Nepal Tax Advisory · FY 2081/82 - 2082/83

Salary Earner Legal Tax Deductions Checklist

Every legitimate exemption, rebate, and deduction under Nepal Income Tax Act 2058 to minimize your payroll tax withholding.

Maximum Total Deductions
NPR 3,65,750+
Across all legal deduction avenues
SSF Social Security Advantage
1% SST Waived
1% tax waived on base 5L / 6L slab
Female Taxpayer Benefit
10% Direct Rebate
Deducted from final computed tax bill

Statutory Individual Income Tax Slabs in Nepal

Tax Slab Band Individual (Unmarried) Couple / Married Applicable Tax Rate
First Band Up to NPR 5,00,000 Up to NPR 6,00,000 1% (Waived if enrolled in SSF)
Second Band Next NPR 2,00,000 (5L to 7L) Next NPR 2,00,000 (6L to 8L) 10%
Third Band Next NPR 3,00,000 (7L to 10L) Next NPR 3,00,000 (8L to 11L) 20%
Fourth Band Next NPR 10,00,000 (10L to 20L) Next NPR 9,00,000 (11L to 20L) 30%
Fifth Band Next NPR 30,00,000 (20L to 50L) Next NPR 30,00,000 (20L to 50L) 36% (30% + 20% surcharge)
Ultra-Wealth Band Above NPR 50,00,000 Above NPR 50,00,000 39% (30% + 30% surcharge)

The 7 Legal Deductions Checklist (Income Tax Act 2058)

1. Approved Retirement Contributions (SSF / EPF / CIT): Section 63
Up to NPR 3,00,000 Max

Contribution to Social Security Fund (SSF), Employees Provident Fund (Karmachari Sanchaya Kosh), or Citizen Investment Trust (CIT / NLK). Statutory limit: Lower of 1/3rd of total assessable income or NPR 3,00,000.

Action: Verify your monthly employer deposit receipt or CIT monthly deduction statement.
2. Life / Term Insurance Premium Deduction: Section 12
Up to NPR 40,000 Max

Annual premium paid for individual Life or Term Insurance policy issued by an Insurance Board (Nepal Beema Pradhikaran) registered insurer in your name. Statutory maximum deduction: NPR 40,000 per fiscal year.

Action: Submit premium payment receipt and policy certificate to employer HR before Jestha 15.
3. Health Insurance Premium Deduction: Schedule 1
Up to NPR 20,000 Max

Premium paid toward individual or family health/medical insurance with a registered non-life insurer or government National Health Insurance program. Statutory maximum deduction: NPR 20,000.

Action: Submit annual health insurance policy schedule to accounts department.
4. Medical Tax Credit for Approved Hospital Expenses: Section 51
15% Credit (Max NPR 750)

Tax credit calculated at 15% of approved medical bills incurred at recognized hospitals/clinics. Any unabsorbed medical tax credit can be carried forward to subsequent fiscal years indefinitely.

Action: Retain official VAT invoices with your PAN from recognized hospital admissions.
5. Residential Building / House Insurance Premium Deduction
Up to NPR 5,000 Max

Annual insurance premium paid for personal residential private home/property against earthquake, fire, and natural disasters. Statutory maximum deduction: NPR 5,000.

Action: Submit property insurance policy document registered under your ownership.
6. Remote Area Allowances (दुर्गम भत्ता): Schedule 1
NPR 10,000 to 50,000

If stationed or employed in designated remote districts: Grade A (NPR 50,000 deduction e.g., Dolpa, Humla), Grade B (NPR 40,000), Grade C (NPR 30,000), Grade D (NPR 20,000), Grade E (NPR 10,000).

Action: Employer verification letter certifying district posting during the fiscal period.
7. Female Resident Employee Tax Rebate: Schedule 1
10% Final Tax Rebate

A direct 10% tax rebate credited against total calculated tax liability for resident female employees who earn remuneration income in Nepal as an individual taxpayer.

Action: Automatically computed on salary tax worksheet by payroll accounting officer.
risePaisa Tax Intelligence Unit · Kathmandu Compliant with Nepal Income Tax Act 2058 (Updated Finance Act)