Tax Banding

Tax Rates

Individual

FY 2016 - 2017

FY 2015 - 2016

(a) First Slab

350,000

1%

250,000

1%

(b) Second Slab

100,000

15%

100,000

15%

(c) Third Slab

Upto 2,500,000

25%

Upto  2,500,000

25%

(d) Balance Exceeding Rs 2,500,000

> 2,500,000

35%

> 2500,000

35%

Couple

(a) First Slab

400,000

1%

300,000

1%

(b) Second Slab

100,000

15%

100,000

15%

(c) Third Slab

500,001 to 2,500,000

25%

400,001 to 2,500,000

25%

(d) Balance Exceeding Rs 2,500,000

> 2,500,000

35% >

2,500,000

35%

A. Additional Deductions

Remarks

Natural person working at remote areas Remote Area Allowance

Additional deduction from taxable amount up to Rs 50,000. (A-50,000, B-40,000, C-30,000, D-20,000, E-10,000)

Natural person with pension income included in the taxable income

Additional deduction from taxable amount equal to 25% of amount prescribed under first tax band

Incapacitated natural person

Additional deduction from taxable amount equal to 50% of amount prescribed under first tax band

B. Deduction on Income

Life Insurance Premium

A natural person who has procured life insurance and paid premium amount thereon shall be entitled to a reduction of actual annual insurance premium or Rs 20,000 whichever is less from taxable income

Medical Insurance

A natural person insured in resident insurer for health insurance shall be entitled to a reduction of actual premium paid or Rs 20,000 whichever is less

Contribution to Retirement Fund

1/3 of taxable income or Rs 300,000 which-ever is lower;

C. Rebate on Tax Rates

In case of resident individual women having only remuneration income

Rebate of 10% on the tax liability calculated as other natural person. i.e. not applicable for women with couple status.

Retirement payment resulting from Merger

In case of decision of the organization to provide group retirement to its employees (in the event of merger or acquisition) except to the payment made as per the employment term or the payment made by retirement fund, a rebate of 50% on withholding tax.

D. Foreign Allowances

In case of the employee employed at the foreign diplomatic mission of Nepal

Only 25% of the foreign allowances are to be included in the income from employment

E. Tax Exemption

Compensation received against deceased natural person

Compensation received against the deceased of natural person is not required to be included in income

F. Compulsory Filing

Natural Person Having Taxable Income exceeding Rs 4 million

A natural person having taxable income exceeding Rs 4 million during an Income Year shall submit income return u/s 96