax). If you contribute to SSF, even this 1% is waived — making the effective threshold Rs 5,00,000 tax-free. For married couples it is Rs 6,00,000.
Female employees in Nepal receive a 10% rebate on their total calculated income tax liability under Section 88(3) of the Income Tax Act 2058. This is applied after all deductions and before the final tax figure.
SSF (Social Security Fund) at 11% of basic salary has the added benefit of waiving the 1% social security slab tax. EPF contributions are also deductible but do not waive the 1%. Most employees now enrolled in SSF see a slightly lower tax liability at lower income levels.
Your employer calculates your estimated annual tax liability at the start of the year (or when your salary changes) and divides by 12 to deduct monthly. The tool shows this exact monthly TDS amount based on your inputs.
The annual income tax return deadline is the end of Ashwin (approximately mid-October). If TDS was deducted correctly throughout the year, salaried employees may not need to file a separate return. Self-employed individuals must file by Poush end.
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Last updated: · Based on IRD Nepal Income Tax Act 2058 · suman-pokhrel.com.np
⚠️ For informational purposes only. Verify with IRD Nepal or a qualified tax professional.