What is Tax ?

Tax is a obligatory/compulsory charge and a failure to pay, along with evasion of or resistance to taxation is punishable by law.

* Collected from and Collected by 

Tax is levied to finance the government activities

 Different type of tax base on Charge


Direct Tax 

A direct tax is one that the tax payer pays directly to the government. There taxes cannot be shifted to any other person or group eg. income tax, house taxes, property tax

Indirect Tax 

An indirect tax is one that can be passed on or shifted to another person or group by the person or business that owes it. eg. vat, custom duty, excise duty

Types of tax on  Based on pattern of tax rate

Progressive tax

The proportion of the tax increases when income increases resident  natural, persons are taxed at progressive rate in Nepal from 0%, 10 %, 30 %, 36 %

Regressive tax

A tax imposed in a such a manner that the tax rate decreases as the amount to taxation increases, vehicle tax, business presumptive taxes are example of this category

Proportional tax or corporate tax

Whole taxable income is taxed at same rate in Nepal we have 20 %, 25 % and 30 % corporate tax rate in case of entity.


Overview of Tax acts in Nepal 

Income tax Act 2058 ( income tax to individual and entity is levied and collected under this act 

Value added tax, 2052 ( vat on goods and services in levied and collected under this act )

Excise act 2058  ( excise duty on manufacturing trading excisable goods is levied and collected under this act 

Custom Act 2064 custom duty on import of goods is levied and collected under this act 


The inland revenue department is currenlty responsible for this enforcement of tax laws and administration of income tax act, value added tax act, excise duty and duties like (entertainment fee)

Subject to amendment of finance act every year. 

Department of customs is responsible for enforcement of customs act at the custom point

Who need to pay tax?

Mention under IT 2058  section 3

Person having taxable income during the year, remitting money to its parents company,  amount after deduction in final withholding tax.

Vat 2052 under section 5

Customs act 2064 under section 5

Excise act 2058 under section 3