Nepal TDS Calculator — Withholding Tax & Net Payable

Tax Deducted at Source (TDS) is an advance tax withholding mechanism mandated by the Nepal Income Tax Act 2058. Any registered business, government agency, NGO/INGO, or company paying for rent, professional services, contracts, or interest is legally required to deduct TDS before disbursing payment to the vendor and deposit it with the Inland Revenue Department (IRD).

Per Section 88 of the Nepal Income Tax Act 2058, TDS must strictly be calculated on the taxable base amount excluding VAT. If a vendor submits a VAT invoice of Rs. 1,13,000 (Rs. 1,00,000 base + Rs. 13,000 VAT at 13%), a 1.5% consultancy TDS is calculated as 1.5% of Rs. 1,00,000 (Rs. 1,500), NOT on the Rs. 1,13,000 total. The net payable to the vendor is Rs. 1,11,500.

House and office rent TDS is 10%. Under the Local Government Operation Act 2074 and current fiscal policies, house rent tax is collected directly by local municipal bodies (Metropolitan, Sub-Metropolitan, or Municipality) rather than central IRD, though the statutory withholding rate remains 10%.

If a professional consultant or agency issues a statutory 13% VAT invoice, the TDS withholding rate is only 1.5% under the Section 88(1) proviso. However, if the consultant or freelancer is not registered in VAT and issues a PAN bill or payment voucher, the withholding rate is 15%.

TDS deducted in any Nepali Bikram Sambat month must be deposited into the government treasury via the IRD E-TDS portal within 25 days of the end of that month (i.e. by the 25th of the following Nepali month). Failure to deposit incurs statutory interest and penalty fees.

When the withholding company deposits the deducted tax on the IRD portal using the vendor's PAN, an E-TDS entry is generated in the vendor's IRD tax ledger. The vendor can log into their IRD portal to claim this as advance tax credit or obtain a digitally signed withholding certificate.