Income tax slabs in Nepal for FY 2083/84

The five bands for FY 2083/84

Bands apply to annual taxable income — that is, total assessable salary income for the year after allowable deductions have been subtracted, not gross salary.

A worked example

Take an employee on NPR 1,00,000 gross per month with a basic salary of NPR 40,000, enrolled in the Social Security Fund, receiving a festival bonus worth 60% of one month’s gross.

Annual salary income is NPR 12,00,000 from twelve months of gross, plus NPR 60,000 of festival bonus, giving NPR 12,60,000. The employee’s SSF contribution of 11% of basic — NPR 4,400 a month, NPR 52,800 a year — is deductible, so taxable income falls to NPR 12,07,200.

That figure crosses into the second band. The first NPR 10,00,000 is charged at 0% because the employee is SSF-enrolled. The remaining NPR 2,07,200 is charged at 10%, producing NPR 20,720 of annual tax, or NPR 1,726.67 a month.

Two adjustments that change the result

Two taxpayer circumstances alter the computed figure rather than the bands themselves.

• Female taxpayers receive a 10% rebate applied to the tax computed across all bands. In the example above, NPR 20,720 would become NPR 18,648.
• An employee with a disability has the first exemption band widened by 50%, so the first NPR 15,00,000 rather than NPR 10,00,000 falls in the opening band.

What comes off before the bands apply

Bands are applied to taxable income, so the deductions that reduce it matter as much as the rates themselves.

From annual tax to a monthly deduction

Employers do not wait until year end. The annual figure is divided across the payroll months and withheld as TDS, so the liability is settled progressively rather than in one payment.

That is why a festival bonus paid in a single month does not wipe out that month’s take-home: the tax it creates is spread across the remaining months of the fiscal year rather than deducted all at once.

Frequently asked questions