Tax Rules for Ride-Hailing & Delivery Partners (Pathao, InDrive) in Nepal

If you drive or deliver for Pathao, InDrive, or a similar app in Nepal, 2026 brought the biggest tax change this sector has seen: a new 5% VAT collected directly by the platforms on every ride and delivery, effective 17 July 2026. This guide explains whether your earnings count as business income, how the new VAT actually works, what presumptive tax option is available to you as a gig worker, and what records you should be keeping either way.

Is Driver/Rider Income Taxable as Business Income?

Yes. Whether you drive a few hours a week between other jobs or do it full-time, the money you earn through a ride-hailing or delivery app is business income under the Income Tax Act, 2058 — not a gift, not a reimbursement, and not exempt simply because it comes through an app instead of a shopfront. You are running a personal transport or delivery service, and that income must be declared, either under the presumptive tax scheme (if you qualify) or under normal income tax rules if your turnover is higher.

This matters because many drivers assume that since the platform takes a commission and now deducts VAT, their own tax obligation is automatically settled. It isn't — VAT and income tax are two separate things, covered in the next two sections.

The New 5% VAT on Ride-Hailing — Who Actually Bears It?

Under a provision that took effect on 17 July 2026, the Inland Revenue Department (IRD) now requires ride-sharing platforms such as Pathao and InDrive to collect 5% VAT on transportation and delivery services booked through their apps. Critically, the responsibility to collect this VAT sits with the platform, not with the individual driver — the platform deducts it at the time of each transaction and is required to deposit the collected amount with the concerned revenue office, generally by the 25th of the following month.

What remains genuinely unsettled, even as this rule takes effect, is exactly what the 5% is calculated on — the full fare paid by the passenger, or only the commission the platform retains. Industry commentary published around the rollout has flagged this as an open implementation question. There was also a related proposal for a separate 1% withholding tax on driver earnings discussed alongside the VAT measure; whether and how that applies depends on the final rules your platform confirms, so check your latest payout statement or the platform's official communication rather than assuming.

The Presumptive Tax Option for Gig Workers

Separately from the platform-level VAT, you as an individual driver still need to handle your own income tax. If you are a resident individual with only Nepal-source income, and your annual turnover from driving/delivery stays under roughly NPR 30 lakh with taxable business income under about NPR 3 lakh, you can generally opt into the presumptive tax (D-01) scheme — paying a small fixed annual amount based on your local body classification instead of filing a full profit-and-loss return. Under current rules, a year with genuinely zero transactions attracts zero presumptive tax.

Most part-time and even many full-time individual drivers fall comfortably within this turnover band, which makes the presumptive scheme the simplest compliance route for the majority of gig drivers. If your combined earnings across multiple apps push you past the threshold, you move into the turnover-based or normal income tax regime, where proper income and expense records become necessary.

Recordkeeping Tips for Drivers

Even under the simplified presumptive scheme, keeping basic records protects you if the IRD ever asks questions, and becomes essential the moment your earnings push you into normal filing:

• Download and save your weekly/monthly earnings statements from each app you drive for
• Keep a simple log of total trips, gross fare collected, and platform commission deducted
• Save fuel, maintenance, and vehicle insurance bills if you plan to claim them as expenses under normal filing
• Track any VAT shown as deducted on your payout statements separately from your net earnings
• If you drive for more than one platform, keep each platform's records separate before combining them for your return
• Renew your PAN details and keep them consistent across every platform you register with

What This Means Practically for a Nepali Driver

In practice, most individual drivers will see the 5% VAT reflected as a deduction on their payout statement without needing to do anything themselves for that part — the platform handles collection and deposit. Your own job is to separately track your total earnings for the year, decide whether you qualify for the presumptive scheme, and file (or pay the fixed amount) on time. Treat the platform's VAT deduction and your own income tax filing as two different checkboxes, not one.

Frequently Asked Questions

Q1. Does the platform deduct tax automatically?

Partially. As of 17 July 2026, platforms like Pathao and InDrive are required to deduct 5% VAT on each ride or delivery transaction and deposit it with the revenue office on your behalf — that part is automatic. However, your own income tax obligation (whether under the presumptive scheme or normal filing) is still your personal responsibility and is not automatically filed or paid by the platform.

Q2. Do I need to register for VAT myself as a driver?

Generally, individual drivers are not the ones registering for or charging VAT — the platform is the entity collecting the 5% VAT on transactions under the new rule. Your own registration concern is typically on the income-tax side: getting a PAN and deciding between the presumptive scheme and normal filing based on your turnover.

Q3. What if I drive for more than one platform (Pathao and InDrive both)?

You still combine your total earnings across all platforms when assessing your turnover for presumptive tax eligibility or normal filing. Each platform may deduct VAT on its own transactions independently, but your income tax position is based on your combined earnings as one individual taxpayer.

The 5% VAT on ride-hailing is still a very fresh rule, and some implementation details — like the exact fare base it applies to — are likely to be clarified further as platforms and the IRD work through it. What won't change is your own responsibility to track your earnings and file your income tax correctly, whether that's a small fixed presumptive amount or a full return as your driving income grows.