4th June 2023, Kathmandu
The Department of Internal Revenue in Nepal has recently announced the income tax rates and deductions applicable for the next financial year, 2080-81.
These changes are aimed at providing clarity and transparency in the tax policy of the country.
Under the new regulations, advance tax deductions, also known as TDS (Tax Deducted at Source), will be implemented on various personal benefits received by individuals. This includes salaries, meeting allowances, and other payments. Employers and organizations are responsible for deducting the appropriate amount of advance income tax and remitting it to the tax office.
While the previous income slabs of 5 lakhs and 6 lakhs for married individuals are still applicable, the tax office has also published a list of other incomes from which advance tax will be deducted.
The department has established a provision to deduct 5% TDS on contingent profits for holding periods of up to one year. This deduction also applies to profits received by individuals from entities listed on the Nepal Securities Board, as well as other profits obtained from entities not listed on the board.
Additionally, a 7.5% advance tax deduction will be made on profits received within a period of less than one year. It is important to note that investors will still receive benefits according to the previous system.
Furthermore, the revenue department has introduced a 10% tax on profits received from investments made by listed companies on an individual basis. However, if the investor is neither an individual nor an organization but a foreigner, a higher tax rate of 25% will be applicable.
These changes in the tax policy reflect the government’s efforts to streamline and improve the tax system in Nepal, ensuring fairness and adequacy in revenue collection.
