💼 How to Save Tax Legally in Nepal – For Salaried Employees (2025)
Many salaried individuals in Nepal pay more tax than necessary simply because they don’t know their legal rights. Here are smart and 100% legal ways to reduce your tax burden under Nepal’s Income Tax Act.
1. Contribute to CIT (Citizen Investment Trust)
Investing in CIT is one of the best tax-saving tools. You can get a tax exemption of up to Rs. 500,000 per year.
✅ Tip: Monthly contribution of Rs. 5,000 to Rs. 8,000 helps build long-term savings and reduce tax.2. Use Your Provident Fund (PF) Contribution
If you're contributing to Provident Fund (EPF), your up to Rs. 500,000 is tax-deductible.
✅ Tip: Combine PF + CIT + Life Insurance to stay within Rs. 500,000 total exemption limit.3. Life Insurance Premium Deduction
You can claim deduction for Life Insurance premiums up to Rs. 40,000 per year.
✅ Tip: Submit insurance payment slips to your employer’s HR before tax filing.4. Medical Tax Credit (Rs. 750)
Every employee is entitled to a flat deduction of Rs. 750 per year under health expenses — no bills needed.
✅ Tip: This is automatic; make sure your payroll department includes it.5. Get Housing or Remote Area Allowance
If you live in rural/remote areas, you may get an additional tax-free allowance as per government zone rules.
✅ Tip: Ask HR if your work location qualifies for remote allowance deductions.6. Use Family Exemptions (If Eligible)
If you're the only earning member or have dependents, you may qualify for additional deductions.
✅ Tip: Declare dependents (spouse/children) in your income source declaration form.7. Claim Approved Donations
Donations made to government-approved charities (like PM Relief Fund) are tax deductible up to a limit.
✅ Tip: Keep official receipts of donations to submit with tax documents.8. Declare Home Loan Interest
If you're paying a home loan, interest amount can be tax-deductible up to a certain limit.
✅ Tip: Ask your bank for an annual interest certificate.9. File Tax Returns on Time
If your tax is over-deducted, you can claim a refund by filing tax returns through IRD's e-filing portal.
✅ Tip: File your return before Shrawan end to avoid penalties.💡 Bonus Tip: Talk to HR + Use Tax Calculator
Most salaried employees rely only on HR. Use an online salary tax calculator Nepal or consult a tax advisor to maximize your savings.
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Written by Barala Finance Desk • Updated 2025 • Visit Blog