House rent tax in Nepal (घर बहाल कर): the rate, who pays and where

Ghar bahal kar in English is house rent tax: the tax on rent from a house, flat, room, shop, office, store or land that you let out. The municipality or rural municipality (गाउँपालिका) where the property stands collects it, through the ward office.

The power is in the Constitution. Schedule 8 lists घर बहाल कर among the local levels' own taxes, and the Local Government Operation Act 2074 (section 57) lets a municipality tax rent whenever any person or institution lets out a building, house, shop, garage, store, shed, factory, land or pond, in whole or in part.

The rate is not national. Each municipality sets it in its finance act (आर्थिक ऐन) for the year, which starts on 1 Shrawan. That is why the same flat can be taxed differently in two cities, and from one year to the next.

There are two taxes on rent in Nepal. Which one applies depends on who the landlord is.

The municipality's house rent tax is for individual landlords. Since the Finance Act 2075, the Income Tax Act no longer counts house rent received by an individual as rent, and section 88(1) says no tax is withheld from it. The Inland Revenue Department's own FAQ says it plainly: from 2075/76 an individual pays house rent tax to the local level, at the local level's rate.

The IRD's income tax is for companies, firms and other entities that let property. A tenant that is a business or institution withholds 10% from each rent payment and deposits it with the IRD within 25 days of the end of the month (sections 88 and 90). The landlord company counts the rent in its yearly income tax return, where the 10% is credited.

These are the rates in the finance acts themselves. For anywhere else, ask the ward office, or read your municipality's finance act for the year in its local gazette (स्थानीय राजपत्र).

• Kathmandu adds up all your rent. If you let property in more than one ward, the rents are added together to decide the rate. Rs 2,40,000 a year is Rs 20,000 a month.
• Kathmandu's 7% reads as a rate on the whole rent once the year's rent passes Rs 2,40,000, not only on the part above it. Confirm this at your ward before you pay.
• Small landlords in Kathmandu can ask for relief. If your rent is under Rs 1,20,000 a year and you have no other income, the ward committee may waive up to 90% of the tax.
• Lalitpur has its own minimum figures. Its act charges 10% on the rent in the agreement, the landlord's own declaration, or its table of monthly rent per square foot by road and floor: on the Kupondole–Satdobato road, for example, Rs 50 a square foot for a first-floor shop.
• Lalitpur's act for 2083/84 could not be read on 28 October 2026, so the figure above is the one for 2082/83.

Rs 30,000 a month is Rs 3,60,000 a year. This is the tax on that same rent, by who lets it and where.

1. 1Multiply the monthly rent by the months it was let in the year: Rs 30,000 × 12 = Rs 3,60,000.
2. 2Find your municipality's rate for that use and that amount: 7% for a home in Kathmandu let for more than Rs 2,40,000 a year.
3. 3Multiply: Rs 3,60,000 × 7% = Rs 25,200.
4. 4Take off any discount for paying early. Kathmandu's 2083/84 act gave 10% off to anyone who paid by the end of Asoj 2083, which would have made it Rs 22,680. That window closed in mid-October 2026.

The landlord pays, unless the agreement says otherwise. The Civil Code (section 392) and Kathmandu's finance act both put the duty on the owner. If the owner does not pay on time, the tenant may pay it and take it off the next rent.

• In Kathmandu the owner stays responsible. Even where the agreement says the tenant pays, the landlord must see that it is deposited (Finance Act 2083, section 4(2)). A business tenant whose agreement takes on the tax can be billed for it directly (section 5(9)).
• Subletting. Kathmandu and Lalitpur both tax a sublet as well as the main let, and Kathmandu wants the landlord and the ward told of a sublet within 35 days.
• Company landlords. The Income Tax Act taxes a company's rent, and the municipal acts tax rent from any person or institution. Law firms report a court ruling that local levels may tax only individuals, but we could not find the judgment itself. A company should take advice before it pays both.
• A sole proprietorship firm that lets a house is not an individual for this purpose: the Act still counts its rent as rent.

Paying late costs more. Kathmandu adds a 10% fine on arrears and Lalitpur 15%.

1. 1Have a PAN. Since 2076/77 the IRD has required a PAN of everyone who earns an income, house rent included. The PAN card guide shows how to get one.
2. 2Take the rent agreement to the ward office where the property is. Kathmandu wants every letting certified by the ward, and commercial agreements filed by the end of Asoj or within 35 days of letting. Lalitpur wants the agreement for any rent above Rs 20,000 a month.
3. 3Let the ward assess the tax from the rent, the use (home or business) and the municipality's rates. Kathmandu collects it together with property tax (सम्पत्ति कर).
4. 4Pay within the fiscal year, which ends with Asar. Kathmandu lets you pay in up to three instalments; Lalitpur lets you pay quarterly, half-yearly or yearly, as the agreement says.
5. 5Keep the receipt. Kathmandu will not provide most of its services, approving a building map among them, while your taxes, rent tax included, are unpaid.
6. 6Tell the ward when things change. If the tenant leaves or the rent falls, Lalitpur asks you to report it to the ward within 35 days.

The law does not always require one. The Civil Code (section 386) asks for a written house rent agreement, but not where the rent is Rs 20,000 a month or less. Above Rs 1 lakh a month the agreement must also be registered at the Land Revenue Office (section 464), with the fee set on the first month's rent.

The tax is due either way. Without an agreement the ward goes by another figure: in Lalitpur, the rent you declare or its table of rent per square foot; in Kathmandu, any minimum rent its executive has set by land value, road and use.

And neither side can prove much. The tenant cannot show what rent was agreed, or that the landlord was to pay the tax. The landlord cannot show the notice period or what the deposit covers.

The rent agreement maker (घर बहाल सम्झौता) writes one in Nepali or English, ready for both sides and two witnesses to sign. Add a line on who pays the house rent tax. What any agreement needs in order to hold is in agreement paper in Nepal, and in Nepali in घर बहाल सम्झौता कसरी लेख्ने.

• It settles who pays the tax. The Civil Code lists who pays the house rent tax among the things a rent agreement must state. Write it in, or it falls on the landlord.
• It fixes the amount taxed. The ward taxes the rent in the agreement. A certified agreement is your proof if the ward's figure is higher.
• It is what the ward asks for. Kathmandu certifies every letting, and Lalitpur requires the agreement above Rs 20,000 a month.
• It decides disputes. Your municipality's judicial committee (न्यायिक समिति) can settle house rent disputes worth up to Rs 25 lakh a year. It works from the agreement, the receipts and the witnesses.
• It goes with receipts. A landlord who takes the rent in cash must give a receipt (Civil Code, section 391).