Kathmandu: Unmarried taxpayers in Nepal will now pay just a 1 percent income tax on annual earnings up to 1 million rupees.
This marks a significant shift from the previous threshold, where the 1 percent tax rate applied only to incomes up to 500,000 rupees. By doubling this minimum tax-free ceiling, the government has moved to provide substantial relief to individual earners, effectively shielding a larger portion of their income from higher tax brackets.
The practical impact of this policy change is substantial for middle-class professionals. Under the previous tax regime, an unmarried individual with an annual income of 1 million rupees was liable to pay 85,000 rupees in total income tax. With the implementation of the new budget, that same individual will now only be required to pay 10,000 rupees. This adjustment results in a direct annual saving of 75,000 rupees, significantly increasing the disposable income for individual taxpayers.
In addition to easing the burden on lower-income earners, the government has also moved to make the tax system more competitive for high-income individuals by reducing the maximum personal income tax rate by 10 percentage points.
The top tax bracket, which previously stood at 39 percent, has been slashed to 29 percent. This strategic reduction is intended to encourage tax compliance among high earners while fostering a more favourable environment for professional talent and investment within the country.
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