Kathmandu Metropolitan offers 95pc tax exemption for businesses employing 20 or more people

KATHMANDU: Kathmandu Metropolitan City (KMC) has announced generous tax exemption schemes in its Fiscal Act for 2082/83 (2025/26), aiming to encourage job creation and inclusive entrepreneurship within the capital. Businesses that employ at least 20 people directly and register within the current fiscal year will enjoy a 95% exemption on business tax for three consecutive years.

Key Highlights of the Tax Relief Policy:
Direct Employment-Based Exemption:

Newly registered industries or businesses that employ a minimum of 20 people will get a 95% business tax exemption for three years.

Early Payment Incentive:
Taxpayers who clear their property tax, business tax, and rental tax liabilities by the end of Poush 2082 (January 14, 2026) will receive a 10% rebate.

One Ward, One Model Enterprise Scheme:
Businesses established under this scheme will enjoy a 95% tax waiver on business tax for three years from registration.

Inclusive Ownership Incentives:
Industries or businesses registered under the name of women, indigenous people, Dalits, persons with disabilities, or youth under 35 years of age can avail:

Up to 40% business tax exemption if their capital investment is up to NPR 500,000.

50% total tax exemption for permanent residents of Kathmandu.

Rainwater Harvesting Incentive:
Residential buildings with approved rainwater recharge systems will receive up to 95% property tax exemption upon recommendation of the Revenue Committee.

Support for Public Toilets:
Private enterprises collaborating with KMC to operate public toilets will be entitled to a 40% business tax exemption.

Hospitality Sector Relief:
Hotels, resorts, and cinemas operating in leased or owned properties will get an additional 10% off property tax for this fiscal year.

Property Tax Structure in Kathmandu:
Property Value Annual Tax (NPR)
Up to 1 crore 1,000
Up to 2 crore 2,500
Up to 3 crore 4,500
Up to 4 crore 8,500
Up to 5 crore 14,500
Up to 10 crore 84,500 (0.45%)
Above 10 crore 0.60% of total value

Poor Family Support:
Property owners holding a poverty identity card will get a 50% property tax waiver under the “Identification Program for Poor Households.”

Parking Tax and Facilities:
First Two Hours Free:

At KMC-operated parking sites, parking is free for the first two hours.

Beyond Two Hours:

Two-wheelers: NPR 15 per 30 minutes

Four-wheelers: NPR 25 per 30 minutes

No charge for vehicles used by persons with disabilities.

Privately Operated Parking:
Charges at jointly managed or privately operated lots will follow the terms stated in their agreements with KMC.

Property Construction and Tax Exemptions:
Parking-Oriented Buildings:
Buildings constructed specifically for vehicle parking will enjoy a 10-year property tax exemption for the floor area used for parking, excluding those that use Floor Area Ratio (FAR) benefits.

Building Approval Exemption:
No property tax will be imposed for the first two years after building map approval, and during any legally extended construction period.

Early Completion Penalty:
Property tax will apply immediately if the building is completed, certified, sold, or used before the approved construction period ends.