Salary tax in Nepal for FY 2083/84: slabs, deductions and worked examples
The Finance Act 2083 made the biggest change to salary tax in years. From Shrawan 1, 2083 (mid-July 2026) the 1% band rises to Rs. 10 lakh, the top rate falls from 39% to 29%, and single and married employees use the same slabs. Here is how the new system works.
Tax slabs for FY 2083/84
| Taxable income (per year) | Rate | Tax on this band | Total tax at top of band |
|---|---|---|---|
| Up to Rs. 10,00,000 | 1% | Rs. 10,000 | Rs. 10,000 |
| Rs. 10,00,001 to 15,00,000 | 10% | Rs. 50,000 | Rs. 60,000 |
| Rs. 15,00,001 to 25,00,000 | 20% | Rs. 2,00,000 | Rs. 2,60,000 |
| Rs. 25,00,001 to 40,00,000 | 27% | Rs. 4,05,000 | Rs. 6,65,000 |
| Above Rs. 40,00,000 | 29% | 29% of the excess | – |
Rates are marginal: each rate applies only to the income inside its band. The separate couple slabs that existed until FY 2082/83 are gone, so a single/married choice no longer changes the rates.
The 1% social security tax
The 1% on the first Rs. 10 lakh is a social security tax on employment income. It is not charged on employees who contribute to the Social Security Fund or an approved pension fund, and it does not apply to pension income or to registered sole proprietors' business income.
How the tax is worked out
- Assessable income: salary, allowances, bonus, overtime, Dashain allowance and taxable benefits for the year.
- Less deductions (below) to get taxable income.
- Apply the slabs.
- Less rebates and credits, then less tax already deducted at source (TDS).
Deductions
| Deduction | Limit for FY 2083/84 |
|---|---|
| SSF, EPF/PF, CIT and approved retirement funds (employer + employee) | Lowest of the actual contribution, one-third of assessable income, or Rs. 5,00,000 |
| Life insurance premium | Up to Rs. 40,000 |
| Health insurance premium | Up to Rs. 20,000 |
| House (building) insurance, own house | Up to Rs. 10,000 (was Rs. 5,000) |
| Children's school fees (new) | 25% of fees paid, up to Rs. 25,000 |
| Remote area allowance | Rs. 10,000 to Rs. 50,000 depending on the area category |
| Donation to the Prime Minister Disaster Relief Fund | The full amount donated |
| Donations to other approved institutions | Up to 5% of adjusted taxable income or Rs. 3,00,000 |
Persons with a disability get a first slab 50% higher, at Rs. 15 lakh.
Rebates and credits
- Female rebate: a resident woman with only employment income gets 10% off her total tax.
- Medical tax credit: 15% of approved medical expenses, up to Rs. 1,500. It can't be combined with the health insurance deduction.
Worked examples
Salary Rs. 18,00,000 a year; CIT/PF contribution Rs. 3,00,000; life insurance Rs. 40,000; health insurance Rs. 20,000.
| Step | Amount |
|---|---|
| Retirement deduction (lowest of 3,00,000 / 6,00,000 / 5,00,000) | Rs. 3,00,000 |
| Insurance deductions | Rs. 60,000 |
| Taxable income | Rs. 14,40,000 |
| Tax: 10,00,000 × 1% + 4,40,000 × 10% | Rs. 54,000 |
- Same employee, female: Rs. 54,000 less 10% = Rs. 48,600.
- Same employee, SSF contributor: the 1% is not charged, so tax = Rs. 44,000.
- Taxable income of Rs. 50 lakh: 10,000 + 50,000 + 2,00,000 + 4,05,000 + 2,90,000 = Rs. 9,55,000 (an effective rate of 19.1%).
How much less than last year?
Under the FY 2082/83 single slabs, the same Rs. 14.4 lakh taxable income was taxed at Rs. 2,17,000. Under FY 2083/84 it is Rs. 54,000, a saving of Rs. 1,63,000 a year, or about Rs. 13,600 a month in take-home pay.
Do you need to file a return?
Usually not, if salary is your only income, you work for one employer at a time, tax is fully withheld and you claim no donation deduction. You must file if your taxable income is above Rs. 40 lakh.
Work out your own figure with our salary tax calculator, which covers both FY 2083/84 and FY 2082/83. For payroll and salary TDS for your staff, see our payroll service.
This article is general information based on the law as we understand it at the time of writing. It is not tax or legal advice for your situation. Confirm details with the Inland Revenue Department, Department of Customs or Office of the Company Registrar, or talk to us.