Can I get back the TDS deducted on my bank or FD interest in Nepal?

No. Interest paid by a bank or financial institution to an individual is final withholding under Section 92 of the Income Tax Act 2058. Once the bank deducts the 6% TDS and deposits it, your tax on that interest is settled. You cannot add it to your return and claim it back. This is the single most misunderstood point about Nepali TDS.

Is dividend TDS refundable in Nepal?

No. The 5% TDS on dividends to an individual shareholder is also final withholding. You do not report the dividend separately on your personal return and you cannot reclaim the 5%. The same logic applies to rent paid to a non-business individual (10%) and a few other categories listed in Section 92.

Which TDS can actually be refunded?

Adjustable (non-final) withholding under Section 93: salary TDS, service and consulting fees (1.5%), contract payments (1.5%), and advance or installment tax. These are credited against your final annual tax liability when you file your return. If the credits exceed what you actually owe, the excess is refundable under Section 113.

How do I claim a tax refund from the IRD?

File your annual income tax return (the D-03 return) through the IRD taxpayer portal, declaring your TDS credits on Annexure 10, which auto-populates from the e-TDS the withholder deposited. If your credits exceed your liability, the return shows an overpayment. The IRD first sets it off against any unpaid tax, then refunds the balance. The claim must be made within two years.

How long does a tax refund take in Nepal, and is interest paid?

The law (Section 113) requires the IRD to pay interest at the normal rate on delayed refunds, and consultants report straightforward claims taking roughly 45 to 60 days. In practice, refunds are widely reported as slow and difficult, often carried forward against future liability rather than paid out. There is no official IRD service-level timeline, so treat the quoted durations as estimates, not promises.

What is the deadline to claim a tax refund in Nepal?

Two years. Section 113(4) requires you to apply within two years of the latest of: the end of the income year in which the excess was paid, the date you paid the excess, or the date the case was decided. Miss the window and the right to claim lapses, so file your return on time even in a refund year.

TDS Refund in Nepal: How to Claim Excess Tax Back

A friend checked his FD statement and saw the 6% TDS the bank had skimmed off every interest credit. "I'll just claim that back when I file," he said. He cannot. That money is gone for good, and understanding why is the whole game with Nepali tax refunds.

The Income Tax Act splits withholding into two buckets, and only one of them is refundable. Get the bucket wrong and you either chase money you will never see, or you leave a real refund unclaimed.

The one distinction that decides everything

Section 92 of the Income Tax Act 2058 lists income where tax is withheld finally. Section 93 covers withholding that is adjustable against your final liability. That single split determines whether a refund is even possible.

Income with TDS	Typical rate	Final or adjustable	Can you reclaim excess?
Bank / FD interest (individual)	6%	Final (Sec 92)	No
Dividend (individual shareholder)	5%	Final (Sec 92)	No
Rent to a non-business individual	10%	Final (Sec 92)	No
Salary	scaled to your slab	Adjustable (Sec 93)	Yes, if over-withheld
Service / consulting fee	1.5%	Adjustable	Yes, if over your liability
Contract payment	1.5%	Adjustable	Yes
Advance / installment tax	per estimate	Adjustable	Yes, if over your liability

Read the table before you do anything else. If your only "extra" tax is the 6% on bank interest or the 5% on dividends, there is nothing to reclaim. The 6% FD interest TDS post walks through the final-tax mechanics of Sections 88 and 92 in detail.

The TDS you will never see again

Final withholding is designed to close the matter at source. Once the payer deducts and deposits the tax, you are "deemed to have fulfilled" your liability on that income, and Section 97 even exempts people whose only income is final-withholding income from filing at all.

That means three common deductions are permanent:

Bank and FD interest: 6% (raised from 5% by the Finance Act 2080), final. No refund, regardless of your slab.
Dividends: 5%, final for individuals. You do not report the dividend separately and cannot reclaim the 5%. Contrast this with the capital gains tax on shares, which has its own settlement-day mechanics.
Rent paid to an individual not in the rental business: 10%, final.

People in low slabs often feel cheated here, because a 1%-slab earner still loses a full 6% on interest. That is how final withholding works: the rate is fixed and does not flex to your personal slab.

The TDS you can actually reclaim

Adjustable withholding is provisional. It is a prepayment of a tax you have not yet finalised, so when you file and the real number turns out lower, the excess comes back. The genuine overpayment scenarios:

Two employers in one year. Each deducts salary TDS as if it were your only job, so the combined withholding overshoots your real liability. The salary TDS post explains the annual-divided-by-12 logic that causes this.
An employer simply over-deducted. Reconciled when you file.
A consultant or freelancer with 1.5% deducted across many clients, adding up to more than the final tax due on total income. The freelance and side income tax post covers when this happens.
Advance or installment tax that exceeds your final liability.
TDS deducted on a payee whose income falls below the taxable threshold.

In each case the tax was withheld, but your true liability is lower, so the difference is yours to reclaim.

How to actually claim it

The refund is not a separate form you post in. It surfaces when you file your annual return.

File the income tax return (D-03) on the IRD taxpayer portal, within three months of the fiscal year-end (Section 96), which lands around the end of Ashoj. The online filing walkthrough covers who must file and the portal steps.
Declare your TDS credits on Annexure 10. If the withholders filed e-TDS correctly, this annexure auto-populates with the tax already deposited against your PAN. Cross-check it against your own TDS certificates.
The return computes the overpayment. Section 113 then directs the IRD to first set the excess off against any unpaid tax you owe, and refund what remains.
Keep the evidence: PAN, TDS certificates or e-TDS statements, proof of payment, income statements, and the bank account details for the refund.

The two-year clock, and the interest the law owes you

Two numbers protect you. Section 113(4) gives a two-year window to claim, measured from the latest of the end of the income year, the date the excess was paid, or the date the case was decided. Section 113(6) entitles you to interest at the normal rate on a delayed refund, accruing from the return due date (for adjustment cases) to the date you are actually paid. The Act's normal interest rate is commonly cited at 15% a year, though it is worth re-confirming against the current Finance Act before you rely on it.

File on time even when you are owed money. The refund right is the one thing you can lose purely by waiting.

The uncomfortable reality

The law and the practice diverge sharply, and an honest post has to say so. Reporting in Nepali Times quoted an IRD spokesperson calling the process "a very lengthy and difficult one," and a tax expert saying a refund is "very, very difficult to get... almost impossible," with overpaid tax repeatedly rolled forward as "government reserve" rather than paid back. The figures cited were stark: in one year about Rs 6.67 billion was claimed and only roughly 57% refunded.

So set expectations accordingly. The right exists, the statutory interest exists on paper, but individuals chasing a modest refund should expect delay, persistence, and possibly a carry-forward against next year's liability instead of cash. None of that changes the core advice: claim what is adjustable, do not chase what is final.

What you actually need to know

Final withholding is permanent. The 6% on bank interest and the 5% on dividends are gone the moment they are deducted, no matter your slab. Do not waste effort chasing them.
Adjustable withholding is reclaimable. Salary, service and contract fees, and advance tax are credited on your return; genuine overpayment (two employers, over-deduction, advance tax over liability) comes back under Section 113.
File on time and keep the certificates. The two-year claim window and the auto-populated Annexure 10 are what turn a theoretical refund into a filed one, even if the payout itself is slow.

A few specifics here move with each Finance Act and are not published as firm service levels: the exact normal interest rate, and how long the IRD actually takes to pay. Verify the live rate and the current D-03 process on the IRD portal before filing. For a walk-through of a specific overpayment situation, email parjanya57@gmail.com.

This post is part of the Nepal Money Basics guide — the earn-more-and-reconcile-the-tax section.