“Employment” means any kind of past, present or future employment. Income from employment means income earned by providing one’s skill, labor, knowledge, experience, ability, talent etc.
A natural person shall, while computing the income to be earned from his employment and investment, maintain accounts on the cash basis for purposes of tax.
Income from employment includes following payments (Section 8(2)):
- Amount for wages, salary, leave, overtime work, fee, commission, prize, gift, bonus, and payment for other facilities,
- Payment for any personal allowance including amount for dear allowance, subsistence allowance, entertainment and transport allowance,
- Payment received for settlement of or reimbursement of expenses incurred by him/her or his/her associated person for personal purpose,
- Payment made for having given consent to any terms of employment,
- Retirement payment and retirement contribution including the amount deposited by the employer for that employee in the retirement fund,
- Other payments made in respect of employment
- In the case of a payment made by way of transferring money or property by any person to another person, amount equal to the market value of the transferred money or property,
- A motor vehicle used or made available for use for personal purposes of the recipient of payment in full or in part. Amount equivalent to 0.5% of basic salary of the recipient is included in the income.
- A building made available for the recipient of payment. Amount equivalent to 2% of basic salary of the recipient is included in the income.
- Contribution made to the retirement fund. Limit – a sum of Rupees Three Lacs or One-thirds of his/her assessable income, whichever is lower.
- Donation, gift given to an organization entitled to tax exemption . Limit – Rupees One Lac or five percent of the adjusted taxable
- Insurance Premium up to twenty thousands
|Particulars (FY 2074-75)||Tax Rate|
|If natural person is propritership form, 1% tax is not levied|
|C)||Upto Rs. 25,00,000||25%|
|D)||Above Rs. 25,00,000||35%|
|Rebate of 10% of tax amount is provided to single women|
|For non resident person, no tax rebate. Tax rate is 25%|
Income tax return must be filed by a natural person:
- If annual income exceeds Rs. 40,00,000
If there is more than one employer at one time (working in more than two places)
- If person has income from foreign source other than source from Nepal.
- If a person claims medical expenses and donation for deduction.