Tax is an unpleasant thing that is attached to everything you do. From the things that you eat, wear, buy, get, etc. everything is taxable. There are different types of taxes that Nepalese citizens have to pay to the government. And Income tax is the one that most Nepalese people want to avoid. It is hard to avoid the Income-tax but there are these top 6 ideas to legally protect your Income from heavy taxes in Nepal.
The government of Nepal charges up to 30% of your income as an income tax according to the latest tax rates and rules for the fiscal year 2078/80. So, here is the list of top 6 ideas to legally protect your Income from taxes.
1) Claim relief for medical expenses
Claiming income tax exemptions for medical expenses is one of the finest ideas to save a person’s income tax. The Nepali government allows a person to claim 15% or up to Rs 750 of the total amount of medical expenses. This is one of the best options to save income tax legally and helps to lower the tax liability. Although, for claiming relief on the tax you have to safely submit the medical bill to the related office.
2) By joining government schemes
Joining the schemes given by the Nepali government is another best idea to be safe from heavy income tax. Putting the income in these Employees Provident Fund and Citizen Investment Trust helps you to save heavy income tax. The government allows you to deposit up to Rs 300,000 in these two schemes combined. These government schemes are very helpful and help you to save a lot of your income and tax.
3) By getting Insurance Packages
You can save a good amount of tax amount if you buy life insurance up to Rs 40,000 per year. The government of Nepal also provides an exemption of a certain amount, if you buy health insurance up to Rs 20,000. This helps you to decrease your amount of tax and tax liability. If a person has a house in his/her name then there is also an exemption of Rs 5,000 from the taxable income by the government.
4) Rebate for Consular posts, Diplomatic missions
If you’re working in diplomatic missions or you have a consular post then you’re eligible for a 75% rebate of the extra allowance you receive while working in those organizations. The entities and foreign representatives are entitled to rebates according to the Nepali government.
5) By working in the Remote areas
If you’re able to work in the remote districts of Nepal then you’re able to get a remote area allowance of up to Rs 50,000 which is untaxable. The taxation various according to the area you choose while the Nepali government has divided the districts into rural and urban areas. While being protected from heavy income tax, this is also one of the fine ideas that save you from heavy income tax in Nepal.
6) By being a Single woman
The government of Nepal frees you from 10% of the tax you have to pay if you are a single woman with a single source of income. For example, the government frees your Rs 1,000 if your total tax per year is Rs 10,000 which you have to pay. This one is the best idea for being saved from heavy income tax if you’re a single woman with a single source of income in Nepal.
Although it is necessary to pay all the tax that is legally and officially owned to tax authorities or the government. But, paying tax doesn’t mean you’ve to pay any extra. These 6 ideas and some reading on the IRD website (IRD.gov.np) can help you to protect your income from heavy taxes in Nepal. Moreover, you can save hundreds, thousands, or even lakhs of your income by knowing the details of Nepal government taxation and by being a little smart.