TDS Filing in Nepal — Tax Deducted at Source
TDS (Tax Deducted at Source) is a mechanism where the payer deducts tax at the time of payment and deposits it with IRD on behalf of the payee. In Nepal, TDS applies to salaries, professional fees, rent, dividends, and many other payment types. Monthly TDS filing is mandatory for all applicable businesses.
Common TDS Rates in Nepal (2081/82 BS)
- Salary/wages: Progressive slab rates (1%–36%) after personal exemption
- Professional/consultant fees: 15% of gross payment
- Rent (commercial): 10% of gross rent
- Dividends to individuals: 5% of dividend amount
- Interest payments: 15% (for companies), 5% (for individuals from banks)
- Commission payments: 15% of commission
- Royalties: 15% of royalty amount
Step-by-Step Process
- 1
Identify TDS-applicable payments
Review all payments made during the month. Identify which payments are subject to TDS and at what rate.
- 2
Deduct TDS at source
When making each payment, deduct the applicable TDS percentage and pay only the net amount to the recipient.
- 3
Deposit TDS with IRD by 25th
Deposit all TDS collected during the month at an IRD-authorized bank. File the monthly TDS return on the taxpayer portal.
- 4
Issue TDS certificates to payees
Issue TDS certificates to all recipients specifying the gross payment, TDS deducted, and net payment. Recipients use this to claim credit in their own tax return.
- 5
Annual reconciliation
At year-end, reconcile all TDS deducted with the income tax return. Any under-deduction must be settled with penalty and interest.
TDS Penalties
| Item | Fee |
|---|---|
Failure to deduct TDS Plus the TDS itself plus interest | 50% of TDS amount |
Late TDS deposit (per month) On the overdue TDS amount | 0.1% per day |
Failure to issue TDS certificate Per day of delay | NPR 100 per certificate |
TDS Non-Compliance is Expensive
Failing to deduct or deposit TDS is one of the most common and expensive compliance failures for Nepali businesses. The penalty for failure to deduct TDS is 50% of the TDS amount — on top of the TDS itself and interest. Chartered Corporate manages TDS compliance for all our accounting and tax management clients, ensuring zero penalties.Need help with this process? Chartered Corporate Business Consulting handles it all for you — from start to finish.