Nepal income tax calculator

What is the difference between income tax and salary tax in Nepal?

Income tax is the whole tax a person owes under the Income Tax Act 2058, whatever the income came from. Salary tax is not a separate tax — it is income tax on employment income, collected monthly by the employer instead of once a year by the taxpayer. Same Act, same bands, different collection route.

The confusion is worth clearing up because it decides which rules apply to you. Nepal does not run a separate schedule for salaried people: the bands on this page are the bands a consultant, a landlord and a shopkeeper are charged on too. What differs is how the money reaches the Inland Revenue Department, and which reliefs each earner can claim on the way.

For an employee the employer does the work — it withholds monthly, deposits against your PAN, and issues the statement you would otherwise assemble yourself. That is why most Nepali readers meet income tax under the name “salary tax” and never file anything.

Is TDS the same as income tax?

TDS is the method, income tax is the tax. Tax Deducted at Source is the employer withholding a slice of each month's pay and depositing it against the employee's income tax account, so the annual bill is already paid by the time the year ends. On a salary of NPR 10,00,000 a year the TDS is NPR 833.33 a month, and the income tax for the year is NPR 10,000.

A TDS figure is therefore an instalment, not a rate. Two people on the same salary can have different monthly TDS — one joined in Kartik, one has been there all year — and still owe exactly the same income tax for the year, because the tax is assessed on the fiscal year as a whole. The calculator above takes the months you actually worked, so the instalment it shows is the one your payroll should be withholding.

How much income tax do I pay in Nepal?

On FY 2083/84 rules a resident individual pays NPR 10,000 on NPR 10,00,000 of annual taxable income, NPR 60,000 on NPR 15,00,000, and NPR 2,60,000 on NPR 25,00,000. Bands are marginal, so each rate touches only the slice of income inside it — the effective rate at NPR 25,00,000 is 10.4%, not 27%.

Taxable income is not gross salary — it is what is left after every relief you qualify for. Read the rows above against the figure the calculator calls taxable income, not against your CTC. The full band tables for all three fiscal years carry the same numbers with the bands spelled out.

Which income does this calculator cover?

This calculator covers employment income: salary, taxable allowances, festival bonus, and the employer's PF or SSF contribution, which the Act counts as income in the employee's hands. Business income, rent, capital gains and foreign income are taxed under the same Act but by different rules, and are not computed here.

Stating the scope plainly matters more than covering everything badly. What this tool computes:

• Monthly salary, for a flat year or a year with a mid-year raise.
• Taxable allowances — transport, fuel, and anything else paid in cash.
• Dashain or festival bonus and other one-off annual payments.
• The employer’s PF or SSF contribution, which is a taxable benefit in your hands and is the step most calculators skip.
• Relief for PF, SSF and CIT up to a combined NPR 5,00,000, life insurance up to NPR 40,000 and health insurance up to NPR 20,000.
• The 10% rebate on computed tax for a resident woman with employment income.

What it does not compute, and should not be used for:

• Business or professional income, and the deductions that go with it.
• Rent, and the withholding a tenant applies to it.
• Capital gains on shares or property.
• Foreign income, and relief for tax already paid abroad.
• Non-resident status, which changes the schedule entirely.

Those are all income tax, and all under the same Act — they are simply not employment income, and a calculator that guessed at them would be a worse answer than saying so. For any of them, take the figures to a registered accountant or to the Inland Revenue Department.

How is income tax calculated in Nepal?

Nepal computes income tax on the year, not the month. Add up assessable income for the fiscal year, subtract each relief against its own ceiling, run the remainder through the bands, apply the resident woman rebate if it is due, and divide the result across the months worked to get the monthly TDS.

1. Assessable income.Salary, allowances and bonus for the year, plus the employer’s retirement contribution.
2. Reliefs, each against its own ceiling. PF/SSF and CIT share one ceiling of NPR 5,00,000; CIT gets only the room the mandatory contribution leaves behind.
3. The bands run on what is left. Marginal, so a raise never costs you more than it pays.
4. SSF members skip the 1% band; Provident Fund members do not.
5. A resident woman’s computed tax gets a 10% rebate, applied last.

The step-by-step guide works the same sequence through with a full example, including what happens when the salary changes part-way through the year.

Other ways to ask the same question

Each of these runs on the same tested tax engine as the calculator above, so no two of them can disagree:

• The salary tax calculator — the same tool framed around a monthly salary and the TDS on it.
• The TDS calculator — the same figure framed as the deduction rather than the bill, with what the employer does with it afterwards.
• Take-home to gross — a salary calculator that runs backwards, from the amount you want in hand to the gross you should ask for.
• Deductions — every relief against employment income, its ceiling, and what each one saves in rupees.
• The payroll calculator — the employer side: withholding, contributions and the true cost of an employee-month.
• The IRD tax calculator page — which rules come from the Inland Revenue Department, and which jobs only its portal can do.
• Compare two offers — two salaries priced after tax, including the fund balances built in your name.
• The FAQ — short answers to the questions this page raises but does not have room for.
• The free JSON API — the same engine over HTTP, no account and no key, if you are building payroll of your own.

Sources

• Income Tax Act 2058

  The Act every figure on this page is computed from, as amended.

• Inland Revenue Department

  Filing, PAN, and the income types this calculator does not cover.

• Social Security Fund

  Contribution rates and who the 1% Social Security Tax waiver applies to.