Before you file, run payroll, or plan next year's budget, it helps to see the old and new Nepal income tax slabs side by side. Budget 2083/84 (2026/27) replaced Nepal's six-slab, marriage-differentiated tax table with a single, simplified five-slab structure — and the changes are large enough that most taxpayers will notice a real difference in take-home pay. Below is a full rate-by-rate comparison between FY 2082/83 and FY 2083/84, now confirmed as law after President Ram Chandra Paudel certified the Finance Bill 2083 on 14 July 2026.
Table: Rate-by-Rate Comparison
| FY 2082/83 (Old) | Rate | FY 2083/84 (New) | Rate |
|---|---|---|---|
| Up to NPR 5,00,000 | 1% | Up to NPR 10,00,000 | 1% |
| Next NPR 2,00,000 | 10% | Next NPR 5,00,000 | 10% |
| Next NPR 3,00,000 | 20% | Next NPR 10,00,000 | 20% |
| Next NPR 10,00,000 | 30% | Next NPR 15,00,000 | 27% |
| Next NPR 30,00,000 | 36% | Above NPR 40,00,000 | 29% |
| Above NPR 50,00,000 | 39% | — | — |
Note: married couples under FY 2082/83 had a marginally wider first slab of NPR 6,00,000 instead of NPR 5,00,000. This distinction has been fully removed for FY 2083/84 — one schedule now applies to everyone.
Exemption Threshold: 5 Lakh → 10 Lakh Explained
The single biggest change is the doubling of the lowest-rate band. Previously, only the first NPR 5,00,000 of taxable income enjoyed the minimal 1% rate before jumping to 10%. Now that low-rate band stretches all the way to NPR 10,00,000. This matters enormously for middle-income earners: someone earning NPR 9,00,000 a year, who previously crossed into the 10% and 20% brackets, now pays just 1% on their entire taxable income.
Top Rate Cut: 39% → 29% — What It Means in Real Savings
High earners see the most dramatic percentage-point relief, even though the exemption change benefits the largest number of taxpayers overall. Consider someone with NPR 15,00,000 in annual taxable income: under the old structure their tax bill was approximately NPR 2,35,000; under the new structure it drops to NPR 60,000 — a reduction of roughly NPR 1,75,000, driven mostly by the widened 1% band rather than the top-rate cut alone. For ultra-high earners well above NPR 40 lakh, the 10-percentage-point cut on the top slab compounds these savings further.
Corporate Tax — Did It Change? (No)
Budget 2083/84's headline reforms are targeted squarely at personal income tax. Standard corporate tax rates — generally 25% for most industries and 30% for specific sectors such as banking, financial institutions, and certain other regulated businesses — remain unchanged this fiscal year. Business owners should not assume any automatic relief on the company side just because personal rates dropped.
VAT — 13% Unchanged, New Digital Payment Discount
Nepal's standard Value Added Tax rate stays at 13%, unchanged by this budget. However, the Finance Bill 2083 does introduce more flexibility for the government to prescribe different VAT rates for specific goods or services through Gazette notification, provided such rates do not exceed the standard 13% ceiling — alongside a discount incentive for transactions settled through digital payment channels, intended to encourage formal, traceable commerce.
Who Benefits Most: Salaried vs Business Owners?
Salaried employees in the NPR 5 lakh to NPR 25 lakh range arguably see the most noticeable year-on-year change, since a large portion of their income shifts from the 10%–20% brackets down into the 1% band. Business owners and self-employed professionals benefit too, but proportionally less dramatically, since their corporate or presumptive tax treatment (where applicable) did not change. High-net-worth individuals with income concentrated above NPR 40 lakh benefit from both the widened lower band and the reduced top rate simultaneously, making them — in percentage terms — one of the biggest beneficiary groups of this reform.
Your Effective Tax Rate — Work It Out
Your "effective tax rate" is simply your total tax payable divided by your total taxable income — and it will always be lower than your top marginal rate because of how progressive slabs work. Use the worked examples from the sample calculations above as a starting template, then adjust for your own eligible deductions (SSF/EPF/CIT contributions, life and health insurance premiums, and other allowable exemptions) before applying the new slabs to get an accurate personal figure.
Disclaimer: This article is for general information only and does not constitute legal or tax advice. Tax rules can change and individual circumstances vary — please consult an ICAN-registered Chartered Accountant (CA) before making any financial or tax-related decisions.
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