Nepal IRD Income Tax — Rates and Departure Procedures
Nepal's income tax is administered by the Inland Revenue Department (IRD — ird.gov.np). Income tax rates (2026/27 fiscal year — Nepali FY 2083/84, effective 16 July 2026): the Finance Act 2083 merged the previously separate individual and married-couple schedules into one unified table and cut the top rate from 39% to 29%. Rates: 1% Social Security Tax (SST) on NPR 0–1,000,000/year (~$6,500) — waived for taxpayers contributing to the Social Security Fund (SSF) or an approved retirement/pension fund; 10% on NPR 1,000,001–1,500,000; 20% on NPR 1,500,001–2,500,000; 27% on NPR 2,500,001–4,000,000; 29% on NPR 4,000,001+. Remote worker/foreign employment: Nepali citizens working abroad — if not resident in Nepal — are taxed only on Nepal-source income. Foreign employment income: Nepal technically taxes Nepali residents on worldwide income. However, practically, the foreign employment income of Nepali workers in the Gulf and Malaysia has historically been lightly enforced on remittances. What to do when leaving: settle all outstanding IRD liabilities (income tax returns for all years). Obtain Kar Chuktara (tax clearance certificate) from local IRD office — essential document for many departure-related procedures. PAN (Permanent Account Number): you keep your PAN even after emigrating — needed to file returns for any remaining Nepal-source income (e.g., rental property). Nepali fiscal year: mid-July to mid-July (Shrawan 1 to Ashadh end in Vikram Samvat calendar). This is important for timing departure to minimise pro-rata obligations.
EPF and CIT — Pension and Investment Withdrawal on Departure
Nepal has two main mandatory saving/pension schemes: (1) EPF (Employees' Provident Fund — Karmachari Sanchaya Kosh): administered by EPF (sanchaya.gov.np). Contribution rates: employee 10% of basic salary + employer 10% = 20% total. Applies to government employees mandatorily; voluntary for private sector workers (though increasingly common under SSPF below). Lump-sum withdrawal: EPF members can withdraw their accumulated balance when leaving employment — including on emigration. The full individual account balance (contributions + interest) is refundable. Interest rate: EPF declares an annual return — typically 8–10% in recent years. Process: resign from employment → submit EPF withdrawal application with resignation letter, citizenship certificate, and bank details. Timeline: 2–4 weeks for processing. Note: EPF is separate from the newer SSPF (Social Security Fund) which launched under the Social Security Act 2017. (2) SSPF (Social Security Fund — Samajik Suraksha Kosh): contribution: employee 11% + employer 20% = 31%. Four benefit packages: medical, maternity, accident, and old-age. Old-age pension: unlike EPF, the SSPF old-age benefit is NOT fully refundable as a lump sum for emigrants. It functions more like a traditional pension — payable at age 60. Partial: accidental and other benefits may be accessible. Foreign workers in Nepal: no entitlement to SSPF benefits in most cases. (3) CIT (Citizens Investment Trust): government-backed investment fund with units available to Nepali citizens. Units can be redeemed at current NAV. Redemption proceeds: subject to capital gains tax at 5% (for natural persons on units held). Redemption is straightforward — contact CIT Bhawan, Minbhawan, Kathmandu.
NPR Remittance Rules — Sending Money Out of Nepal
Nepal Rastra Bank (NRB) regulates all foreign exchange outflows: NPR/INR peg: the Nepalese rupee is pegged to the Indian rupee at NPR 1.6 = INR 1 — this peg has been maintained for decades and provides stability relative to INR. NPR is freely convertible into INR. NPR vs USD/GBP/EUR: the peg to INR means NPR follows INR movements against hard currencies. NRB outward remittance limits for residents: foreign exchange for personal travel: USD 5,000 per trip (or equivalent). Transfer of foreign employment savings: NRPs (Non-Resident Nepalis) can remit savings from abroad — limited for residents sending money out. EPF/CIT/savings transfer on emigration: obtain NRB permission for lump-sum transfers above USD 50,000. Process: IRD clearance + NRB approval + bank transfer. For typical EPF balances (often NPR 500,000–2,000,000, equiv. ~$3,800–$15,000): amounts within normal NRB limits for documented foreign employment savings — process with your bank. Non-Resident Nepali (NRN) accounts: once abroad, open a NRN bank account (available at most major Nepali banks — NRB Bank, Nabil Bank, Standard Chartered Nepal). NRN accounts can receive foreign currency and hold in USD/EUR/GBP — provides flexibility. Remittance landscape: Nepal is one of the world's top remittance-receiving countries. eSewa, IME, Prabhu Money Transfer: major domestic services for receiving remittances. For sending money home from abroad: Western Union and Ria are commonly used by Nepali diaspora.
Nepali Workers Abroad: Gulf States and Malaysia Tax Context
The majority of Nepali emigrants are labour workers in the Gulf states and Malaysia — the tax implications are simple but important: Gulf states (Qatar, UAE, Saudi Arabia, Kuwait, Bahrain, Oman): 0% personal income tax in all six GCC states. Nepali workers: receive full salary with no host-country income deduction. Nepal: if genuinely non-resident (not in Nepal for 183+ days/year), Nepal's IRD does not tax Gulf-earned income. The remittances sent home: not subject to Nepali income tax when received by the family. Qatar: large Nepali construction and service worker community (~400,000 workers). Qatar-Nepal DTA: no DTA in force — but moot for zero-tax Gulf states. Malaysia: income tax applies, but most Nepali workers are in the informal sector or low-income bracket below the taxable threshold (MYR 5,000/month). LHDN (Malaysia IRD) requires a tax clearance certificate (CP21) from foreign workers who leave Malaysia permanently. Nepal-Malaysia: no DTA. Destination countries for professional diaspora: UK (Nepal-UK DTA — 2011): allocates employment income to country of employment. Australia (no Nepal-Australia DTA): Australian tax law applies based on residence. USA: no Nepal-USA DTA — US tax law applies. Canada: no Nepal-Canada DTA.