TDS and TCS Rates in Nepal

Provisions related to Tax Deduction at Source (TDS) u/s 87, 88, 88Ka and 89 and Tax Collection at Source u/s 95Ka

87(1)

Income from Employment

Rate as per by Schedule 1(1) to Income Tax Act, 2058

88(1)

·      Payment for Interest, Natural Resource, rent, royalty, service charge, commission, sales bonus, retirement payment, etc. having source in Nepal

·      Interest payment having source in Nepal

·      Meeting allowances, one-time payments for teaching, question paper preparation or checking papers

Note: Payer shall be resident and such payment shall have source in Nepal.

15%

1st Proviso to 88(1)

Payment of Retirement fund by the Government or Approved Retirement Fund based on Contribution exceeding Higher of Rs. 5,00,000 or 50% of such Payment

5%

2nd Proviso to 88(1)

Commission paid by Resident Employment Agency to Non Resident

5%

3rd Proviso to 88(1)

Payment for Lease of Aircrafts

10%

4th Proviso to 88(1)

Payment of service fees to Resident Person registered under VAT or involved in VAT exempted transactions

1.5%

5th Proviso to 88(1)

Rent payment having source in Nepal by resident person

10%

5Kath Proviso to 88(1)

Payment of rent to Vehicle Rental Service providers registered in VAT

1.5%

5Khath Proviso to 88(1)

Amount received by Natural Person as House Rent

No TDS

6th Proviso to 88(1)

Distribution of benefit by Mutual fund to

·      Natural Person

·      Non- natural person

5%

15%

7th Proviso to 88(1)

Payment by resident person for use of Satellite, Radio, Optical Fiber, Telecommunication equipment or electricity transmission Line

10%

9th Proviso to 88(1)

Payment by Resident BFIs of Interest in Foreign Currency on Loan from foreign banks or other financial institutions taken for investment in sectors specified by Nepal Rastra Bank

10%

10th Proviso to 88(1)

   

11th Proviso to 88(1)

Payment as Registration fee, academic fee and examination fee to foreign schools or universities

5%

12th Proviso to 88(1)

Payment of Interest on Deposits by Resident BFIs to Life Insurance Companies

5%

13th Proviso to 88(1)

Payment of Royalty to resident person for Literary Writings or creations

1.5%

88(2)

(Ka)                 Dividend

(Kha)              Benefit from Investment Insurance

(Ga)                Benefit from Unapproved Retirement Fund

Note: Payer shall be resident and such payment shall have source in Nepal.

5%

88(3)

Payment by Resident BFIs, Cooperatives or other entity issuing bonds or company listed under prevailing law to any natural person of any interest not in connection to operation of business but in connection to deposit, bonds, debenture, and government bonds

5%

88Ka(1)

Windfall Gains

25%

89(1)

Payment made to resident exceeding Rs. 50,000 for contract or agreement

1.5%

89(3)(Ka)

Payment to Non-Resident for contract or agreement

5%

89(3)(Kha)

Premium paid to Non-Resident Insurance company or Commission on reinsurance premium received from non-resident Insurance Company

1.5%

89(3)(Ga)

Other payments to Non-Resident Person

 

Note: This subsection shall not apply to payments made by Nepal Army, Nepal Police and Armed Police Force for purchase of weapons, bullet bales and telecommunication equipments

As per Written Notice by Department

89(3Ka)

Payment exceeding Rs. 50,00,000 for works carried out by Consumer Committees

1.5%

     

Click here to read the document in the Nepali Language.

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