What is That income tax ?
In Nepal, income tax is a direct tax levied on the income earned by individuals, businesses, and organizations within the country. It is governed by the Income Tax Act of Nepal, which outlines the rules, rates, and procedures related to income taxation.
Here are some key points about income tax in Nepal:
- Taxable Income: The income subject to taxation includes salaries, wages, rental income, business profits, capital gains, dividends, interest, and other forms of income earned within Nepal.
- Tax Residency: Individuals who are residents of Nepal for at least 183 days in a fiscal year are considered tax residents and are subject to tax on their global income. Non-residents are taxed only on their income sourced from Nepal.
- Tax Rates: Income tax rates in Nepal are progressive, meaning that the rate increases as the income level rises. The tax rates vary depending on the income brackets and may change from year to year. Different rates may apply to individuals, businesses, and specific types of income.
- Tax Slabs: The income tax rates in Nepal are typically divided into multiple slabs, with each slab representing a specific range of income. As the income increases, the corresponding tax rate for that slab applies to the income within that range. The higher the income, the higher the tax rate.
- Deductions and Exemptions: The Income Tax Act allows for certain deductions, exemptions, and allowances, which can reduce the taxable income. These may include deductions for expenses related to health, education, insurance premiums, donations, and retirement savings.
- Filing and Payment: Taxpayers are required to file an annual income tax return and pay their taxes within the specified due dates. The tax year in Nepal generally runs from mid-July to mid-July of the following year.
- Penalties and Enforcement: Failure to comply with tax obligations, including non-payment or underreporting of income, may result in penalties, fines, or legal action by the tax authorities.
It’s important to note that the specific details, rates, and regulations regarding income tax in Nepal may change over time, as they are subject to updates and amendments by the government. Therefore, it is advisable to consult official sources or seek advice from a tax professional to obtain the most accurate and up-to-date information for your specific situation.
Fiscal Year 2080-2081 Income Tax Slab Rate
| Income Range (Nepalese Rupees) | Tax Rate |
|---|---|
| Up to 500,000 | 1% |
| More than 500,000 – Up to 700,000 | 10% |
| More than 700,000 – Up to 1,000,000 | 20% |
| More than 1,000,000 – Up to 2,000,000 | 30% |
| More than 2,000,000 – Up to 5,000,000 | 36% |
| In excess of 5,000,000 | 39% |
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