TDS Rates Nepal 2026 (FY 2083/84): 1.5% vs 15% & Complete Rate Card

Quick Answer (TL;DR)

FY 2083/84 (Shrawan 2083–Ashad 2084, effective 16 July 2026): service with VAT invoice = 1.5% TDS, service on PAN-only bill = 15%, rent = 10%, bank interest to an individual = reported 6% final (reported rise from 5% — confirm current IRD circular), dividend = 5% final, contract > Rs 50k = 1.5%. The first two are adjustable/advance (claimed in your annual return); interest/dividend are reported final (settled at source — confirm circular).

What Is TDS in Nepal?

Tax Deducted at Source (srotma kar katti) is the withholding mechanism under the Income Tax Act 2058 where the payer withholds a % while paying and deposits it to the IRD on the payee’s behalf. It is the payee’s tax — the payer is just the withholding agent.

• Salary: employer withholds monthly per the FY 2083/84 unified progressive slab (1% to Rs 10L → 10% to Rs 15L → 20% to Rs 25L → 27% to Rs 40L → 29% above; no separate single/couple slab, as of October 2026 — see our salary-tax guide)
• Business payments: rent, service/consultancy, royalty, interest, dividend, commission, contract, carriage/vehicle rent
• Legal base: Sec 88 (withholding on payments), Sec 87/88A/89 (non-resident), plus annual Finance Act updates

Final vs Adjustable (Advance) — The Key Distinction

Check the “Final or adjustable” column in the rate card below before deciding whether to file for a refund.

Complete TDS Rate Card — FY 2083/84 (Effective 16 July 2026)

Verify each rate against the current IRD withholding circular on ird.gov.np before applying — Finance Acts revise specific lines each year. Figures below as of October 2026; hedged lines are reported, not independently verified.

Service Fees: 1.5% vs 15% — VAT Invoice vs PAN Bill

The payer reads the invoice — that single detail picks the rate:

Example: Rs 100,000 service fee → VAT provider: Rs 1,500 withheld, Rs 98,500 paid; PAN-only provider: Rs 15,000 withheld, Rs 85,000 paid. Both providers reconcile the withheld amount in their ITR.

Rent: 10% and When Municipality Collects It

Rent for land/building/fixtures with source in Nepal is 10% withholding under Sec 88(1) Proviso 5. A common confusion:

• Entity pays rent (company/registered business): the payer withholds 10% and deposits to IRD via e-TDS (adjustable).
• Individual pays rent directly for a private residence to another individual: often no federal TDS — instead a 10% municipal rent tax is collected at the ward/municipality (check your local Economic Act). The rate looks identical but the collector is different.
• Vehicle rent: use 1.5% if the provider is VAT-registered, otherwise 2.5% (carriage).

Interest & Dividend: 6% / 15% / 5%

Because individual bank interest is commonly final, you generally cannot claim a refund even if your total income is below Rs 10 lakh — the reported 6% is gone at source (confirm final treatment in current circular).

Who Must Withhold & When?

• Withholding agent: any resident person (business, entity, or individual carrying on business) making a Sec 88 payment — not just companies.
• Trigger: at the time of payment, not invoice date.
• Threshold for contracts: 1.5% applies to contract/agreement payments over Rs 50,000 per contract.
• PAN requirement: always obtain the payee’s PAN — PAN-only service billed at 15% cannot be re-rated to 1.5% after payment.

Deposit, e-TDS Return & Certificate

Two Worked Examples

1) Freelancer (PAN-only) bills Rs 80,000 for a design sprint

• Client withholds 15% = Rs 12,000, pays you Rs 68,000, deposits Rs 12,000 to IRD by the 25th next month, and sends you the e-TDS certificate.
• At year-end you file ITR on total professional income; Rs 12,000 is credited as advance tax paid. If your final tax < total TDS withheld, you get a refund.
• Same work with a VAT invoice: client withholds only Rs 1,200 (1.5%), you receive Rs 78,800 — a Rs 10,800 cash-flow difference the same month.

2) Company rents office for Rs 60,000/month

• Company withholds 10% = Rs 6,000, pays landlord Rs 54,000, deposits Rs 6,000, and issues e-TDS certificate.
• Landlord claims Rs 6,000/month ×12 as credit in annual return if the rent is adjustable; if it was final municipal rent-tax path, no IRD credit applies.

Late Deposit & Non-Filing Penalties

Common Mistakes to Avoid

• Using an earlier-FY 5% for individual bank interest without checking — reported FY 2083/84 figure is 6% final (confirm current circular)
• Applying 1.5% without checking for a valid VAT invoice — PAN-only bills are always 15%
• Treating rent TDS and municipal rent-tax as interchangeable — collector and credit path differ
• Forgetting the commonly cited Rs 50,000 floor for contract TDS vs no floor for pure service charge (confirm circular)
• Not issuing the e-TDS certificate within 15 days (per IRD notice — verify) — payee cannot claim credit without it
• Withholding 10% on a Rs 9 lakh land deal — commonly cited CGT floor is Rs 10 lakh (reported — confirm Finance Act 2083), but service/rent TDS has no such floor
• Missing the commonly cited 25th-of-next-Nepali-month deposit deadline (per IRD notice — verify)

Withholder & Payee Checklist

If you pay rent/service/interest/dividend

• Collect payee PAN + verify VAT status (VAT invoice = 1.5%, otherwise 15%)
• Apply correct rate from the FY 2083/84 card above; confirm if reported 6% interest applies (individual final — verify circular)
• Withhold at payment, deposit by 25th next Nepali month (per IRD notice — verify), file e-TDS, issue certificate within 15 days (per IRD notice — verify)
• Keep contract/vehicle-rent distinction: VAT vehicle =1.5%, non-VAT =2.5%

If you receive a payment with TDS

• Check whether it is final (commonly interest reported 6% / dividend 5% — no return credit if final confirmed) or adjustable (service/contract — keep the e-TDS certificate); confirm in current circular
• Reconcile all e-TDS credits in your ledger before filing ITR; claim advance credit for 1.5%/15% blocks
• For PAN-only freelancers near Rs 30 lakh, model whether voluntary VAT registration (→1.5% ) beats 15% monthly

Official Sources & Final Note

Sources: Inland Revenue Department (ird.gov.np) — current-year withholding circular + Sec 88 provisos, and the federal Finance Act 2083 (effective 16 July 2026). For salary slabs see the FY 2083/84 unified schedule (1/10/20/27/29%, as of October 2026); for land CGT see Finance Act 2083 (reported 10%/7.5% — confirm current text).

Last updated: September 26, 2026. Rechecked as of October 2026. Withholding rates change with each Finance Act. Verify the current circular on ird.gov.np → Notices before withholding. SolutionsNepal is an educational guide, not a tax advisor.