Nepal’s government has announced major changes to income tax rules starting the upcoming fiscal year. Here’s a simple breakdown of what’s changing and how it affects your wallet.
Big News: No Tax on Annual Income Up to Rs. 10 Lakh
If you earn Rs. 10 lakh (Rs. 1,000,000) or less per year, you will no longer pay income tax. This is a huge relief for thousands of salaried workers and small earners across Nepal.
Note: A symbolic 1% tax applies to employment income up to Rs. 10 lakh — but this does NOT apply to people contributing to a pension fund or the Social Security Fund (SSF).
New Tax Slabs at a Glance
| Annual Taxable Income | Tax Rate | Fixed Amount |
| Up to Rs. 10 lakh | 1% (employment only) | — |
| Rs. 10 lakh – Rs. 15 lakh | 10% on amount above Rs. 10L | + Rs. 10,000 |
| Rs. 15 lakh – Rs. 25 lakh | 20% on amount above Rs. 15L | + Rs. 60,000 |
| Rs. 25 lakh – Rs. 40 lakh | 27% on amount above Rs. 25L | + Rs. 2,60,000 |
| Above Rs. 40 lakh | Extra 2% surcharge on top | + existing tax |
How Is This Different From the Old System?
Previously, single individuals paid income tax on earnings above Rs. 5 lakh, and married couples paid on income above Rs. 6 lakh. Tax rates climbed steeply — all the way up to 39% on income above Rs. 50 lakh.
The new structure raises the tax-free threshold significantly and simplifies the slabs, making the system friendlier for middle-income earners.
Who Benefits the Most?
Salaried employees, small business owners, and SSF contributors in the Rs. 5–10 lakh income range see the biggest benefit. People who were previously paying taxes in lower brackets now fall completely outside the taxable range.
Quick Summary
Nepal’s updated income tax structure for fiscal year 2082/83 is designed to ease the burden on everyday earners. With a higher tax-free ceiling, cleaner tax brackets, and a fairer progressive rate, this reform marks one of the most taxpayer-friendly budgets in recent years.