Sima & AssociatesChartered Accountants
Loading Practice Portal...
ICAN Regd. 1432 • COP No. 1612 • Pokhara-10, Nepal
ICAN Regd. 1432 • COP No. 1612 • Pokhara-10, Nepal
Searchable, categorized directory of statutory withholding rates under Sections 87, 88, 88Ka, and 89. Designed for accountants, CFOs, and procurement managers in Nepal.
| Section | Payment Nature | Recipient Type | Rate | Withholding Category | Statutory Notes |
|---|---|---|---|---|---|
| Section 88 | House / Office Space Rent | Individual (Natural Person) or Entity | 10% | Final Withholding | TDS on house rent paid to natural persons is treated as final withholding tax under current municipal directives. |
| Section 88 | Consultancy & Professional Services | Resident Individual / Non-VAT Registered entity | 15% | Adjustable Credit | If the provider is VAT-registered and issues a VAT invoice, standard rate is 1.5% under Section 89. |
| Section 89 | Professional / Service billing with VAT Invoice | VAT Registered Resident Entity/Individual | 1.5% | Adjustable Credit | Applicable on service supply contracts against tax invoices. |
| Section 88 | Bank Interest on Deposits | Resident Natural Person | 5% | Final Withholding | Final withholding tax on interest paid by BFIs to individuals not engaged in business. |
| Section 88 | Interest on Loans / Inter-company debt | Corporate Entity / Other | 15% | Adjustable Credit | Adjustable against annual corporate income tax assessment. |
| Section 88 | Dividend Distribution | Resident Shareholder (Individual / Entity) | 5% | Final Withholding | Final withholding tax for resident natural persons. |
| Section 88Ka | Vehicle & Heavy Equipment Rental | Non-VAT registered vehicle owner | 10% | Adjustable Credit | If VAT-registered transport service, Section 89 (1.5%) applies. |
| Section 89 | Supply of Goods & General Contract Works | Any Resident Contractor / Supplier | 1.5% | Adjustable Credit | Mandatory deduction by entities on supply of goods/services against VAT invoices. |
| Section 88 | Commission & Brokerage Fees | Resident Agent / Broker | 15% | Adjustable Credit | Adjustable tax credit against annual income tax return. |
| Section 88 | Royalty & Technical Service Fees (Foreign Remittance) | Non-Resident Entity | 15% | Final Withholding | Withholding on software licenses and foreign tech support; rate may be reduced under applicable DTAA. |
| Section 87 | Employment Remuneration & Benefits | Resident Employee | Progressive (1% - 39%) | Final Withholding | Deducted monthly on estimated annual income basis using prevailing slab rates. |
All tax deducted must be deposited to the Government of Nepal's consolidated tax account via designated commercial banks by the 25th of the following Nepali month. Deducting entities must submit e-TDS returns on the IRD portal to ensure withholding credits reflect in the taxpayer's ledger.