The Government of Nepal has unveiled its comprehensive budget highlights and taxation structural changes for the Fiscal Year 2083-84. Formulated via the latest Finance Bill, these updates introduce significant alterations to personal income tax brackets, corporate compliances, customs duties, and an expansive suite of time-bound tax amnesties designed to regularize non-compliant taxpayers. For individual taxpayers, businesses, and expatriates, understanding these statutory shifts is critical to maintaining accurate compliance and optimizing tax liabilities. 1. Revised Income Tax Slab Rates (Schedule 1) The tax brackets for resident natural persons have undergone a major restructuring for both single and couple assessment tracks, expanding lower-rate brackets to provide relief to mid-income earners. For Resident Natural Persons Opting Single Assessment For Resident Natural Persons Opting Couple Assessment Note on 1% SST: The 1% Social Security Tax does not apply to sole proprietorship taxpayers (Business Income), pension income, income from contribution-based pension funds, or individuals contributing directly to the Social Security Fund (SSF). 2. Deductions, Reductions, and Tax Rebates Taxpayers can claim specific deductions from their taxable employment income under the following thresholds: Deductions & Rebates Maximum Eligible Limit / Condition Remote Area Allowance Deduction based on region: Area “Ka” Rs. 50,000; Area “Kha” Rs. 40,000; Area “Ga” Rs. 30,000; Area “Gha” Rs. 20,000; Area “Nga” Rs. 10,000. Pension Income Allowance Lower of an additional 25% of the basic exemption or the Actual Pension amount. Handicapped Allowance An additional 50% basic exemption is allowed for physically disabled individuals. Life Insurance Premium Lower of actual payment or NPR 40,000. Health Insurance Premium Lower of actual premium or NPR 20,000 (Paid for self, spouse, and children). Private Building Insurance Lower of actual payment or NPR 10,000 for an owned building with a resident insurer. Approved Retirement Fund Lower of: $1/3$ of assessable income, NPR 500,000, or actual contribution. Education Fee Credit Lower of 25% of annual tuition fees paid to a resident person for children’s education or NPR 25,000. Female Tax Credit A 10% tax credit on total tax liability is granted if the source of income is exclusively from employment. 3. Capital Gains Tax (CGT) Adjustments The tax framework on the disposal of listed shares and real estate (Non-Business Chargeable Assets) has seen targeted revisions: 4. Key Tax Amnesty & Relief Packages The Finance Bill 2083 introduces a crucial grace window ending in Poush End, 2083 BS, allowing taxpayers to clear historical discrepancies with minimal or zero penalties. Income Tax & Unregistered Taxpayers (Section 40) Value Added Tax (VAT) & Excise Adjustments (Section 41 & 43) 5. New Indirect Taxes and Regulatory Fees To fund social, educational, and environmental goals, the government has created several targeted levies: 6. Strategic Legal and Corporate Adjustments Disclaimer: This document is drafted for informational and educational purposes based on the budget documentation compiled by K.S.P. & Associates, Chartered Accountants. Taxpayers are strongly advised to consult certified tax professionals before finalizing structural corporate closures or applying for specific litigation withdrawals under the amnesty provisions.
