Fixed Deposit Tax in Nepal: TDS on FD Interest (5% or 15%)
Fixed deposit interest in Nepal is taxed at source. Here is exactly how much, when a PAN cuts it from 15% to 5%, and what you actually receive.
- FD interest is taxed at 5% at source when your account is linked to a PAN — the bank deducts it automatically before crediting interest.
- Without a PAN the deduction is 15% — three times higher. Registering a PAN and linking it is worth it for any real balance.
- On a 6.00% gross rate you receive 5.70% net with a PAN, or just 5.10% without.
- The TDS is generally the final tax on FD interest for most individuals — no extra filing needed.
How much tax is deducted on FD interest?
In Nepal, interest earned on a fixed deposit is subject to withholding tax (TDS) deducted at source. The rate depends entirely on whether your deposit account is linked to a Permanent Account Number (PAN):
| Situation | TDS rate | Net on a 6.00% FD |
|---|---|---|
| Account linked to a PAN | 5% | 5.70% |
| No PAN linked | 15% | 5.10% |
The bank calculates the interest, deducts the applicable TDS, and credits the remainder to you. You never have to pay it separately — it is already taken out.
Why a PAN saves you money
The difference between 5% and 15% is large. On a NPR 10 lakh one-year FD at 6.00%, gross interest is NPR 60,000. With a PAN you lose NPR 3,000 to tax and keep NPR 57,000. Without a PAN you lose NPR 9,000 and keep only NPR 51,000 — a NPR 6,000 difference for a single deposit. Registering a PAN with the Inland Revenue Department is free and quick, and most banks now ask for it at account opening.
Is the TDS the final tax?
For most individual depositors, the 5% TDS on FD interest is treated as a final withholding tax — you are not expected to pay additional income tax on that interest or include it in a separate return. Rules can differ for businesses and very high earners, so if you run a company or have complex income, confirm with a tax advisor. This article is general information, not tax advice.
Does the tax change the "best" FD?
Because the same 5% TDS applies across every bank and finance company, it does not change which institution pays the most — the ranking on the live FD tracker is by gross rate, and the highest gross rate is still the highest net rate. Senior-citizen bonuses and PAN status affect your personal net return, but the comparison order stays the same. Use the FD calculator to see your exact after-tax maturity value.
Frequently asked questions
How much tax do I pay on fixed deposit interest in Nepal?
5% withholding tax (TDS) if your account is linked to a PAN, or 15% without a PAN. It is deducted automatically by the bank before interest is credited.
How do I reduce the tax on my FD interest?
Register a Permanent Account Number (PAN) with the Inland Revenue Department and link it to your deposit account. That cuts the TDS from 15% to 5% — there is no legal way below 5% for a standard FD.
Is FD interest tax-free for senior citizens in Nepal?
No. The 5% TDS (with a PAN) applies to senior citizens too — there is no age-based exemption. Seniors often get a higher gross rate, but the tax treatment is the same.
Do I need to file a separate return for FD interest?
For most individuals the 5% TDS is the final tax on FD interest, so no separate filing is needed. Businesses and complex cases should confirm with a tax advisor.
See live, verified rates: rates change often — check today's numbers on the Byajdar FD rate tracker → or get matched to your best bank with Find My Bank →.