1) When making payment by a resident person for interest, natural resources, rent, royalty, service charge, commission, sales bonus, retirement payment and other considerations, having a source in Nepal and making payment of any amount of any retirement payment, the person shall withhold tax at the rate of fifteen percent of the total amount of payment.Provided that tax shall be withheld in the following payment at the following rate:

1) In case of retirement payment from the Government of Nepal or contribution-based retirement payments from the approved retirement fund, at the rate of five percent in benefit computed under clause (b) of sub-section (1) of Section 65,

2) In a commission paid by the resident’s employment company to the resident person, at the rate of five percent,

3) In payment of the amount for a lease of aircraft, at the rate of ten percent,

4) In-service charge paid to service provider resident person registered in value-added tax or resident entity operating transaction of exemption of value added tax, at the rate of one and a half percent of the payment amount,

5) Rent payment made by a resident person in a source in Nepal, at the rate of ten percent,

Provided that,

(a) In an amount payment to a person, registered in valued added tax, an operating business of providing vehicles in rent, for rent of such vehicles, one and a half percent shall be withheld from such amount.

(b) No tax shall be withheld in an amount received by an individual for house rent.

1(c)………………………

6) In an amount payment as a consideration distributed to a natural person by the mutual fund, at the rate of five percent,

7) In payment for the use of satellite, bandwidth, optical fibre, tools related to communication or electricity transmission line, at the rate of ten percent,

28) ………………………………

9) In the payment of the interest for a loan received in foreign currency from the foreign bank or other financial institution by the resident bank and financial institution for investment in the sectors as specified by the Nepal Rastra Bank, at the rate of ten percent,

39A) At the rate of five percent on payment of interest on loans taken in foreign currency from foreign banks or other foreign financial institutions by reservoirs and hydroelectric projects with a capacity of more than 200 MW for which financial closure is to be completed by the fourth month of the year 2082.

10) Tax shall not be deducted from the motivational amount provided for payment made through a payment card, e-money (wallet), or mobile banking like electronic payment under prevailing laws in the purchase of goods and services by the consumer,

11) In payment of the amount for registration charge, study charge and examination charge to the foreign school or university, at the rate of five percent of the paid amount,

12) In payment of deposit by the resident bank and financial institution to the insurance company, at the rate of five percent of interest

2) A resident person shall, in making the following payment having source in Nepal, withhold tax at the following rate:

a) In a dividend payment, at the rate of five percent of the paid amount,

b) In a benefit payment of investment insurance, at the rate of five percent of the paid amount, or

c) In a benefit payment from an unapproved retirement fund, at the rate of five percent of the paid amount.

3) Notwithstanding anything contained in sub-section (1), a resident bank, financial institution, co-operative or any other body issuing debentures or a company listed in accordance with the prevailing law shall deduct tax at the rate of six per cent on the total amount paid to any natural person on payment of any amount by way of interest or interest on deposits, debentures, debentures and co-operative bonds;

a) Which has a source in Nepal and

b) Which is not related to the operation of the business.

4) Notwithstanding anything contained in sub-section (1), (2) and (3), this Section shall not apply to the following payment:-

a) Any payment related to the operation of a business  by a natural person,

4a1) Payment for a feature, article in a newspaper,

b) Interest paid to a resident bank or other resident financial institution,

c) Payment enjoying tax exemption or payment liable to tax withholding pursuant to Section 87.

4d) Inter-regional interchange charge paid to the bank issuing the credit card,

4e) Dividends and interest paid to collective investment funds (mutual funds).

1 Removed by the Financial Act, 2077.

2  Removed by the Financial Act, 2078.

3 Inserted by the Financial Act, 2080.

4 Inserted by the Financial Act, 2075.