House Rent Tax (Ghar Bahal Kar) in Nepal — Who Pays, the Rate, and How to File

Yes. Income you earn by renting out a house, apartment, shop, office or land is taxable in Nepal — it is not tax-free just because it is 'personal' income. The confusion most people have is not whether it is taxed, but which office collects the tax, and that depends on who the tenant is.

There are two separate mechanisms, and it is important not to mix them up. (1) When a natural person (an ordinary individual, not a company) rents out property, the house-rent tax — Nepali घर बहाल कर, ghar bahal kar — is a LOCAL government tax, collected by the municipality or rural municipality where the property is located. (2) When the tenant is a registered business, company, NGO, government office or other organisation, that tenant is required to withhold Tax Deducted at Source (TDS) on the rent it pays and deposit it to the federal Inland Revenue Department (IRD).

In everyday terms: an individual landlord renting to a family or a small unregistered tenant deals with the municipality; a landlord renting to a registered firm typically has 10% deducted by that firm and paid to the IRD on their behalf. The sections below explain each track, who is liable, the rate, and exactly how and where to pay.

House-rent tax is one of the taxes assigned to local governments. The Constitution of Nepal lists house-rent tax among the taxes local levels may levy (Schedule 8), and the Local Government Operation Act, 2074 (2017) gives each of the 753 municipalities and rural municipalities the power to impose and collect it. Each local level fixes its own rate and rules through its annual finance ordinance, so the tax is administered ward by ward, not from Kathmandu.

This is the tax that applies to an ordinary individual landlord. If you own a house or land and rent it out, you — the property owner (घरधनी) — are liable to declare the rent and pay the house-rent tax to your ward or municipal office. It is charged on the rental income (the rent you receive), and it is separate from the annual property/land-revenue tax (Malpot / sampatti kar) that you already pay for owning the property.

Because rates and procedures are set locally, two landlords in different cities can face different rates and different filing steps for the same kind of tenancy. This is the single most important reason to verify your figure with your own municipality rather than assuming a national number.

The second track sits under the Income Tax Act, 2058 (2002), administered by the Inland Revenue Department. Section 88 of the Act requires resident businesses and organisations to withhold tax at source when they make certain payments — including rent — in the course of their business. The widely applied rate on rent paid to a natural-person landlord is 10%.

Here the person legally responsible for the tax is the TENANT (the payer), not the landlord. A registered company that rents an office, for example, deducts 10% from the rent, pays the landlord the remaining 90%, and deposits the 10% to the IRD, crediting it against the landlord's account. The landlord effectively receives rent net of this deduction.

A key exception: an individual tenant paying house rent to an individual landlord for a residence generally does NOT withhold TDS (Section 88 carries a proviso for rent paid by a natural person other than in conducting a business). That ordinary house-to-house tenancy therefore falls under Track 1 — the municipal house-rent tax — rather than federal TDS. TDS on rent is triggered by a registered/business tenant, not by a private individual.

For the municipal house-rent tax, the most commonly quoted rate is 10% of the rent, and Kathmandu Metropolitan City levies 10%. Across the country's 753 local levels, however, published rates run roughly in the 10–17% range, and some municipalities vary the rate by the purpose of the tenancy (residential vs commercial), the type and location of the building, the floor, and the prevailing market rent. Kathmandu, for instance, applies a House Rent Management Directive that sets out how rent is assessed. Treat 10% as a typical figure, not a guaranteed one — the only authoritative rate is the one in your municipality's current finance ordinance.

For federal TDS, the rate on rent is 10%, which is the standard withholding figure businesses apply when paying rent to individuals. This is a national rate under the Income Tax Act, not something municipalities set.

Rental income of a natural person handled through the municipal house-rent tax is generally treated as a final tax at the local level, which is designed to avoid the same rent being taxed twice. In practice there has been jurisdictional overlap and dispute between local governments and the IRD over rent collected from registered tenants, so if you receive rent from a business it is wise to keep the TDS deposit certificate and confirm your obligations with both your municipality and the IRD.

For the municipal house-rent tax, the traditional route is to visit your ward office / municipal revenue counter, where your details are recorded and the tax is assessed and paid. Larger metros have moved online: Kathmandu Metropolitan City operates a taxpayer e-service portal where, once your record has been created at the ward office, you can view your dues for the fiscal year and pay house-rent tax (ghar bahal kar) and property tax digitally through eSewa, Khalti, Connect IPS or IME Pay. Other metropolitan and sub-metropolitan cities are rolling out similar systems; smaller municipalities may still be counter-only, so check your local level's website or ward office.

For federal TDS on rent, the tenant (the withholding business) files an electronic TDS (e-TDS) return and deposits the tax on the IRD taxpayer portal (taxpayerportal.ird.gov.np), logging in with its PAN credentials. The deducted amount is credited to the landlord, who sees it reflected when the annual income-tax return is filed. Landlords with taxable business or multiple income sources still file their own annual income-tax return through the same portal.

If you are unsure which track applies to you, the safest step is to ask your ward office (for the municipal tax) and, where a registered tenant is involved, the local Inland Revenue Office or the IRD portal (for TDS).

Nepal's fiscal year runs from around mid-July to mid-July; the current fiscal year 2083/84 (2026/27) began on 1 Shrawan 2083 (mid-July 2026). Deadlines and penalties differ by track and by local level, so treat the following as the general pattern and confirm specifics with your municipality and the IRD.

Municipal house-rent tax is generally expected to be cleared within the fiscal year set by the local level, and municipalities typically impose a late fee or fine (a common figure is around 10%, but it varies) on tax not paid on time. Conversely, many municipalities offer an early-payment discount — often for taxpayers who pay in the first part of the fiscal year — so paying early can save money. The exact deadline, fine and discount are all set in your municipality's finance ordinance.

Federal TDS is time-sensitive: the tenant must deposit the withheld tax and file the e-TDS return within 25 days of the end of the Nepali month in which the rent was paid (for example, tax deducted in Mangsir is due by Poush 25). Failing to withhold when required, or failing to deposit tax that was withheld, exposes the payer to interest and penalties, and the payer and recipient can be held jointly liable — so businesses should not let rent TDS slip.

The right steps depend on who you are in the tenancy. Use the checklist below, and remember that the numbers above are national norms — your municipality's finance ordinance and the IRD are the authorities for your exact situation.