Jun 03, Kathmandu- The government revised various tax rates through the budget of the next financial year 2080/81.

Through the Economic Bill 2080, the government has also amended the provisions related to income tax. The income tax to be paid by people with an annual taxable income of more than 20 lakhs has been increased.

On Friday, the Internal Revenue Department has released the details of the income tax to be paid in the next financial year, clarifying the provisions in the financial bill.

The new regime has revised the rate of income tax for individuals with an annual taxable income of more than 20 lakhs. 36% income tax will be levied on taxable income above 20 lakhs up to 50 lakhs. Similarly, any taxable income above Rs 50 lakh will be taxed at 39%. Tax rates have been kept unchanged for people with annual taxable income of less than Rs 20 lakhs.

At present, a single person has to pay one percent income tax on taxable income up to five lakhs and in the case of a couple up to six lakhs. However, in the case of sole proprietorship registered taxpayers, income from pension, pension fund, and contribution-based social security fund of natural persons, there is no one percent tax on income tax.

A single person has to pay 10% income tax on taxable income between Rs 5 lakh and Rs 7 lakh and in the case of couple between Rs 6 lakh and Rs 8 lakh. 20% income tax has to be paid on the income of more than 7 lakh and up to 10 lakh in the case of a single person and between 8 lakh to 11 lakh in the case of couple.

There is a provision of 30% income tax on income from Rs.10 lakh to Rs.20 lakh for a single person and Rs.11 lakh to Rs.20 lakh for a couple.

In calculating the annual taxable income, the provision of not counting the amount of various titles, i.e. exemptions, has also been kept in the economic bill.

The government has set a limit for the amount that is not included in the income of a natural person or the amount that can be exempted from expenses.

When a person contributes to retirement fund, Rs.3 lakh per annum or one third of his assessable income, whichever is less, can be deducted from his taxable income. When contributing to social security fund based on contribution, there is a provision to deduct from his taxable income up to five lakh rupees or one-third of his assessable income, whichever is less.

The remoteness allowance facility is also deductible from taxable income. Similarly, the revenue department has stated that 75 percent of the foreign allowance received by employees working in Nepal's diplomatic missions abroad can be deducted from taxable income.

Income from a pension can be reduced by 25 percent in the exemption limit that an individual gets Similarly, disabled persons will be able to deduct an additional 50% of their taxable income.

The annual premium paid for insurance or 40,000, whichever is lower, can be deducted from taxable income. The annual premium paid for health insurance or Rs.5,000 whichever is lower can be deducted from taxable income.

The annual premium paid by a person for the insurance of a private building owned by him or an amount up to five thousand rupees can be deducted from the taxable income.

For medical treatment expenses, 15 percent of the amount of the actual expenses according to the bill or Rs 750, whichever is less, the said amount can also be tax matched.