Tax Deducted at Source (TDS) rates in Nepal for 2073/2074 (UPDATED)

Tax Deducted at Source (TDS) rates, rules and updates of Nepal for 2073/2074

TDS WITHHOLDING IN OTHER PAYMENTS

S.N

Nature of Transaction

2072/2073

2073/2074

A Interest income from deposit up to Rs 10000 under ‘Micro Finance Program’, ‘Rural Development Bank’, ‘Postal Saving Finance Program’, ‘Rural Development Bank’, ‘Postal SavingBank’ & Co-Operative (u/s-11(2) in rural areas) Exempt from tax Exempt from tax
B Wind fall gains 25% 25%
  Wind fall gains from Literature, Arts, Culture, Sports, Journalism,Science & Technology and Public Administration amountreceived up to 5 lacs Nil Nil
C Payment of rent by resident person having source in Nepal  10% 10%
D Payment of Rent by Resident person having source in Nepal if the Bill raised is VAT bill 1.50% 1.50%
E Profit and Gain from Transaction of commodity future market 10% 10%
F Profit and Gain from Disposal of Shares:    
In case of Individual    
Listed Shares 5% 5%
Non Listed Shares 10% 10%
Others    
Listed Shares 10% 10%
Non Listed Shares 15% 15%
G On dividend paid by the resident entity. 5% for both 5% for both
  To Resident Person    
  To Non Resident Person    
H On payment of gain in investment insurance 5% 5%
I On payment of gain from unapproved retirement fund 5% 5%
J On payment of interest or similar type having source in Nepal to natural person [ not involved in any business activity ] by Resident Bank, financial institutions or debenture issuing entity,
or listed company
5% 5%
K Payment made by natural person relating to business or other payments relating to house rental except house rent No TDS No TDS
L Payment for articles published in newspaper, question setting,answer evaluation No TDS No TDS
M Interest payment to Resident bank, other financial institutions No TDS No TDS
N Interregional interchange fee paid to credit card issuing bank No TDS No TDS
O Interest or fees paid by Government of Nepal under bilateral No TDS No TDS
P On payment of general insurance premium to resident insurance company No TDS No TDS
Q On payment of premium to non-resident insurance company    
R Contract payment exceeding Rs 50000 for a single contract wtith in 10 days. 1.50% 1.50%
S Interest & Dividend paid to Mutual Fund No TDS No TDS
T Payment of consultancy fee    
  to resident person against VAT invoice 1.50% 1.50%
  to resident person against non VAT invoice 15% 15%
U Payment on contract to Non Resident Person    
  On service contract 15% 15%
  On repair of aircraft & other contract 5% 5%
  In cases other than above as directed by IRD.    
V Gain on disposal of Interest in any resident entity (both listed or unlisted) exchange (Taxable amount is calculated under section 37)    
To resident natural person 10% 10%
To others including non resident 15% 15%
W TDS deducted on payment of dividend made by Mutual fund to natural Person is final withholding Tax. 5% 5%
X TDS on Payment by Resident Person for utilizing services related with Satellite, Bandwidth, Optical Fiber, equipment relating to telecommunications or electric transmission 15% 10%
Y Dividend Paid by Partnership Firm to its Partners 5% 5%
It is now Final Withholding
       
  INCOME FROM INVESTMENT    
S.N Particulars 72/73 73/74
1 INDIVIDUAL    
Tax withholding on capital gain for natural person on transaction exceeding Rs 3 million (to be made by land revenue office at the time of registration)    
disposal of land or land & building owned for more than 5 years up to 10 years    
disposal of land or land & building owned for less than 5 years    
2 Corporate    
Income from disposal of non business chargeable assets (Capital Gain) Normal Rate Normal Rate
(However 10% TDS is deducted by Land Revenue Office)

OTHER IMPORTANT POINTS FOR TDS IN NEPAL THAT ARE WORTH REMEMBERING

– In case of Disposal of Interest on entity as per section 37 (2Kha), company registrar shall update the register only after receiving the evidence for payment of TDS applicable on capital gain from such disposals. (New)
– Infrastructure tax at the rate of Rs.5/ltr is levied in addition to all applicable taxes on import of petrol, diesel, and aviation fuel. (New)


– Any person and entity licensed to operate casino during the F.Y. 2073/74 shall be liable to pay 30 million rupees as royalty, furthermore, person operating the same business only using modern machines and equipment shall be liable to pay 7.5 million rupees as royalty. (New)


– In case of disposal of land and building by person other than mentioned in section 95(ka), Malpot office during the registration shall collect advance tax equal to 10% of gain on such disposal. (New)


– Presumptive Tax Rates has been changed as follows: (New)
a. Person dealing with Cigarette, Gas etc. and having profit margin up to 3 percent is liable to pay tax at 0.25% of Turnover instead of 0.5% of Turnover.
b. Similarly in case of businesses other than Cigarette, Gas etc. 0.75 percent instead of 1.5 percent of Turnover.
c. In case of Service Industry 2 percent (no Change).


– Natural Person whether Resident or not having Taxable Income exceeding Rs. 40 Lakhs is compulsorily required to submit Income Tax Return within the time limit prescribed by Income Tax Act.


– Person contributing any amount to Prime Minister Relief Fund or National Reconstruction
Fund established by Government of Nepal during any Income Year, are entitled to deduct such amount while calculating taxable income for such Income Year.

12 thoughts on “Tax Deducted at Source (TDS) rates in Nepal for 2073/2074 (UPDATED)

  1. Govinda Pandey

    I need to know about the rate of TDS on govt. office rent.While asking to others, they are also confusion on either 10% or 15% of monthly rent amount.

  2. zhang wei

    Dear Sir,

    Please confirm the meaning of “other contract” in clause “U” mentioned above is inclusive of the international EPC contract loaned by World Bank under NEA or exclusive ?

    I thought that EPC contract should be exlusive, am i right?

    Thanking for your kindly reply!

    Best regards,

  3. Pankaj sharma

    could you please let me know what will be the taxes to be made from a company. In other words id ABC company ‘s profit is Rs,1000000.00 ( ten lakhs) and if the company’s share holder want s this profit tb divided between themselves as per their shares in the company, whjat percentage of taxes have to bepaid or deucted.

  4. Basudev Upadhyay

    Dear Sir,
    I am trying to do a international consultancy as a lead consultant and Have a partner from France whom I awe some percentage of the cost.
    I would be grateful to understand if you could help me understand the taxation rules for this. say total project fund is $50000 and I owe the consultant $30000 and I need to send the amount from Nepal.

    Thank you

    1. Suman Basnyat

      Basudev ji;
      The consultancy fee is subject to 15% TDS and 13% reverse VAT. Reverse VAT is which you can adjust with your other business invoice of VAT transaction. You will have to present all your contract with the company along with TDS and reverse VAT submission evidence and present it for NRB approval thru the bank you intend to transact.

  5. Nitesh

    Point (R) says Contract payment exceeding Rs 50000 for a single contract within 10 days 1.5% TDS. Is it applicable if the contract payment is related to service registered in PAN only??

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