Friday 6th December 2024
With more aspirations and strong will to tap the additional economic potential, the Nepal Government presented its new budget on May 28, 2020.
Finance Minister Yuba Raj Khatiwada presented the NPR 1.47 billion budget for FY 2077-78 (2020-21), with a slew of measures including sector-wise priorities and policy-level decisions.
Out of the total budget for the new fiscal, NPR 949 billion has been categorized as current expenditure, followed by NPR 353 billion as capital expenditure and NPR 173 billion as the financial provisioning.
With the due emphasis on safe and secure social welfare, the government continued to focus on infrastructure development across multiple areas.
“Enhance the state’s role in public welfare by fulfilling requirements that are considered fundamental rights and basic necessities of the citizen,” reads one of the budget priorities.
Taxation is one critical area that is closely related to the public and the nation’s economic development.
Under the new revenue policy for FY 2020-21, the government proposed to have a future-oriented, transparent and business-friendly taxation system.
For Individuals
| Income Level (NPR) | Tax Rate (FY 2020-21) | Taxable Amount |
| Up to 4 Lakh | 1% | NPR 4,000 |
| Additional 1 Lakh | 10% | NPR 14,000 |
| Additional 2 Lakhs | 20% | NPR 54,000 |
| Next 1,300,000 | 30% | NPR 444,000 |
| Additional Tax: Above 2,000,000 | 36% | NPR 624,000 |
| Income Level (NPR) | Tax (FY 2020-21) | Taxable Amount |
| Up to 450,000 | 1% | NPR 4,500 |
| Additional 100,000 | 10% | NPR 14,500 |
| Additional 200,000 | 20% | NPR 54,500 |
| Next 1,300,000 | 30% | NPR 429,500 |
| Additional Tax: Above 2,000,000 | 36% | NPR 609,500 |
| Source of Income | Tax (2020-21) |
| Normal transactions | 25% |
| Through shipping, air or telecom services, postage, satellite and optical fiber project | 5% |
| Shipping, air or telecom services through the territory of Nepal | 2% |
| Repatriation of profit by Foreign Permanent Establishment | 5% |
| Type of Business | Normal Tax Rate | Rebate | Applicable Tax Rate |
| Normal Business | 25% | – | 25% |
| Special Industry under section 11 for the whole year | 25% | 20% | 20% |
| Constructing and operating ropeway, cable car, railway, tunnel or sky bridge | 25% | 40% | 15% |
| Constructing and operating roads, bridges, tunnel, railway, and airports | 25% | 50% | 12.5% |
| Having export income from a source in Nepal | 25%*** | 20% | 20% |
| Banks and financial institutions | 30%*** | – | 30% |
| General Insurance | 30%*** | – | 30% |
| Engaged in tobacco, alcohol and related products | 30%*** | – | 30% |
| Telecom and Internet Services | 30%*** | – | 30% |
| Capital market, securities, and related | 30%*** | – | 30% |
| Type of employment provided | Tax Concessions (FY 2020-21) |
| Direct employment to 100 or more Nepalese citizens throughout the year | *10 % of AR/NR |
| Direct employment to 300 or more Nepalese citizens throughout the year | *20% of AR/NR |
| Direct employment to 500 or more Nepalese citizens throughout the year | *25% of AR/NR |
| Direct employment to 1,000 or more Nepalese citizens throughout the year | *30% of AR/NR |
| Concessions to special industries, by geography | Tax Concessions (FY 2020-21) |
| Very underdeveloped areas | 90% of the AR (for 10 yrs from the date of commercial production) |
| Undeveloped areas | 80% of the AR (for 10 yrs from the date of commercial production) |
| Less developed areas | 70% of the AR (for 10 yrs from the date of commercial production) |
Likewise, there are concessions to industries by investment amount, presence in SEZs, and special areas.
| CC | Tax Amount |
| Up to 125 cc | NPR 2,800 |
| 126 cc – 160 cc | NPR 4,500 |
| 161 cc – 250 cc | NPR 5,500 |
| 251 cc – 400 cc | NPR 9,000 |
| 401 cc – 650 cc | NPR 20,000 |
| Above 651 cc | NPR 30,000 |
| CC | Tax Amount |
| 350 Watt to 1000 Watt | NPR 1500 |
| 1001 watt to 1500 watt | NPR 2000 |
| 1501 watt and higher | NPR 3000 |
| CC | Tax Amount |
| Up to 1000 cc | NPR 21,000 |
| 1001 cc – 1500 cc | NPR 23,500 |
| 1501 cc – 2000 cc | NPR 25,500 |
| 2001 cc – 2500 cc | NPR 35,500 |
| 2501 cc – 2900 cc | NPR 41,000 |
| Above 2901 cc | NPR 58,500 |
| Goods | Excise Duty |
| Pan masala | NPR 650/kg |
| Flavored areca (supari) with tobacco | NPR 225/kg |
| Edible Fruit and Nuts; Peel of Citrus Fruit or Melons | 5% |
| Tobacco and Manufactured Tobacco Substitutes | NPR 650/kg |
| Hukkah Flavor | NPR 1000/kg |
| Essential Oils and Retinoids; Perfumery, Cosmetic or Toilet Preparations-others | 10% |
| Wire of iron or non-alloy steel | NPR 1650/MT |
Students going abroad for higher education at 2% of the foreign exchange facility availed from Banking and Financial Institutions (BFIs)
Petrol and diesel imports into Nepal will be subjected to this tax at Rs. 10 per liter for development at the customs point
Petrol and diesel sales within Nepal will be paying these taxes at NPR 1.5 per liter
New connections or ownership transfer on fixed-line services will be charged Rs 500 per connection, and mobile phone recharges will pay an additional 2% of the total value
Licensed casino operators, per license, will pay NPR 40 million per annum and operating modern machine and equipment will pay NPR 10 million per annum
In Conclusion
There are also other tax rates, provisions and concessions under different taxation sections for individuals and entities across varying levels of income.
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