How to Get Your 3% Education Tax Refunded

Table 1: Refund eligibility at a glance

Background: What the education service fee is

The education service fee is a levy on payments of tuition fees in foreign currency for international study or to foreign-affiliated colleges and universities. Banks collect it from students in accordance with prevailing law and deposit it into a designated Government of Nepal account of the Inland Revenue Department (IRD). It is commonly called the ‘education tax’. The student or guardian pays it to the bank or financial institution in addition to the tuition fee.

Scale of the fee

According to Nepal Rastra Bank (NRB) data (Current Macroeconomic and Financial Situation of Nepal, annual data for mid-July 2026), NPR 141.92 billion was paid in foreign currency as education fees to foreign institutions in financial year 2082/83 (2025/26). Banks and financial institutions collect the education service fee on such payments. At the rate of 3%, the fee on that amount would be approximately NPR 4.26 billion (NPR 141.92 billion × 3%). This figure is an arithmetic estimate, not a reported collection amount: it assumes that the 3% rate applied to the whole amount. No published data on the amount of fee actually refunded were identified, so no refund proportion is assumed here.

How the refund amount is calculated

The Inland Revenue Office (the ‘Tax Office’) refunds the education service fee in proportion to the foreign currency actually received back, compared with the amount originally sent. The refund equals the fee paid multiplied by the foreign currency received back and divided by the foreign currency originally sent. Table 2 illustrates the calculation for a student who sends USD 100 at an assumed rate of NPR 140 per USD, so that the fee paid is NPR 420 (100 × 140 × 3% × 100%). If the full USD 100 is returned, the entire NPR 420 is refunded. If only USD 90 is returned, 90% of NPR 420 (NPR 378) is refunded.

Table 2: Illustrative refund of the education service fee (USD 100 sent; NPR 140 per USD; education service fee of NPR 420)

Source: Author’s illustration. The exchange rate is assumed for illustration only.

Key issues

This article answers five questions:

What the Finance Act provides

Section 15 of the Finance Act, 2083 (2026) provides, in summary, as follows on the education service fee:

Education service fee, advance tax and TDS: how they differ

The education service fee is 3% of the education fee paid in foreign currency. Banks and financial institutions deduct it and deposit it into the Government of Nepal’s revenue account under code 11444 by the 25th day of the following month. It applies to the education fee paid to a foreign college or university, but not to living expenses and other related costs. If living costs and tuition fees are not separated in the invoice or offer letter issued by the university or college, the bank levies the fee on the total amount.

Advance tax and TDS are separate charges under the Income Tax Act, 2058 (2002). Table 3 compares the three.

Table 3: Education service fee compared with advance tax and TDS

Laws and regulations that govern the refund

Three instruments are relevant:

The IRD issued the Education Service Fee Refund Procedural Standard, 2078 (the ‘Standard’) to provide a simplified process for refunding the fee to students who paid it while remitting an education fee to a foreign college or university but were unable to go abroad to study, for reasons such as visa refusal or withdrawal.

The Standard is available on the IRD website:

Education Service Fee Refund Procedural Standard, 2078 (Inland Revenue Department)

Under the Standard, a student or guardian may submit the application and required documents to a bank or financial institution at any time. The bank, however, forwards the collected documents to the Tax Office only three times a year: by the 3rd day of Mangsir (mid-November), Chaitra (mid-March to mid-April) and Shrawan (mid-July to mid-August), as shown in Table 4.

Table 4: Bank submission deadline for refund

Source: Education Service Fee Refund Procedural Standard, 2078.

Parties and refund process

Parties involved

Three parties are involved in the refund process (Table 5).

Table 5: Parties and their responsibilities

Source: Education Service Fee Refund Procedural Standard, 2078.

Step-by-step refund process

Summarised process flow

1. Step 1: Application Submission
   The applicant submits an application to the Bank or Financial Institution through which the education fee was paid to the foreign university/college, along with all required supporting documents*.
2. Step 2: Bank Verification and Submission
   The Bank or Financial Institution verifies the submitted documents and forwards them to the concerned Tax Office where the bank’s PAN is registered. This submission is done three times a year.
3. Step 3: Review and Refund Processing by Tax Office
   The concerned Tax Office reviews and scrutinizes the documents. After verification, the refund amount is processed and transferred to the respective Bank or Financial Institution via cheque or online fund transfer.
4. Step 4: Credit to Applicant’s Account
   The Bank or Financial Institution credits the refunded amount to the applicant’s account.

Required documents

• Application in the specified format
• Identification documents of the student and guardian (if required)
• Offer letter issued by the college or university
• No objection letter issued by the Ministry of Education
• Bank statement or receipt of the amount paid
• Supporting documents for payment of the fees, such as invoices
• Any document evidencing visa refusal, rejection or withdrawal
• Bank account statement or refund receipt from the foreign university or college clearly showing the amount received in foreign currency

Deadline for applying for a refund

A student or guardian must submit the refund request to the bank or financial institution within three years from the date the foreign currency refund is received.

Practical implications

Students and guardians should:

1. Obtain an invoice or offer letter that shows tuition fees separately from living and other expenses before the remittance is made. Where they are not separated, the bank levies the fee on the total amount.
2. Keep every supporting document until the refund is credited, including the application, identification, offer letter, no objection letter, payment receipts, evidence of refusal or withdrawal, and the foreign institution’s refund receipt or bank statement.
3. Apply through the same bank or financial institution that collected the fee.
4. Apply early. Banks forward documents to the Tax Office only three times a year (Table 4), so an application collected just after a cut-off waits for the next submission.
5. Apply within three years from the date the foreign currency refund is received.
6. Confirm the current forms and requirements with the bank or the Inland Revenue Office before applying.

Key takeaways

1. The education service fee is a 3% levy on foreign currency exchanged for education fees, collected by banks under Finance Act, 2083 (2026).
2. It is refundable only where the student cannot go abroad and the foreign currency has been refunded; the refund is proportionate to the amount refunded back.
3. Advance tax and TDS are separate taxes under the Income Tax Act, 2058 (2002) and are outside the Standard.
4. Claims are made through the bank that collected the fee, which forwards them to the Tax Office three times a year; the claim must be made within three years.

Conclusion

A student who cannot proceed abroad can reduce the financial burden by claiming a refund of the education service fee, through the bank, from the Tax Office where the foreign university/college has refunded the amount following visa refusal or withdrawal of the application. Procedures, forms and required documents may be revised, so the relevant bank or Inland Revenue Office remains the source for current requirements.

References and sources

• Finance Act, 2083 (2026),
• Income Tax Act, 2058 (2002).
• Inland Revenue Department, Education Service Fee Refund Procedural Standard, 2078.
• Nepal Rastra Bank, Current Macroeconomic and Financial Situation of Nepal, annual data for mid-July 2026.

Key contacts

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