Businesses with significant expected tax liability in Nepal don't wait until year-end to pay — the Income Tax Act, 2058 requires advance payments in three installments across the fiscal year.
The Three Installments
- Poush-end (mid-January): 40% of estimated annual tax
- Chaitra-end (mid-April): a further 30%, bringing the cumulative total to 70%
- Ashadh-end (mid-July): the remaining 30%, completing 100% before fiscal year close
Who Must Pay in Installments
Businesses and individuals with tax liability above the threshold set by the IRD each year must estimate and pay in installments, rather than settling the full amount when filing the annual return.
Underpayment Penalty
Paying less than required at each installment triggers 15% annual interest on the shortfall — calculated for the period the installment was underpaid, not just a flat penalty.
Estimating Accurately
Since your estimate is based on projected annual income, businesses with volatile or seasonal revenue (tourism, construction, trading) should revisit their estimate before each installment date rather than simply dividing last year's tax by three.
Company Sathi helps businesses estimate and file advance tax installments accurately, avoiding interest on underpayment.
