Income Tax Rates 2083-84 (2026-27 A.D.)

Introduction

The Finance Act 2083 (2026 A.D.) (“Finance Act”) was passed by the Federal Parliament and was authenticated by the President on July 14, 2026.  The Finance Act is applicable to Fiscal Year 2083/84 (2026/27 A.D.), commencing from July 17, 2026. 

This Briefing highlights major provisions with respect to income tax and other taxes as proposed by the Finance Act.

Major Highlights

• Domestic Production Protection and Promotion Fee: A domestic production protection and promotion fee shall be levied and collected at the customs point on goods imported into Nepal.
   
• Clean Infrastructure Investment Fee: A clean infrastructure investment fee shall be levied and collected, at the rate of 2.5% to 10% on electric vehicles and other means of transport imported into or manufactured within Nepal. The clean infrastructure investment fee shall be collected either by the Customs Office upon importation or by the registering authority at the time of registration, as applicable.
   
• Luxury Fee: Two percent luxury fee shall be levied on the service fee charged by hotels and luxury resorts having a rating of five stars or higher as well as on import value of ready-made alcoholic beverages, inclusive of customs duty and excise duty. 
   
• Skill Promotion Fee: A Skill Promotion Fee shall be levied at the rate of 0.5%, on the sale of gold, silver, and their jewelry and products to consumers in Nepal.
   
• Education Equity Fee: Three percent education equity fee shall be levied on all types of fees charged by private educational institutions to students. The proceeds of such fees shall be utilized to promote access to quality education and for the development of educational infrastructure.
   
• Health Equity Fee: Three percent health equity fee shall be levied on all service charges collected from patients by private-sector healthcare service providers. The proceeds of such fee shall be utilized to enhance access to quality healthcare services and for the development of healthcare infrastructure.
   
• Special Relief Measures for Businesses Affected During the Gen-Z Movement: Uninsured inventory losses caused by the Gen-Z movement may be recognized based on a supported valuation and timely reporting to the Inland Revenue Office. For FY 2082/83 (2025/26 A.D.), such losses are deductible for income tax purposes, and related input VAT may be claimed.
  
  Industries, businesses, and commercial establishments affected during the Gen-Z movement may receive a 50% exemption on customs duties and excise duties for the import of goods required for reconstruction and resumption of operations, based on verified insurance survey reports.
   
• Withdrawal of Pending Tax Disputes: Taxpayers with pending disputes over VAT, income tax, or excise duty assessments may withdraw their cases and, by paying the assessed tax amount plus an additional 1% by mid‑January 2027 (end of Poush 2083), obtain a waiver of all related fees, penalties, interest, and late charges.  Similarly, if the Government has filed or is permitted to file an appeal or review before the Supreme Court, it may withdraw the case upon the taxpayer’s payment of the disputed tax plus 1% and submission of an application within the prescribed period.
   
• Waiver of Outstanding Dues for Companies: Any company registered but failing to submit returns, renew registration, or pay applicable taxes, fees, interest, or penalties within the time frame prescribed under the Companies Act, 2063 (2006 A.D.) may continue its operations or seek deregistration if it submits the required filings and pays applicable taxes and fees due for FY 2082/83 (2025/26 A.D.) by the mid October 2026 (end of Ashoj 2083) and shall obtain a full waiver of all past dues.  

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