Yango drivers in Nepal are now operating under a new tax framework introduced for ride-sharing services. From Shrawan 1, 2083 (17 July 2026), ride-sharing platforms must handle a 5% VAT on applicable transport and delivery services, while a separate 1% advance income tax applies to payments made to individuals providing services through the platform.

For drivers, the important thing is understanding what each percentage means. The 5% VAT is not the same as the 1% TDS, and the two should not simply be treated as a single 6% deduction from driver earnings.

What Are the New Tax Rules for Yango Drivers?

The main changes affecting ride-sharing drivers are:

• 5% VAT applies to the applicable ride-sharing transport or delivery service.
• 1% advance income tax is withheld from qualifying payments to service providers.
• Drivers must have a Permanent Account Number (PAN).
• Drivers providing services through the platform are not required to obtain separate VAT registration solely for that activity under the special ride-sharing arrangement.
• The ride-sharing platform handles the applicable VAT collection and the advance-tax withholding process.

These rules apply to the wider ride-sharing sector, including platforms such as Yango, Pathao and inDrive.

Is Yango Driver Tax 5% or 6%?

This is one of the biggest points of confusion.

There are two separate tax measures:

So, while both rates were introduced as part of the new ride-sharing tax framework, they should not be described as one 6% driver tax.

The 5% VAT is collected through the platform under the special ride-sharing VAT mechanism. The 1% is an advance income-tax deduction connected to the driver’s payment.

How Does the 5% VAT Work for Yango Rides?

Under the new arrangement, the ride-sharing platform collects 5% VAT on the service fee charged by the driver and handles the required tax invoice and submission process. The platform is required to remit the collected VAT to the tax authority within the prescribed period.

This means a Yango driver does not need to calculate and separately deposit the 5% VAT for each ride.

The VAT collected under this special mechanism is also different from VAT on the platform’s own commission or service fee.

What Is the 1% TDS for Yango Drivers?

The new rule also requires a ride-sharing operator to collect 1% advance income tax when making qualifying payments to individuals who provide services through its platform.

For a driver, this is the part that is directly connected to income-tax withholding.

The amount withheld is recorded against the driver’s tax information, so keeping your PAN and payment records accurate is important.

Do Yango Drivers Need a PAN?

Drivers providing services through a qualifying ride-sharing platform are required to have a Permanent Account Number (PAN) under the new tax arrangement.

If you are already driving with Yango, make sure the PAN information associated with your driver account and tax records is correct.

If you are planning to register as a new driver, having the required tax identification documents ready can make the onboarding process easier.

Do Yango Drivers Need to Register for VAT?

No, not solely because they drive through a qualifying ride-sharing platform.

The special VAT mechanism places the collection responsibility on the platform. Drivers still need PAN, but they do not have to obtain separate VAT registration simply to provide transport services through the platform under this arrangement.

This distinction is important because PAN registration and VAT registration are not the same thing.

What About VAT on Yango’s Commission?

The 5% ride-sharing VAT should also be separated from VAT applicable to the platform’s own commission or service fees.

Current implementation guidance states that platforms continue to apply the standard 13% VAT to their own commission or booking/service-fee income, while the 5% mechanism applies to the driver’s transport or delivery service.

Therefore, drivers may see different tax-related amounts associated with a transaction. These amounts should not automatically be added together and treated as one tax charged to the driver.

How Will the New Tax Rules Affect Yango Driver Earnings?

The 1% advance income tax can affect the amount paid to the driver, because it is withheld from the applicable payment.

The 5% VAT has a different treatment because the platform collects it under the ride-sharing VAT mechanism. The actual effect on a driver’s payout therefore depends on how the fare, platform charges and tax deductions are shown in the driver’s transaction statement.

For a clearer picture of your earnings, keep track of:

• Total ride value
• Platform commission or service fees
• Applicable VAT
• 1% advance income tax
• Fuel expenses
• Vehicle maintenance
• Other driving costs

This gives you a better view of your net earnings, rather than looking only at the gross fare.

A Simple Example

Suppose a qualifying ride has a service value of Rs. 1,000 before the applicable taxes and platform charges.

The 5% VAT on the ride-sharing service would be Rs. 50.

Separately, the 1% advance income tax is calculated according to the applicable payment and withholding rules. The exact amount withheld from the driver’s settlement can therefore depend on the transaction structure and applicable platform charges.

This is why drivers should use their actual Yango payout statement rather than simply subtracting 6% from every fare.

What Should Yango Drivers Do Now?

The new rules do not require drivers to handle the entire tax process themselves, but there are a few things worth keeping organized.

• Keep your PAN details updated.
  Your PAN is now an important part of the ride-sharing tax process.
• Check your payout statements.
  Look at how VAT, platform charges and advance tax are reflected in your transactions.
• Keep your records.
  Save relevant earning statements, payment records and tax documents.
• Separate business costs from tax deductions.
  Fuel, maintenance and other vehicle expenses are operating costs, not the same thing as VAT or advance income tax.
• Check your wider tax position.
  If Yango is one of several income sources, your overall tax obligations may be different from those of someone whose only income comes from driving.

How Can InnoHub Help Yango Drivers?

InnoHub Services supports Yango drivers with onboarding, platform guidance and driver training in Nepal.

For tax compliance, InnoHub can help drivers understand the basic requirements and what information they should keep ready. However, individual income-tax obligations depend on the driver’s circumstances, and InnoHub does not determine a driver’s final tax liability.

For questions about a specific Yango account, payout or platform deduction, drivers should also use the appropriate Yango support channel.

What Yango Drivers Should Know About the New Tax System

The new ride-sharing tax rules are easier to understand when the two main percentages are kept separate.

5% VAT applies to the applicable ride-sharing service and is collected through the platform.

1% advance income tax is withheld from qualifying payments to service providers.

Drivers need PAN, but they do not separately register for VAT solely because they provide services through a qualifying ride-sharing platform.

For drivers, the practical priority is to understand the deductions shown in their Yango statements, keep proper records and make sure their PAN information is correct.

Need Help Getting Started With Yango?

InnoHub Services can guide you through the Yango onboarding process and help you understand the requirements before you start driving.

Register with InnoHub Services:
https://forms.fleet.yango.com/forms?ref_id=0a89c29297a1482e9f728656ee87fd3b

Frequently Asked Questions

What is the new Yango driver tax in Nepal?

From 17 July 2026, the new ride-sharing tax framework includes 5% VAT on the applicable ride-sharing service and 1% advance income tax on qualifying payments to service providers.

Is Yango VAT 5% or 13%?

The special VAT rate for the applicable ride-sharing service is 5%. The platform’s own commission or service-fee income is separately subject to the standard 13% VAT under the current framework.

What is the 1% TDS for Yango drivers?

It is an advance income-tax deduction that the ride-sharing operator collects from qualifying payments made to individuals providing services through its platform.

Do Yango drivers need PAN in Nepal?

Yes. Drivers providing services through qualifying ride-sharing platforms are required to have a PAN.

Do Yango drivers need VAT registration?

No. A driver providing services solely through a qualifying ride-sharing platform does not need separate VAT registration under this special arrangement.

Is the 5% VAT deducted from the Yango driver’s income?

The platform collects the 5% VAT under the ride-sharing VAT mechanism. It should not be confused with the separate 1% advance income-tax withholding from the driver’s payment.

Is the new Yango tax simply a 6% deduction?

No. The 5% VAT and 1% advance income tax are separate tax mechanisms and should not simply be treated as a single 6% deduction from every driver’s payout.

Does the 1% advance tax mean I have no other tax obligations?

Not necessarily. The 1% is an advance income-tax withholding. Your overall tax position can depend on your total taxable income and other circumstances.

What should I do if I do not understand a tax deduction in my Yango payout?

Check your transaction or payout statement first to identify the type of deduction. For platform-specific questions, contact Yango support. For questions about your personal tax liability, consult a qualified tax professional.