Income Tax Calculator Nepal
Salary tax and monthly TDS for FY 2083/84, with the 2082/83 slabs for comparison.
Deductions
Free tool by EngineeringNepal.com.np · Results are for guidance; check critical figures with a qualified engineer.
How income tax on salary works in Nepal
Employers in Nepal deduct tax from salary every month (TDS) and deposit it with the Inland Revenue Department. The tax is worked out on the whole year's taxable income using progressive slabs: each slice of income is taxed at its own rate, so moving into a higher slab only raises the tax on the part of income inside that slab. This calculator follows the same steps as a payroll sheet: total the year's pay, subtract the allowed deductions, apply the slabs, then divide by twelve for the monthly deduction.
Tax slabs for FY 2083/84
From FY 2083/84 the same slabs apply to individuals and couples:
| Taxable income (Rs) | Rate |
|---|---|
| Up to 10,00,000 | 1% (social security tax) |
| 10,00,001 to 15,00,000 | 10% |
| 15,00,001 to 25,00,000 | 20% |
| 25,00,001 to 40,00,000 | 27% |
| Above 40,00,000 | 29% |
Tax slabs for FY 2082/83
| Band | Individual | Couple | Rate |
|---|---|---|---|
| First band | 5,00,000 | 6,00,000 | 1% |
| Next | 2,00,000 | 2,00,000 | 10% |
| Next | 3,00,000 | 3,00,000 | 20% |
| Next | 10,00,000 | 9,00,000 | 30% |
| Next | 30,00,000 | 30,00,000 | 36% |
| Above 50,00,000 | Remaining income | 39% | |
Deductions you can claim
- Retirement contributions to the Employees Provident Fund, Citizen Investment Trust or SSF: up to one third of income, with a cap of Rs 3,00,000 (Rs 5,00,000 for SSF contributors).
- Life insurance premium: up to Rs 40,000 a year.
- Health insurance premium: up to Rs 20,000 a year.
- Remote area allowance: up to Rs 50,000 depending on the area category of the posting.
- SSF contributors do not pay the 1% social security tax on the first band.
Limits are set in each year's Finance Act and can change. The figures here are for planning; your employer's payroll or a tax advisor gives the final amount.
Example
A site engineer earns Rs 80,000 a month plus Rs 80,000 of Dashain allowance, with no other deductions. Yearly income is Rs 10,40,000. Under the 2083/84 slabs, the first Rs 10,00,000 is taxed at 1% (Rs 10,000) and the remaining Rs 40,000 at 10% (Rs 4,000), so the annual tax is Rs 14,000, or about Rs 1,167 a month.
Frequently asked questions
Is Dashain allowance taxable?
Yes. Festival allowance, bonus, overtime and most other allowances paid by the employer are part of taxable salary.
Why is my employer's TDS slightly different?
Payroll systems often spread the tax unevenly through the year, adjust for months already paid, or include benefits such as vehicle or housing facilities. The annual total should be close to this result.
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