The Beach Aircraft (BHA 103), which crashed at 7.30 am local time, belonged to the private Buddha Air airline and had a total of 19 people aboard, including a three-member crew.
One Nepalese passenger survived miraculously, according to an official at the Civil Aviation Authority of Nepal (CAAN).
A total of 18 people, including 10 Indians, were killed in the crash, the official said.
The passenger, who escaped the crash, was rescued from the accident site located 25 km east of the capital and admitted to hospital.
Apart from 10 Indians and three crew, the plane had three foreigners, whose identities were yet to be established, and three Nepalese passengers aboard, according to the Rescue Coordination Centre, Tribhuvan International Airport, under the CAAN.
The aircraft, which had taken tourists to view Mount Everest and other high peaks, crashed at Kotdanda hills in Lalitpur district when it was returning to Kathmandu.
The Indian nationals killed in the crash were identified as Pankaj Mehta, Chhaya Mehta, H D Nagraja, S Nagraja, I Nagraja, L Nagaraja, D Talosubrisum, D P Talosubrisum, Nagraja Talosubrisum and P Talosubrisum.