What is Income Tax? 💰
Tax is a compulsory payment to the
government by law. It is the
main source of government income — used to
build roads, schools, hospitals, and run the country.
Income Tax is charged on your yearly earnings at increasing rates — the more you earn, the higher the percentage you pay.
Income Tax is charged on your yearly earnings at increasing rates — the more you earn, the higher the percentage you pay.
4,50,000
Tax-Free Limit
(Married, Rs.)
(Married, Rs.)
1%
Lowest Tax
Rate
Rate
30%
Highest Tax
Rate
Rate
12×
Monthly → Yearly
Income
Income
📖 Definition
Income Tax is a percentage (%) of your taxable income paid to the government each year. Nepal uses a progressive tax system — meaning your income is split into slabs and each slab is taxed at a different rate.
Taxable Income = Yearly Income − Deductions (PF + Festival Expense + Insurance Premium)
🇳🇵 Taxes in Nepal
Income Tax
Value Added Tax (VAT)
Customs Tax
Vehicle Tax
Property Tax
House-Rent Tax
📋 Official Tax Rate Table
📅 Fiscal Year 2078/2079 (Nepal)
Tax Rate only for Employment Income
For Single Person
TitleRate
Income up to Rs. 4,00,0001%
Rs. 4,00,000 up to Rs. 5,00,00010%
Rs. 5,00,000 up to Rs. 7,00,00020%
Rs. 7,00,000 up to Rs. 20,00,00030%
Income above Rs. 20,00,00036%
For Couple
TitleRate
Income up to Rs. 4,50,0001%
Rs. 4,50,000 up to Rs. 5,50,00010%
Rs. 5,50,000 up to Rs. 7,50,00020%
Rs. 7,50,000 up to Rs. 20,00,00030%
Income above Rs. 20,00,00036%
Tax Rate only for Business Income as an Individual Firm
For Single Person
TitleRate
Income up to Rs. 4,00,000Tax Free
Rs. 4,00,000 up to Rs. 5,00,00010%
Rs. 5,00,000 up to Rs. 7,00,00020%
Rs. 7,00,000 up to Rs. 20,00,00030%
Income above Rs. 20,00,00036%
For Couple
TitleRate
Income up to Rs. 4,50,000Tax Free
Rs. 4,50,000 up to Rs. 5,50,00010%
Rs. 5,50,000 up to Rs. 7,50,00020%
Rs. 7,50,000 up to Rs. 20,00,00030%
Income above Rs. 20,00,00036%
Tax Free
0%
1%
First slab
10%
Second slab
20%
Third slab
30%
Fourth slab
36%
Top slab
📐 Income Tax Formula
1
Find Yearly Income
Yearly Income = Monthly Salary × 12
💡 If the employee receives 13 months salary per year
(festival bonus included), use
Monthly × 13 instead.
2
Calculate Total Deductions
Deductions = PF + Festival Expense + Insurance Premium
📌 Employee PF = 10% of Monthly Salary ×
12 | Festival = 1 month
salary (Dashain/Tihar) |
Insurance = Annual premium paid
3
Find Taxable Income
Taxable Income = Yearly Income − Total Deductions
💡 This is the amount on which you actually pay tax. The
more deductions you have, the
less tax you pay.
4
Apply Tax Slabs — Married / Couple (Employment
Income)
Income up to Rs. 4,50,0001% / Tax Free
Rs. 4,50,000 up to Rs. 5,50,00010%
Rs. 5,50,000 up to Rs. 7,50,00020%
Rs. 7,50,000 up to Rs. 20,00,00030%
Above Rs. 20,00,00036%
📌 For Single Person: same rates but the
first slab starts at Rs. 4,00,000 instead of Rs. 4,50,000.
5
Calculate Tax on Each Slab & Find Total Tax
Tax on Slab = Slab Amount × Rate ÷ 100
Total Annual Tax = Sum of Tax on All Slabs
💡 Monthly tax deduction = Total Annual Tax ÷ 12
PF (Provident Fund)
Employee PF = 10% of Basic Salary
Employer PF = 10% of Basic Salary
Annual PF = Monthly PF × 12
Employer PF = 10% of Basic Salary
Annual PF = Monthly PF × 12
Festival Expense
Festival Expense = 1 month salary
(Deductible from income)
Paid during Dashain/Tihar
(Deductible from income)
Paid during Dashain/Tihar
Tax on each slab
Tax = Slab Amount × Rate ÷ 100
Total Tax = Sum of all slab taxes
Total Tax = Sum of all slab taxes
Net Tax Payable
Net Tax = Total Tax − Tax Credit
(if any advance tax already paid)
(if any advance tax already paid)
Tax Free / 1% below threshold
10% Slab next Rs. 1,00,000
20% Slab next Rs. 2,00,000
30% Slab up to Rs. 20,00,000
36% Slab above Rs. 20,00,000
🧮 Income Tax Calculator
📅 Yearly Income
📉 Total Deductions
📊 Taxable Income
💸 Total Tax Payable
📆 Monthly Tax Deduction
📋 Worked Examples
✏️ Solve Questions