How to use this calculator
Choose the payment type — the correct TDS rate fills in automatically (you can edit it) — and enter the payment amount excluding VAT. You will see the TDS to deduct and the net amount to pay.
TDS in Nepal
TDS (Tax Deducted at Source) is one of the main ways the Inland Revenue Department collects tax in Nepal. The payer — usually a business — withholds a set percentage of certain payments and deposits it with the IRD, then gives the recipient a TDS certificate. A key rule for services and contracts is the gap between a VAT-registered party (just 1.5%) and one registered only with a PAN (15%), so picking the right category matters. TDS is always calculated on the taxable amount, not on the VAT, and some payments such as dividends and interest to individuals are final — no further tax is due on that income.
House rent needs an extra distinction: rent paid to an entity is generally subject to 10% federal withholding, while house rent received by a natural person is excluded from federal TDS. Local municipality house-rent tax can still apply separately.
Common TDS rates (FY 2082/83)
| Payment type | Rate |
|---|---|
| Rent paid to company / entity | 10% |
| House rent paid to natural person (federal TDS) | 0% |
| Vehicle / equipment rent — VAT-registered | 1.5% |
| Vehicle / equipment rent — non-VAT | 10% |
| Service / consultancy — VAT-registered | 1.5% |
| Service / consultancy — PAN only | 15% |
| Contract / supply over Rs 50,000 — resident | 1.5% |
| Contract / supply — non-resident | 5% |
| Interest — natural person (final) | 5% |
| Interest — company / non-resident | 15% |
| Dividend (cash) (final) | 5% |
| Commission | 15% |
Rates are current as of FY 2082/83 and may change with the annual Finance Act — confirm with the IRD or your accountant before deducting.
For landlord type and municipality tax, use the House Rent Tax Calculator.
Sources and disclaimer
Rates reviewed against Nepal's Income Tax Act 2058, amended through Finance Act 2082. Payment type, residency, registration and later Finance Act changes can alter the result; verify with IRD or a tax professional.
Frequently asked questions
What is TDS in Nepal?
TDS (Tax Deducted at Source) is withholding tax: when a business makes certain payments — rent, service fees, contracts, interest, dividends, commission — it deducts a fixed percentage and deposits it with the Inland Revenue Department (IRD) on the recipient's behalf.
Is TDS calculated on the VAT amount too?
No. TDS is deducted on the taxable (service/payment) amount only, never on the 13% VAT portion of a bill.
Is federal TDS deducted from house rent paid to an individual?
No. Under the current Income Tax Act, house rent received by a natural person is excluded from federal rent withholding. Local municipality house-rent tax may still apply. Rent paid to an entity is generally subject to 10% federal withholding.
Why is the TDS rate sometimes 1.5% and sometimes 15%?
For services and contracts, a VAT-registered provider attracts a low 1.5% TDS, while a provider with only a PAN (not VAT-registered) attracts 15%. Choose the matching option so the rate is correct.
What does 'final withholding tax' mean?
For some payments such as dividends and interest to individuals, the TDS is final — the recipient owes no further tax on that income and need not include it in the annual return.