Nepal government has increased the income tax limit for individuals. Presenting the budget on Sunday, Finance Minister Janardan Sharma has announced that only 1 percent income tax will be levied on income of up to Rs 500,000 annually for individuals and 1 percent income tax for couples earning up to Rs 600,000.
Similarly, up to Rs 40,000 spent on insurance premium will be tax deducted.
At present, a person earning up to Rs 4 lakh per annum and a couple earning up to Rs 450,000 per annum was subject to one percent income tax.
After new Budget the income tax will be 1 per cent( i.e. Rs 5,000) upto Rs 5 lakh income. If you earn more than five lakhs, you have pay 10 percent of the remaining amount up to seven lakhs.
This means that the person who earn Rs 7 lakh now have to pay Rs 5,000 up to Rs 5 lakh and Rs 20,000 up to Rs 2 lakh. Thus, those who earned seven lakh rupees has to pay a total of 25,000 rupees in taxes.
Similarly, those earning up to Rs 10 lakh per annum have to pay Rs 25,000 up to Rs 7 lakh and 20 per cent tax on the remaining amount. This means that the one who earns ten lakhs have to pay 25 thousand rupees up to seven lakhs and 60 thousand rupees for remaining three lakhs . Those who earn Rs 10 lakh in this way have to pay Rs 85,000 in taxes.
Similarly, those who earn up to Rs 20 lakh have to pay Rs 85,000 tax up to Rs 10 lakh and pay 30 per cent income tax on the remaining Rs 10 lakh. This means that the one who earns Twenty lakhs have to pay 85,000 rupees up to Ten lakh rupees and three lakh rupees on the remaining Ten Lakhs rupees . In this way those who earn Rs twenty lakh have to pay Rs 385,000 in taxes.
Those who earn more than twenty lakhs in a year will have to pay tax at the rate of 36 percent just like now.
