KATHMANDU: Through the Economic Bill 2026, the government has amended the Income Tax Act to disallow tax deductions for cash payments exceeding Rs 25,000.

Under the revised rules, individuals or businesses with an annual turnover above Rs 2 million cannot claim single cash payments over Rs 25,000 as deductible expenses when calculating taxable income—a limit that previously stood at Rs 50,000.

This measure is expected to push transactions into the banking system, promoting formal economy expansion, transparency, and reduced cash reliance.

Conversely, the amendment now allows expenses incurred during the issuance of shares or debentures to be recognized as deductible expenses for tax purposes, though all other capital expenditures remain non-deductible.