How does the Nepal timing absorption rule (३/३, २/३, १/३) work?

When new assets are purchased during the fiscal year, they are absorbed into the depreciation base according to the date of acquisition: Assets purchased from Shrawan 1 to Poush end receive 100% (3/3) absorption; assets purchased from Magh 1 to Chaitra end receive 66.67% (2/3) absorption; and assets purchased from Baisakh 1 to Ashadh end receive 33.33% (1/3) absorption. The unabsorbed portion is added to the opening balance of the subsequent fiscal year.

What is the Section 16 Repair and Maintenance 7% limitation in Nepal?

Under Section 16 of the Income Tax Act 2058, a business can deduct repair and maintenance expenses up to a maximum of 7% of the depreciation base for each asset block in that fiscal year. Any repair expenses exceeding this 7% threshold cannot be deducted as an immediate expense; the excess must be capitalized into the opening WDV of the block for the following fiscal year.

Can computers and office laptops be depreciated under straight-line method in Nepal?

For statutory tax audit and tax return filing in Nepal, all tangible assets must be depreciated using the Written Down Value (WDV) asset pool method specified in Schedule 2. While companies may use Straight Line Method (SLM) for their internal financial statements (under NFRS / NAS), they must adjust to the WDV Schedule 2 rules when calculating their taxable income.

Nepal Income Tax Act Schedule 2WDV Block Depreciation & Section 16 Repairs

Nepal Tax Depreciation Calculator (Schedule 2)

Calculate written-down value (WDV) depreciation for Blocks A, B, C, D & E with 3-tier timing absorption and 7% repairs limit.

Statutory Rate:25.0%

Select Asset Pool Block (सम्पत्तिको समूह छान्नुहोस्)

Opening Written Down Value (WDV) — सुरुको बाँकी मूल्य

रु

Carried forward from previous year tax audit return closing WDV

Additions / New Purchases (चालू आ.व. को नयाँ खरिद)Schedule 2 Timing Rule

Shrawan 1 – Poush End (साउन देखि पुस मसान्त सम्म)100% Absorbed (३/३)

Magh 1 – Chaitra End (माघ देखि चैत मसान्त सम्म)66.7% Absorbed (२/३)

Baisakh 1 – Ashadh End (वैशाख देखि असार मसान्त सम्म)33.3% Absorbed (१/३)

Sales / Disposal ProceedsDeducted from base

Actual Repairs ExpenseSubject to 7% limit

Tax Depreciation for the Year (चालू आ.व. को ह्रासकट्टी)

रु 1,65,000

Depreciation Base: Rs. 6,60,000 (25.0%)

CLOSING WDV (NEXT YEAR)

रु 5,30,000

Next FY Opening Balance

ALLOWABLE REPAIR (7%)

रु 25,000

Within 7% limit

IRD Schedule 2 Tax Audit Annex

Block B

1. Opening WDV (सुरु बाँकी मूल्य):रु 5,00,000

2. Total Absorbed Additions (खरिद आधार):+ रु 1,60,000

3. Disposal / Sale Proceeds (निसर्ग रकम):- रु 0

4. Depreciation Base (ह्रासकट्टी आधार):रु 6,60,000

5. Depreciation Amount (25.0%):- रु 1,65,000

+ Unabsorbed Additions (अर्को वर्ष सर्ने खरिद):+ रु 35,000

Closing WDV Carried Forward:रु 5,30,000

Quick Summary

Inland Revenue Department (IRD) Nepal

What are the 5 depreciation asset blocks in Nepal (Schedule 2)?

Under Schedule 2 of the Nepal Income Tax Act 2058: Block A includes permanent buildings and civil structures (5%); Block B includes computers, furniture, and office equipment (25%); Block C includes automobiles and transport vehicles (20%); Block D includes factory machinery and production plant (15%); and Block E includes intangible assets like software licenses and patents (amortized over useful life).

FY 2083/84 Active Slabs1% SSF Waiver ApplicableIRD Nepal Standard

Nepal Tax Depreciation Calculator (Schedule 2)

What are the 5 depreciation asset blocks in Nepal (Schedule 2)?

Nepal Tax Depreciation FAQs

Nepal Tax Depreciation Calculator (Schedule 2)

What are the 5 depreciation asset blocks in Nepal (Schedule 2)?

Nepal Tax Depreciation FAQs