A CRITICAL EVALUATION OF NEPAL’S PERSONAL INCOME TAX SLAB BY BUDGET FY 2083/84
Abstract This research paper examines the recent changes in personal income tax brackets introduced in Nepal's Fiscal Year 2083/2084 budget. Although the policy claims to provide significant financial relief by doubling the baseline tax-exempt threshold (1% Social Security Tax) to NPR 10,00,000 and reducing the maximum marginal rate from 39% to 29%, a thorough equity analysis uncovers a regressive aspect. This paper uses quantitative simulation models to compare the old income tax brackets (FY 2082/83) with the new provisions across different salary ranges. The findings indicate that while the middle class experiences a short-term increase in liquidity, high-income executives and ultra-high-net-worth individuals gain disproportionately large financial benefits, undermining the constitutional principle of vertical equity. By drawing from tax structures in OECD countries, Scandinavian models, and developing nations, this paper advocates for an alternative multi-tiered progressive...
