Tax-free threshold doubled, bringing top officials into the net of exemption
Summary
The government has doubled Nepal’s annual income-tax threshold to Rs1 million, removing many salaried workers and even top officials from the personal tax net. Critics say the change weakens progressivity and shifts more of the burden onto indirect taxes and consumption.
Key Points
- The government raised the annual income-tax threshold from Rs500,000 to Rs1 million, putting many salaried workers and top officials outside the personal income-tax net.
- Prime minister, ministers, top civil servants, security chiefs and some judicial officials can now avoid income tax after deductions and still pay a 1 percent social security contribution.
- Former finance minister Yuba Raj Khatiwada and tax experts say the move weakens Nepal’s progressive tax system and shifts the burden toward indirect taxes.
- The Financial Bill 2026 also changes capital gains tax rates on shares and consolidates several customs-related charges into a new Green Tax.
