Kathmandu: Nepal’s 20 commercial banks collectively paid Rs 32.80 billion in income tax in fiscal year 2024/25, contributing 12.26 percent of the government’s total income tax collection of Rs 267.60 billion. Together, these banks reported a profit of Rs 71.51 billion during the year.
Kumari Bank emerged as the highest taxpayer in the banking sector, paying Rs 3.66 billion in income tax despite posting relatively lower profit due to higher loan loss provisioning. The bank alone accounted for 1.37 percent of the nation’s total income tax revenue. In the previous fiscal year 2023/24, Kumari Bank had paid only Rs 994.4 million in tax.
According to the bank’s unaudited financial statements, its taxable profit stood at Rs 5.78 billion, but loan loss provisions of nearly Rs 25 billion—far above the Rs 15 billion allowable as expenses—pushed the bank’s net profit down while keeping tax obligations high.
The Income Tax Act mandates banks and financial institutions to pay 30 percent income tax but allows them to deduct up to 5 percent of loan-loss provisioning as expenses. Provisions beyond that limit are treated as taxable income. This provision made Kumari Bank the largest taxpayer in the sector despite lower profits.
Following Kumari Bank, Nabil Bank paid the second-highest income tax at Rs 3.21 billion, up from Rs 2.39 billion the previous year. Other major contributors include Nepal Investment Mega Bank (Rs 2.85 billion), Global IME Bank (Rs 2.57 billion), and Everest Bank (Rs 2.53 billion).
At the other end, NIC Asia Bank paid the lowest among commercial banks at just Rs 551.5 million. Citizens Bank (Rs 545.1 million) and Himalayan Bank (Rs 573.8 million) were also among the smaller taxpayers. Prabhu Bank, which had paid Rs 2.63 billion the previous year, contributed only Rs 862.4 million this year after reversing its loan loss provisions.
While banks’ income tax payments surged compared to the previous year’s Rs 26.54 billion, interest tax revenue paid by depositors declined. With falling interest rates, the government collected only Rs 30.21 billion in interest tax in 2024/25, down from Rs 36.83 billion a year earlier.
In fiscal year 2023/24, the government had collected Rs 246.62 billion in income tax, of which 10.76 percent—or Rs 26.54 billion—came from commercial banks.
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