Tax Rates and Key Provisions for FY 2082/83 (2025/26)
The Government of Nepal has announced the Annual Budget for Fiscal Year 2082/83 (2025/26), introducing income tax rates, several fiscal and regulatory measures that impact individuals, businesses, and emerging industries. While the personal income tax slabs for resident natural persons remain unchanged, the Finance Bill 2082 introduces important amendments, exemptions, and policy measures in areas such as environmental taxation, industrial incentives, and import taxation.
Notably, the maximum marginal income tax rate for individuals earning above NPR 5,000,000 continues to be 39%, consistent with the previous fiscal year.
Below is an overview of the applicable income tax rates, key changes, and continuing deductions under the prevailing income tax framework of Nepal.
Individual Income Tax Rates in Nepal (FY 2082/83)
A. Single (Unmarried) Individuals
| Annual Taxable Income (NPR) | Applicable Tax Rate |
|---|---|
| Up to 500,000 | 1% |
| 500,001 – 700,000 | 10% |
| 700,001 – 1,000,000 | 20% |
| 1,000,001 – 2,000,000 | 30% |
| 2,000,001 – 5,000,000 | 36% |
| Above 5,000,000 | 39% |
B. Married Couples (Joint Assessment)
| Annual Taxable Income (NPR) | Applicable Tax Rate |
|---|---|
| Up to 600,000 | 1% |
| 600,001 – 800,000 | 10% |
| 800,001 – 1,100,000 | 20% |
| 1,100,001 – 2,000,000 | 30% |
| 2,000,001 – 5,000,000 | 36% |
| Above 5,000,000 | 39% |
Key Changes Introduced by Finance Bill 2082
Although individual tax slabs remain unchanged, the Government has introduced several policy-driven tax reforms aimed at promoting sustainability, industrial development, and trade facilitation.
1. Introduction of Green Tax
A Green Tax has been imposed at customs points on the import of selected environmentally sensitive goods, including:
- Coal
- Petroleum oils
- Petroleum coke
Rate: NPR 0.50 per kilogram or per liter, as applicable.
2. New Income Tax Exemptions for Priority Industries
The budget provides targeted tax incentives to encourage investment in strategic and sustainable sectors:
- Green Hydrogen Industries
Full income tax exemption for the first five years of operation. - EV Charging Machine Manufacturing and Assembly
Full income tax exemption for five years for industries engaged in manufacturing or assembling electric vehicle charging equipment. - Industrial Zones and Industrial Villages
- 100% income tax exemption for the first ten years, followed by
- 50% exemption for the subsequent five years.
3. Removal of Advance Tax on Imports
The requirement to pay advance income tax at the point of import has been removed for several essential and agricultural goods, including:
- Live animals
- Meat and dairy products
- Fresh flowers and plants
- Fruits and similar perishable items
This measure is intended to reduce cash-flow pressure on importers and stabilize essential supply chains.
Continuing Deductions and Tax Relief for Individuals
The following deductions and tax credits remain applicable for natural persons under the Income Tax Act:
- Remote Area Allowance
Additional deduction of up to NPR 50,000 for individuals working in designated remote areas. - Incapacitated Individual Deduction
An additional deduction equal to 50% of the first tax slab threshold (i.e., NPR 250,000). - Medical Expense Tax Credit
Tax credit equal to the lower of NPR 1,500 or 15% of approved medical expenses. - Life Insurance Premium Deduction
Deduction allowed up to the lower of the actual premium paid or NPR 40,000.
Legal Advisory Note
Tax laws and budgetary provisions are subject to interpretation, administrative directives, and subsequent amendments. Proper tax planning and compliance require a careful assessment of individual circumstances, business structures, and sector-specific incentives.
For professional tax advisory, compliance support, or strategic tax planning in Nepal, consultation with a qualified legal or tax professional is strongly recommended.