Withholding Tax (TDS) & Advance Tax (FY 2076-77)

1. Withholdings Tax

1.1 Tax Deduction at Source (TDS)
# Nature of Transaction TDS Rate
1 Windfall gains
Windfall gain tax of 25% will be exempted for the reward up to Rs 500,000 received on behalf of contribution in the field of literature, art, culture, sports, journalism, science and technology and general administration
25%*
2 Payment of rent except house rent to natural person
In case of house rent other than payment to natural person, additional municipality tax to be included and deposited with the local ward/municipal office (2% in case of Kathmandu and Lalitpur Municipal Authorities)
Payment of rent to natural person
The amount obtained by natural person towards the house rental has been excluded from the definition of “Rent”. Hence, 10% withholding rate on rental payment doesn’t apply to the house rental payment to natural person.
The 10% tax (in case of Lalitpur and Kathmandu municipal authority) on house rental payment to natural person should be deposited in respective office.
10%
3 Payment for vehicle hire to VAT registered person 1.5%
4 Payment for freight relating to carriage of goods 2.5%
5 Profit and gain from transaction of commodity future market 10%
6 On returns to be distributed by Mutual Fund:
- Natural person
- Other than Natural Person

5%
15%
7 On Dividend paid by the resident company and partnership firm
- To Resident person
- To Non-resident Person
5% for both
8 On payment of gain from investment insurance 5%
9 On payment of gain from unapproved retirement fund 5%
10 On payment of interest or similar type having source in Nepal by Resident Bank, Cooperatives, financial institutions or debenture issuing entity, or listed company
- In case of payment made to natural person [not involved in any business activity]
- In case of payment made to entities

5%
15%
11 On payment of premium to non- resident insurance company On payment of commission relating to reinsurance premium to non- resident insurance company 1.5%
12 On payment exceeding Rs 5 million made towards the works done through the consumer committee 1.5%
13 Contract payments exceeding Rs 50,000 1.5%
14 Payment of consultancy fee/ for procurement of services: - by resident person against VAT invoice - by resident person against Non-VAT invoice
1.5%
15%
15 Payment of contract to Non-Resident person for repair of aircraft & other contract 5%
16 On payment for use of Satellite, Bandwidth, Optical fiber, telecommunication equipment or electricity transmission by resident person irrespective of its location 10%
17 Payment for question setting, answer evaluation 15%
18 Gain on disposal of Interest in any resident entity (listed)
- To resident natural person
- To resident entity
- Others (including non-resident person)

Gain on disposal of Interests in any resident entity (unlisted)
- To resident natural person
- To resident entity
- Others (including non-resident person)

5%
5%
25%


10%
15%
25%
19 Gain on Disposal of land or land & building:
- Owned by individual for over 5 years
- Owned by individual for up to 5 years
- Owned by person other than individual
The land or land and building or building disposed at proceeds less than Rs 1,000,000 doesn’t fall under the category of non-business chargeable assets (NBCA). These taxes are withheld by the Land Revenue office on sale amount.

2.5%
5%
1.5%
20 On import of items under
- Custom Banding Category 1 (Live Animals),
- Custom Banding Category 3 (Live, Fresh and Iced Fishes)
- Custom Banding Category 6 (fresh flowers),
- Custom Banding Category 7 (Fresh vegetables, potato, onions, dry vegetables, garlic, baby-corn),
- Custom Banding Category 8 (Fresh Fruits)
5%
21 On import of items under
- Custom Banding Category 2 (Meat),
- Custom Banding Category 4 (Dairy products, egg, honey),
- Custom Banding Category 10 (kodo, phappar, junelo rice and kanika)
- Custom Banding Category 11 (Maida, aatta and pitho)
- Custom Banding Category 12 (medical herbs and sugarcane)
- Custom Banding Category 14 (plant produces)
2.5%
1.2 Final Withholding Payments
# Nature of Transaction Withholding Rates
1 On Dividend paid by the resident company and Partnership firm
- To Resident person
- To Non- resident Person
5% for both
2 Payment of vehicle rent and freight made to resident natural person other than sole proprietor 10%
3 On payment of gain in investment insurance by resident natural Person 5%
4 On payment of gain from unapproved retirement fund 5%
5 On payment of interest or similar type having source in Nepal to natural person [not involved in any business activity] by Resident Bank, financial institutions or debenture issuing entity, or listed company 5%
6 Windfall gains 25%
1.3 Non-Applicability of TDS
# Nature of Transaction
1 Interest income from deposit under 'Micro Finance Program', 'Rural Development Bank', 'Postal Saving Bank & Co- operative (u/s11(2)) in rural areas is exempted from tax Up to Rs 25,000
2 Payment made by natural person relating to activities other than business activities
3 Payment for articles published in Newspaper
4 Interest payment to resident bank and other financial institutions
5 Interregional interchange fee paid to credit card issuing bank
6 Interest or fees paid by GON under bilateral agreement
7 Tax Exempt payment or TDS deductible u/s 87
8 Dividend or interest paid to Mutual Fund/ Collective Investment
9 Incentive on payment made using electronic means against purchase of goods or services under section 25(1kha) of VAT Act

2. Advance Tax

2.1 Advance Tax to Normal taxpayer
# Particulars Installemtn
1 By Poush end 40% of estimated tax
2 By Chaitra end 70% of estimated tax
3 By Ashad End 100% of estimated tax
2.2 Advance Tax to taxpayer based on turnover
# Particulars Installment
1 By Poush end Tax at the rate specified on actual transaction up to 20th of Poush
2 By Ashad end Remaining Amount of Tax calculated at the rate specified on estimated transaction amount at Ashad end based on actual transaction up to 20th of Ashad.