Nepal’s Finance Minister, Dr. Prakash Sharan Mahat, presented the fiscal year 2080/81 budget in a recent parliamentary session. The budget emphasizes prosperity, poverty eradication, and sustainability with inclusivity as the central focus. To support these objectives, the government has introduced several new tax rules affecting individuals and businesses in Nepal.
Here are the key highlights of these new tax measures:
- Income Tax Rates:
- Individuals earning over 50 lakh rupees annually will be subject to a higher income tax rate of 39.15%.
- For individuals earning less than 50 lakh rupees annually, the income tax rates remain unchanged.
- Tax Exemptions:
- Tax exemptions up to Rs. 5 lakhs for singles and Rs. 4.5 lakhs for couples continue to apply.
- New Taxes:
- Manpower companies sending workers abroad will be liable for a 1% tax.
- Individuals traveling abroad from Nepal will be required to pay an additional 5% tax.
- Students going abroad for studies will be subject to a 3% tax.
- Companies sending employees on foreign tours must deduct taxes in advance.
- Telecommunication service providers can charge a 10% telecommunication service fee.
- A 2% digital service tax applies to non-resident persons providing digital services to consumers in Nepal, with exceptions for transactions below Rs. 2 million per annum.
- Income from providing shipping, air, or telecom services, postage, satellite, and optical fiber projects will be taxed at 5%. Income from providing these services through Nepal’s territory will be taxed at 2%.
- Small businesses meeting specific criteria will be exempt from tax.
The new tax rules for the fiscal year 2080/81 are designed to stimulate economic growth, promote tax compliance, and align with the government’s development goals. Individuals with higher income will face increased tax rates, while tax exemptions for lower-income individuals and couples remain intact. Various new taxes have been introduced for manpower companies, foreign travel, students studying abroad, and digital services.
Staying informed about these changes and seeking guidance from tax professionals will be essential for individuals and businesses to ensure proper compliance with the new tax regulations.
What do you think of these change in rules ? comment your opinion
Note: The information is based on available sources and may be subject to updates. For the latest information, it is advisable to refer to official government sources or consult tax professionals.