Rent Tax & Tenant Rights in Nepal: A 2025 Specific Guide

Can your landlord increase rent anytime? Who pays the 10% Rent Tax? We explain the Civil Code rules on agreements, evictions, and TDS.

The Landlord-Tenant Conflict

It’s the classic Kathmandu story: Landlord raises rent overnight, Tenant refuses to leave. The Civil Code 2074 and Income Tax Act 2058 actually have very clear rules on this.

1. The Agreement (Samjhauta)

The Law: Any rent Agreement above NPR 20,000/month MUST be in writing.
Duration: Usually 5 years for residential.
Rent Hikes: The law says rent cannot be increased arbitrarily. A fixed percentage (e.g., 10% every 2 years) should be written in the contract.

2. Who Pays the “House Rent Tax”?

This is the #1 confusion.

The Rate: 10% of the gross rent.
Scenario A (Individual Landlord): You rent a flat for living.
- Result: The Landlord is responsible for paying the tax to the Local Ward Office.
Scenario B (Corporate Tenant): You rent an office for your company.
- Result: You (the Company) must deduct 10% TDS (Tax Deducted at Source) and deposit it to the IRD. You pay the landlord the remaining 90%.

3. Eviction Rules

A landlord CANNOT just throw your stuff out.

Notice Period: A minimum 35 Days Written Notice is required for eviction.
Valid Reasons: Non-payment of rent, illegal activities, or if the landlord needs the house for personal use.

4. Tenant Rights

Privacy: The landlord cannot enter your room without permission (except for emergency repairs).
Utilities: Water and electricity must be provided as per the agreement. Cutting off lines to force eviction is illegal.

Conclusion

A “Gentleman’s Agreement” works until it doesn’t. Always sign a House Rent Agreement, verify the tax clause, and keep receipts of your monthly payments. It’s your only defense in the Ward Office Judicial Committee.

Disclaimer: Local Ward bylaws may vary slightly.