1. The Open Border Trap
Because you don't need a visa, it's easy to lose track of days. If you spend 182 days or more in India, you lose NRI status and your Global Income (Nepal Salary) becomes taxable in India.
2. The FEMA Compliance Trap
Just because INR works in Nepal, doesn't mean you can keep a Resident Account.
When you become an NRI (residing in Nepal for employment/business), you MUST convert your resident savings accounts to NRO accounts.
Common Mistake
Continuing to operate a standard SBI/HDFC Savings Account in India while living in Kathmandu.
Penalty: Up to 3x the amount involved under FEMA.
The Solution
- 1. Inform your bank of status change.
- 2. Re-designate account as NRO.
- 3. Open NRE for repatriating Nepal savings to India.
Currency Peg Wealth Effect
While wealth looks "larger" in NPR, tax brackets in Nepal are also denominated in NPR.
3. Income Stream Matrix
Nepal Salary
🇳🇵Nepal: Taxable (Progressive Slabs 1% - 39%).
India: Exempt (for NRIs).
NRE Interest
🏦India: Tax Free.
Nepal: Taxable.
Indian Rent
🏠India: Taxable.
Nepal: Taxable (Foreign Income).
4. The "High Value Note" Ban
Unlike other countries, physical INR cash is widely used in Nepal. However, regulations regarding ₹500 and ₹2000 notes fluctuate frequently.
- General Rule: Carrying INR notes > ₹100 denomination is often restricted or capped (e.g., ₹25,000 limit).
- ₹500 Notes: Check current RBI/NRB status before travel. Historically banned, sometimes allowed with limits.
- Safe Bet: Carry ₹100 notes or use Debit/Credit cards (RuPay/Visa work well).
Tax Rate Comparison (Approx Max Slab)