Income from Employment # Foreign tax credit

Based of cash basis …….% of income from foreign source

1. Vehicle facility provided Or, Actual tax paid to foreign government
For Employee : 0.5% of their salary (vfO|{kfO{ cfPsf] tna) Here,
For Consultant : 1% of market value of vehicles  Foreign tax credit = Assessable income from foreign source × Average rate of
NOTE : Nepal income tax
𝑡𝑜𝑡𝑎𝑙 𝑡𝑎𝑥 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝑎𝑛𝑦 𝑓𝑜𝑟𝑒𝑖𝑔𝑛 𝑡𝑎𝑥
a) Motor vehicles includes motor, car, jeep or similar other motor vehicle. 𝑐𝑟𝑒𝑑𝑖𝑡
Average rate of Nepal income tax = × 100
b) Motor cycle, cycle, joint bus facilities does not fall under the definition of motor 𝑇𝑜𝑡𝑎𝑙 𝑡𝑎𝑥𝑎𝑏𝑙𝑒 𝑖𝑛𝑐𝑜𝑚𝑒
vehicle facility. # Tax rebate for women
c) If the office provides vehicle facility along with driver, fuel etc, the amount  10% of total tax liability
received for driver’s salary, fuel and repairing are not considered as income of NOTE :
employees. Hence, it is to be neglected.
Tax credit and Tax rebate for women should be Deductible from tax liability
not while calculating taxable income.
2. Accommodation facility
For Employees : 2% of their salary (vfO{kfO{ cfPsf] tna). List of withholding payments and applicable withholding Rates
For Consultant : 25% of rent amount. Withholding payments Withholding Advance or
3. Provision of the other facilities : Rate final
3/ /]vb]vstf{, dfG5], ;jf/L rfns, dfnL jf cGo 3/]n' ;xfossf] ;]jf, vfgf, hnkfg, Remuneration payments Normal Advance
dgf]/~hg jf wf/f, ljh'nL 6]lnkmf]g h:tf ;]jf pknAw u/fP jfkt e'StfgL lbg] JolStn] u/]sf] Natural resource payments; 15% Advance
vr{af6 pNn]lvt ;'ljwf pkef]u ug]{ JolStsf] of]ubfg s6fO{ afFls x'g] /sd ;]jf pkef]u ug]{ royalties; service fee;
JolStsf] cfPdf ;dfj]z ul/G5 . commission sales bonus
4. Gift from employer : Dividend paid by a resident 5% Advance
s'g} sd{rf/LnfO{ assets lbO{Psf] /x]5 eg] ;f] assets sf] ahf/ d'No a/fa/sf] /sdnfO{ lghsf] company of a partnership firm
cfPdf ;dfj]z ul/G5 . Interest (In general) 15% Final
5. Interest benefit : Interest paid by a resident bank 5% Advance
s'g} JolStn] C0fjfkt lt/]sf] Aofh /sd k|rlnt Aofhb/ -!%Ü_ cg';f/ ltg'{kg]{ Aofh /sd or financial institution, other
eGbf sd ePdf ;f] sd ePsf] xb;Ddsf] /sdnfO{ lghsf] cfodf ;dfj]z ul/G5 . entity debentures or company
Allowable reduction listed under prevalling law to an
indivisual with source in Nepal
1. Retirement contribution OR Contribution to PF and CIT and not related to business
Maximum limit Rs 3,00,000
Payment of rent by a resident 10% Final
Or,Contribution to Retirement Fund(One-third of total assessable income)
person with source in Nepal
Or, Actual Retirement Contribution (Whichever is lower)
Meeting fee (up to Rs 20,000 15% Advance
2. Donation to Exempt Organization
per meeting, payment made for
a. For person occasional teaching, setting of
5% of adjusted taxable income questions paper and examining
Or, Actual donation paid the answer sheet)
Or, Maximum limit Rs 1,00,000 (Whichever is lowest) All kinds of retirement 5% Final
 Adjusted taxable income = Total assessable income - Retirement Contribution payments made by the
Government of Nepal of
b. For Company
Approved Retirement fund or
10% of total assessable income
Unapproved Retirement fund
Or, Actual donation paid (excluding regular payment of
Or, Maximum limit Rs 10,00,000 (Whichever is lowest) pension).
3. Other reduction (Only for person not for company) Payment made by a resident 5% Final
a. For life Insurance person for gain from
Actual annual premium paid Unapproved Retirement Fund
Or, Maximum limit Rs 25,000 (Whichever is lowest) Payment of commission by a 5% Final
b. For Health Insurance resident employment company
Actual annual premium paid to a non-resident person
Or, Maximum limit Rs 20,000 (Whichever is lowest) Payment of service fees to 1.5% Advance
c. For working at remote areas service-providing natural
 Remote area ‘A’ = Rs 50000 persons registered with VAT/
 Remote area ‘B’ = Rs 40000 payment of service fees to a
 Remote area ‘C’ = Rs 30000 resident entity dealing in VAT
 Remote area ‘D’ = Rs 20000 exempted transaction/ Rental
 Remote area ‘E’ = Rs 10000 payments made to a person
registered with VAT engaged in
d. For pension income
the business of letting out
 25% of Rs 3,50,000 for single. vehicles
 25% of Rs 4,00,000 for couple.
Payment of contract amount 1.5% Advance
( It is 25% of Basic exemption.) exceeding Rs 50,000
e. For disabled person Payment made for repair of 5% Advance
 50% of basic exemption i.e. 50% of Rs. 3,50,000 for Single & 50% of Rs. aircraft and other lender or
4,00,000 for Couple. contract
f. For foreign allowance Lease payments for aircraft 10% Advance
 75% of foreign allowance amount. Payment made by resident 5% Final
NOTE : person for gain from investment
Allowable reduction are deductible while calculating taxable income not while (life) insurance
calculating tax liability. Payment made against casual 25% Final
gain
# Medical tax credit
Payment of gain from 10% Advance
15% of approved (actual/submitted/claimed) medical expenses. commodity future market by an
Or, Maximum limit Rs 750 (Whichever is lowest) entity
Distribution of returns to an 5% Final Statement of total taxable income
individual by a mutual fund Assessable income frome employment (as calculated xxx
Premium paid to a non-resident 1.5% Advance above)
insurance Assessable income from business, if any xxx
Gain from disposal of securities Resident Advance Assessable income from investment, if any xxx
of an entity listed with SEBON individual 5% Total assessable income xxx
Resident entity Advance Less: Allowable Reductions :
10% others 25% - Retirement contribution xxx
Gain from disposal of securities Resident Advance - Donation xxx
of an entity not listed with individual 10%
SEBON Resident entity Advance Total taxable income xxx
15% others 25%
Less: Other reductions :
Gain disposal of building or 2.5% Advance
 Life insurance premium xxx
land of an individual owner for
(Actual premium paid or Rs 25,000, whichever is lower)
more than 5 years
 Health insurance premium
Gain on disposal of building or 5% Advance xxx
(Actual premium paid or Rs 20,000, whichever is lower)
land of an individual owner for
 Remote area exemption
less than 5 years xxx
(A = Rs 50,000; B = Rs 40,000; C = Rs 30,000; D = Rs
Gain on disposal of building or 10% Advance 20,000; E = Rs 10,000)
land to the entity and others  Pension exemption xxx
Payment made to a non-resident Different Final (25% of basic exemption i.e. Rs 3,50,000 or Rs 4,00,000)
person that is subject to or pension income (whichever is lower) xxx
withholding tax under section  Foreign allowance exemption (75% of foreign
87,88 or 89 allowance)
xxx
Payment by a resident person 10% Advance  Exemption for disabled tax payer
for the use of satellite, (50% of basic exemption i.e. 3,50,000 or 4,00,000)
bandwidth, optical fibre, xxx
telecommunication equipment Taxable income (for tax calculation purpose)
or electricity transmission live
is withheld at 10%
Computation of tax liability
Rent paid to natural person for 2.5% Final
First Rs 3,50,000 (single) 1% ......
vehicle and transport service
except relating to sole Next Rs 1,00,000 @ 10% ......
proprietorship business Next Rs 2,00,000 @ 20% .......
Specimen Next Rs 13,50,000 @ 30% .......
Computation of income from Employment, As per income Tax Act, 2058 Balance above Rs 20,00,000 @ 36% …….
Particulars Rs Rs Total tax liability xxx
- Salary and wages xxx Less : Tax Rebate
- Leave pay xxx  Advance tax paid (TDS) xxx
- Pay for overtime xxx  Rebate for women employee (10% of tax liability) xxx
 Medical tax credit (self) (15% of approved medical bill)
- Fees received xxx
Or, Maximum limit Rs. 750 (Whichever is lower) xxx
- Prizes and gifts related to employment xxx
- Bonus xxx  Foreign tax credit xxx
- Other facilities xxx xxx
Tax payable
- Commission receives xxx
- Deamess allowances xxx
- Cost of living subsistence xxx
- Rent allowances xxx
- Entertainment and transportation allowances xxx
Other personal allowances xxx
- Reimbursement of personal expenses xxx
- Payments for the individual’s agreement to any
condition regardingemployment xxx
- Redundancy or loss related payments xxx
- Other payments made in respect of employment
payment xxx
- Retirement payments and contribution to retirement xxx
fund xxx
- Amounts of vehicle facility
- Amount of services of house keeper, chauffeur, xxx
gardener, or other domestic assistants xxx
- Accommondaton facilities
- Any meal, refreshment or entertainment provided by xxx
employer xxx
- Amount of services related to drinking water,
Electricity, telephones, and the like utilities in xxx
respect of the payees
- Under paid interest by employee to employer for xxx
loan taken by the employee
- Other amounts to be included
Assessable income from employment xxx