Nepal Budget Highlights 2083-84

 

 

Table of Contents

Key Reforms & Policy Priorities. 1

1. Capital Market & Financial Sector Reform.. 1

2. Legal, Investment & Business Reform.. 1

3. Public Institutions & Infrastructure Financing. 2

4. Agricultural Development & Land Management. 2

5. Health Sector. 2

6. Infrastructure. 3

7. Energy. 3

8. Cooperatives & Social Sector. 4

9. Digital & Information Technology. 4

10. Communication. 4

11. Education. 4

Amendments in Tax. 5

1.      Income Tax. 5

2.      Value Added Tax. 11

3.      Excise Duty. 16

4.      Customs Act. 21

5.      Others. 23

 

 

 

Key Reforms & Policy Priorities

1. Capital Market & Financial Sector Reform

•                   The Finance Act 2083 authorizes the introduction of three new trading mechanisms on the Nepal Stock Exchange - intraday trading, short selling, and derivatives trading.

•                   Capital Gains Tax for stock investors will now be classified as a Final Withholding Tax.

•                   Listed companies are permitted to issue Global Depository Receipts (GDRs) for foreign listings.

•                   Non-Resident Nepalis (NRNs) will be allowed to participate in the secondary capital market.

•                   The government will introduce new laws governing Securities Market Management and Financial Trustees.

•                   Subsidized loans will be provided to the families of Gen-Z martyrs following loan quality assessments.

•                   Microfinance access will be expanded specifically to support small-scale farmers.

•                   Insurance companies must now channel 20% of their reinsurance through the Nepal Reinsurance Company.

•                   Third-party vehicle insurance coverage will be increased to a limit of Rs. 10 lakhs.

•                   An asset management company will be established to handle bad loans for financial institutions.

•                   The government plans to launch a dedicated cyber security insurance service.

 

2. Legal, Investment & Business Reform

•                   The government will repeal 15 outdated laws and introduce new legislation for debt recovery and intellectual property.

•                   A separate commercial tribunal will be established to ensure the fast resolution of business disputes.

•                   Nepal will sign foreign investment protection and double-taxation treaties to attract international capital.

•                   Prior approval from the Nepal Rastra Bank is no longer required for the repatriation of foreign investment.

•                   Foreign Direct Investment (FDI) frameworks will now include convertible instruments and hybrid tools.

•                   Foreign investors and multinationals will be allowed long-term apartment leasing in designated areas.

 

3. Public Institutions & Infrastructure Financing

•                   Equity in Rastriya Banijya Bank will be increased to strengthen the institution by GON.

•                   Nepal Airlines will be corporatized and paired with a strategic partner to improve management.

•                   The government will issue public shares for National Life Insurance and Bishal Bazaar.

•                   HIDCL will be merged with a suitable financial institution to specialize in infrastructure financing.

•                   Seven public institutions will undergo Due Diligence Audits for future management under PPP models.

•                   The government will launch offshore, clean energy, and diaspora bonds issued in Nepali currency.

             

4. Agricultural Development & Land Management

•                   Agrobusinesses investing up to NPR 20 million can receive a 40% subsidy with annual reimbursements.

•                   NPR 32.46 billion has been allocated for the procurement of chemical fertilizers this fiscal year.

•                   Conditional grants totaling NPR 360 million will promote organic fertilizer use at the local level.

•                   The government will provide NPR 2.19 billion for agricultural insurance premium subsidies.

•                   An 80% insurance premium subsidy will be maintained for agriculture and livestock.

•                   The service system will be restructured to be "Farmer-Centered" and include Farmer ID cards.

•                   Land banks will be established, and unused private land may be converted into shares of agro-companies.

•                   Green urea industries will be operated in partnership with the NEA and the private sector.

•                   Online land transactions and integrated administration will be expanded to 35 municipalities.

•                   Land management for Dalits and squatters is targeted for completion within the next fiscal year.

 

5. Health Sector

•                   The health sector is allocated NPR 101.95 billion, including 15 billion for health insurance.

•                   NPR 13.15 billion is earmarked for free medicines, maternal safety, and support for poor citizens.

•                   The government aims to complete 336 basic hospitals within the next three years.

•                   Capital grants are provided for new PET scan and cyclotron machines at B.P. Koirala Memorial Cancer Hospital.

•                   Nepal Aushadhi Limited will be encouraged to produce 25 types of essential free medicines.

•                   A National Health Accreditation Authority and a Food and Drug Administration will be established.

•                   A "One Citizen One Digital Profile" system will be implemented for real-time service monitoring.

•                   Night duty allowances for nurses have been doubled to improve working conditions.

•                   Air ambulance services will be launched in the remote areas of Karnali Province.

 

6. Infrastructure

•                   Road and urban infrastructure development receives a total allocation of NPR 286.48 billion. • The government plans to complete 1,000 km of blacktopped roads and 275 bridges next year.

•                   The East-West Highway will be upgraded to four lanes within a five-year timeframe.

•                   Electric public buses and smart bus parks will be introduced in Kathmandu and Pokhara.

•                   A goal has been set to ensure every citizen is within a 30-minute walk of a suspension bridge.

•                   Specific funding is allocated for the Karnali, Pushpalal Mid-Hill, and Madan Bhandari Highways.

 

7. Energy

•                   NPR 85.54 billion is allocated for energy generation, transmission, and distribution lines.

•                   Nepal aims to reach an installed capacity of 5,535 MW by adding hydro and solar sources.

•                   Pilot green hydrogen and battery energy storage systems will be initiated in Hetauda and Kathmandu.

•                   Cross-border transmission lines to India remain a high priority for energy trade.

•                   The government will cancel licenses for inactive projects and implement "take or pay" PPA terms.

•                   The Nepal Electricity Authority (NEA) will be split into three separate specialized companies.

 

8. Cooperatives & Social Sector

•                   The monthly child nutrition allowance for Dalit children has been doubled to 1,000 rupees.

•                   Health insurance is expected to cover 90% of the population within three years.

•                   The National Cooperative Regulation Authority will be strengthened to better monitor savings and credit.

•                   An Integrated Depositor Protection Fund will help return funds to members of problematic cooperatives.

•                   A national campaign will encourage wealthy citizens to voluntarily opt out of social security allowances.

 

9. Digital & Information Technology

•         The IT sector is allocated NPR 5.93 billion, with a focus on developing regional "Tech Hubs." • A Sovereign AI Computing Center will be established in Kathmandu using clean hydropower.

•         International AI researchers will be invited back to Nepal to lead domestic innovation.

•         Dozens of government services will be integrated into the Nagarik App for easier access.

•         New Nepal Telecom Bills will be tabled in parliament to modernize communication laws.

 

10. Communication

•                   Quality telecom services will be expanded into the Karnali and Sudurpashchim provinces.

•                   Government data storage will be consolidated into a single, unified secure data center.

•                   The government will promote social media platforms that are officially registered in Nepal.

 

11. Education

•                   The education sector is allocated NPR 218.3 billion to improve nationwide standards.

•                   Quotas for medical, nursing, and IT students will be significantly increased this year.

•                   International universities will be invited to open branch campuses within Nepal.

•                   Domestic universities will be granted administrative and financial autonomy under a costsharing model.

•                   Residential schools will be established for marginalized groups, beginning with the Chepang community.

Amendments in Tax

 

1.    Income Tax

 

S.N.	Topic	Section/ Schedule	Existing Provision	2083/84
PART I -DEFINITIONS
1	International Transaction	Section 2(Kha1)	-	A       new       clause       defines "International Transaction" as any transaction between a person and at least one non-resident person involving goods, services, money, or intangible assets, including transactions affecting income, expenses, assets, or liabilities.
2	Definition: Associated Person (Expanded)	Section 2(KaNa) : New      Sub-clause (4)	Previous definition did not explicitly cover the following relationships.	Expanded to include: (a) entities where one controls 30% or more of income, capital, or voting rights; (b) entities where at least 50% of total assets of a person are financed by loans from one source; (c) entities earning income substantially dependent on another's intellectual property, technical know-how, or business rights; (d) entities supplying 90% or more of raw materials or consumables to a single buyer.
3	Definition: Safe Harbour Rule	Section 2(Kbh1)	-	"Safe Harbour Rule" defined as the conditions under Section 33Ka in which the arm's length transfer price is deemed accepted by the Department without further inquiry.
PART II -EXEMPT INCOME (Section 10)
4	Voluntary Land / Building Transfer to Government	Section 10(Jha1) - New Clause	No specific exemption for             voluntary transfers.	Income derived from voluntary (uncompensated) transfer of land or private building by a natural person to the Government of Nepal, a Province Government, or a local authority is exempt from tax.
5	Interest Income of ForeignOwned Non- Profit Financial Institutions	Section 10(Jha2) - New Clause	No specific exemption existed.	Interest income earned from loans extended in Nepal by a financial institution wholly owned by a foreign government and operating on a non-profit basis is exempt from tax.
6	Income of Water & Sanitation Consumer Committees	Section 10(Jha3) - New Clause	No specific exemption existed.	Income earned by drinking water and sanitation consumer committees registered under the Water Resources Act 2049, in accordance with their stated objectives, is exempt from tax.

 

7	Income         of Universities	Section 10(Tha1) - New Clause	No specific exemption existed.	Income earned by universities established and operating in Nepal, in accordance with their stated objectives, is exempt from tax.
PART III -INCOME & DEDUCTIONS
8	Individual Tax	Schedule 1, Sec 1	•   1%        Social Security Tax up to Rs. 5 Lakhs (Indiv) / 6 Lakhs (Couple).               •   39% for income exceeding Rs.             50          lakhs	•                  Exemption limit increased to Rs. 10 Lakhs.                 •                  Maximum Individual Income Tax Rate reduced by 10 percentage points.
9	House Insurance	Annexure 1, Sub- Clause(16Ka)	Maximum    threshold for deductions 5,000	Up to Rs. 10,000 premium deductible for personal income tax purposes.
10	Sweat Equity Shares -IT Industry	Section 8(3) -New Clause (Nga)	Sweat equity shares received as compensation in the IT industry were taxed as employment income.	The value of sweat equity shares received as compensation by employees in the information technology industry is exempt from employment income tax.
11	Interest Income Threshold             for Taxation	Section 11(2Ka)	No threshold	Interest income exceeding NPR 25,000 is now taxable.
12	Donations       - Deduction Limit Increased	Section 12 -Sub- section (2)	Maximum deductible donation to exempt organizations: NPR 1,00,000.	Maximum deductible donation to exempt organisations increased to NPR 3,00,000.
13	Corporate Social Responsibility (CSR) Expenses	Section   12Gha    - New Section	No specific deduction provision for CSR expenditure.	Expenditure incurred by a person for fulfilling CSR obligations under prevailing law may be deducted from taxable income in the same year, subject to a ceiling of 1% of total taxable income for that year.
PART IV -AGRICULTURAL INCOME
14	Definition     of Agricultural Business	Section    11(6)     - Clarification Clause (Ka)	Previous definition of "agricultural business"         was broader.	"Agricultural business" is clarified to mean: crop cultivation, horticulture  animal husbandry, fisheries, and apiculture.
PART V -TRANSFER PRICING (New Provisions)
15	Safe   Harbour Rule	Section 33Ka -New Section	No        safe             harbour provision existed. All related-party transactions     were subject            to             transfer pricing scrutiny.	Persons with annual turnover up to NPR 1 Billion who meet the conditions in sub-section (3) may opt out of the arm's length determination requirement and use the prescribed normal market transaction (arm's length) value instead. Conditions include:

 

				(a) maintaining an operating profit margin of at least 15% of IT service export costs; (b) fixing intra-group loan interest rates by referencing the two reference rates per the prescribed method; or (c) maintaining a profit margin of at least 5% over the Department-prescribed minimum service cost. Once opted out, the arrangement applies for 5 consecutive income years unless there is a fundamental change in business nature. Procedural rules are to be prescribed by the Department.
16	Advance Pricing Agreement (APA)	Section 33Kha - New Section	No APA mechanism existed.	Notwithstanding other provisions, the Department may enter into advance pricing agreements with taxpayers to determine arm's length prices for international transactions. Nepal may also enter into bilateral or multilateral APAs with foreign countries under double tax treaties. Agreements must specify the methodology, comparable data, and other conditions. An APA is binding on both parties and valid for up to 5 consecutive income years. Rollback provisions (up to 4 prior income years) may be included. Agreements obtained by fraud or misrepresentation may be cancelled. Prescribed fees are payable for an APA.
PART VI -CAPITAL GAINS TAX
17	Capital Gain Tax -Listed Shares	Section 95Ka(2)(Ka)	Withholding Tax (WHT)  rate on disposal of listed shares: 5% (held > 365 days); 7.5% (held ≤ 365 days).	WHT rate increased to 7.5% (held > 365 days) and 10% (held ≤ 365 days). Now treated as Final Withholding Tax -individuals need not include this in their annual taxable income.
18	Capital Gain Tax -Land             & Building	Section 95Ka(2)(Ka1) -New Sub-clause	WHT rate on land and building: 5% (held ≥ 5 years); 7.5% (held < 5 years).	Rates increased to 7.5% (held ≥ 5 years) and 10% (held < 5 years). A concessional rate of 2.5% applies on non-business capital assets (land and building) involuntarily and unconditionally transferred (donated) by a natural person to the Government of Nepal, Province Government, or local authority per a government decision.

 

19	Capital Gain No Recovery on Voluntary Land Transfer		Section 95Ka(5Ka) -New Sub-section	Capital gains tax was chargeable on all disposals.	A natural person who voluntarily and unconditionally transfers land or a private building to the Government,                 Province Government, or local authority shall not be liable to pay capital gains tax or recover capital loss on such transfer.
PART VII -WITHHOLDING TAX
20	Withholding Tax -Insurance Agents		Section 88 / Section 92 Subsection (1) -New Clause (14)	No specific withholding provision for insurance agent commissions paid to resident natural persons.	A 20% withholding tax (advance tax) is now applicable on service fees or commissions paid to resident natural person insurance agents.
21	Withholding Tax -Ride-sharing Operators		Section 95Ka(6Cha) -New Sub-section	No        specific withholding provision for       ride-sharing platforms.	A ride-sharing service operator (ride-sharing aggregator) operating a platform must withhold advance tax at 1% of the service amount paid to natural persons providing services through the platform.
PART VIII -OTHER COMPLIANCE PROVISIONS
22	Cash Expense Limit		Section 21(2)	Cash expense limit of NPR 50,000 applied only when annual turnover exceeded NPR 20 lakhs.	Cash expense limit reduced to NPR 25,000 and now applies to ALL businesses regardless of turnover.
23	Electronic Invoicing		Section 81 -Revised Sub-sections (4) & (5); New Section 119Ka	Electronic invoice issuance through the Departmental billing monitoring system (CBMIS) was required. Non-compliance was subject to existing penalties.	The Department may publish a notice mandating taxpayers to issue electronic invoices; upon such notice, compliance is compulsory. The Department may also order issuance via alternative billing systems provided by it. Penalty for noncompliance: NPR 5,00,000 for failure to issue electronic invoices, plus NPR 1,00,000 for failure to comply with other provisions of this section.
24	Power           to Obtain Information Electronically		Section 82Ka -New Section	No dedicated provision to compel electronic submission of financial information.	The Department may electronically obtain from any person located in Nepal (or their customers, employees, service recipients, or members) financial data, information, and records related to the economic activities of any other person.
25	Amended Assessment		Section 101(3)	Time limit for amended assessment: 4 years.	Time limit reduced to 3 years, providing faster closure of assessment files.
26	Tax       Refund Claim		Section 113(4)	Time limit for filing a tax refund claim: 2 years.	Time limit extended to 5 years, giving taxpayers more time to claim refunds.
PART IX -TAX ADMINISTRATION
27	Control Change -Startup          / Venture Capital Exemption		Section    57(1)      - Proviso Replaced	Section 57 was triggered on any change in ownership or control of an entity (e.g., share transfer in startups).	Section 57 does not apply where: (a) existing shareholders and partners remain, new shareholders/partners are added, and capital increases in a startup, venture capital, or private equity fund; (b) an interest is involuntarily transferred to a legal heir due to death of a beneficial owner; or (c) a resident entity's ownership changes to another resident entity and the interest remains.

 

2.   Value Added Tax

 

S.N.	Topic	Section/ Schedule	Existing Provision	2083/84
PART I -VAT RATE & SCOPE
1	Power   of Government to Prescribe Multiple VAT rates	Section 7(1Ka) New Sub-section	No provision allowing the Government to freeze or maintain VAT   at     below- standard rates for specific goods/services.	The Government of Nepal may, by notice in the Nepal Gazette, maintain VAT at a rate lower than sub-section (1) and designate specific goods and services subject to that rate i.e. multiple VAT rates may be prescribed by the Government of Nepal,
2	Ride- Sharing: VAT at 5% on Service Fee	Section 7(1Kha) New Sub-section	No specific VAT provision for ridesharing platforms or aggregators.	Notwithstanding sub-sections (1) and (1Ka), a ride-sharing service operator (ride-sharing aggregator) operating a platform that provides transport and delivery services to end consumers must determine and collect VAT at 5% of the taxable value on behalf of both the ridesharing platform operator and the final electricity service provider (for e-vehicles) to the end consumer.
PART II -ELECTRONIC INVOICING
3	Penalty       - Non- Issuance of Electronic Invoice (VAT)	Section 29(1)(Chha2)             New Clause	Penalty for non- issuance           of electronic invoice: NPR      1,000             per instance.	Penalty for failure to issue electronic invoice as required under Section 18Ka(1) or (2): NPR 5,00,000. Failure to comply with other provisions of the same section: NPR 1,00,000.
PART III -TAX RETURN & FILING
4	VAT Return -Filing with District Treasury in Absence of IRO	Section 18(1Ka) - Revised        Sub- section	Taxpayers without a local Inland Revenue Office (IRO) were required to submit returns to the	Taxpayers in districts without an Inland Revenue Office must submit their tax details within 15 days of the relevant month to the relevant local body or the District Treasury Controller's Office, along with the tax amount and return. The receiving office must forward the return and payment
			relevant             local authority only.	details to the relevant Inland Revenue Office within 7 days.
5	VAT Return Amendment -7-Day Correction Window	Section 18(4) New Sub-section	No specific provision allowing the Department to amend a return filed by a taxpayer within a short window.	Where a return submitted by a taxpayer contains errors or needs amendment, the Department may correct it within 7 days of the date of filing, following the prescribed procedure.

 

PART IV -REFUND & PENALTY PROVISIONS
6	VAT Refund	Section 25(1Kha)	The section used the phrase "तत्काल फिता ा गरिनेछ" (immediately refunded).	The phrase has been replaced with "तत्काल छुट         गरिनेछ"     (immediately released/waived).
7	Penalty           - Violation of Internal Stock Movement Guidelines	Section 29(1)(Nga)      - New Clause	No specific penalty for violation of internal stock movement directives.	A penalty of NPR 50,000 per instance applies for violation of the Department's guidelines on the internal movement of goods for business purposes.
PART V -RIDE-SHARING & DIGITAL PLATFORMS
8	Ride-Sharing Platform Operators	Section 8(2Kha) -New Sub-section	No        specific provision             making ride-sharing platforms responsible      for collecting VAT on behalf of affiliated service providers.	A resident ride-sharing service operator (aggregator) operating a platform must determine and collect VAT at the applicable rate on the value of services provided to passengers or delivery recipients through the platform, on behalf of the affiliated service providers, in accordance with this Act and its rules.
PART VI -PENALTIES
9	Penalty           - Late/Incorrect Return	Section 29(1)(Ta)         - Clause Amended	Minimum penalty for late or incorrect filing: NPR 1,000.	Minimum penalty for late or incorrect filing increased to NPR 10,000.
10	Departmental Interpretation -Final (Unless Court Rules Otherwise)	Section 32Kha(4) -New Sub-section	No        explicit provision          on             the finality             of         the Department's interpretation under          Section 32Kha.	The interpretation made by the Department under sub-section (1) shall be final unless a court rules otherwise.
PART VII -DEPARTMENTAL INTERPRETATION
11	Electricity for Household Use	Schedule        1, Group 2, Item 26.16 (2716.00.00)	VAT exemption applied to electricity supply up to 50 units per consumer for household use.	VAT exemption continues to apply to electricity supply up to 50 units per consumer for household use. (No change to threshold, but reconfirmed in the revised Schedule 1.)

 

PART VIII -SCHEDULE 1 -EXEMPT GOODS & SERVICES
12	Ride-Sharing &             Transport via Platforms	Schedule    1, Group          9 (Transport Services)	Group 9 exempted mechanically propelled bridge services, public passenger transport (air, ridesharing platforms, transport & delivery services, and cable cars) and cargo for export.	The revised Schedule 1 reconfirms exemption for mechanically propelled bridge services and public passenger transport. Ride-sharing platform-based transport is now subject to the new 5% VAT provision under Section 7(1Kha) rather than the general exemption.
13	Financial Services	Schedule    1, Group 11 (Other Goods         & Services), Item (Aa)-4	Financial services, digital financial service fees, insurance agent services, life insurance, general insurance, etc. were exempt.	Revised Schedule 1 reconfirms VAT exemption for: financial services, digital financial service charges, insurance agent services, life insurance, accident/health/agriculture/livestock insurance, micro-insurance, clearing house services, money transfer, money exchange, SWIFT, hire-purchase business, deposit and loan protection services, capital market activities, pledge/securities business, merchant banking, commodity futures markets, and securities and commodity brokerage.
14	Solar Energy Equipment	Schedule    1, Group 11, Item (Aa)-6	Goods required for solar power generation as recommended by the Alternative Energy Promotion Centre were VAT exempt.	VAT exemption expanded to include: goods required for electricity generation from solar power, solar thermal energy production, and goods operating solely on solar energy. Specific HS codes listed include solar panels, inverters, charge controllers, lithium-ion batteries (HS 8507.60.00), battery boxes, battery packs, and separators (HS 8507.90.00).
15	Green Hydrogen Production Equipment	Schedule    1, Group 11, Item (Aa)-24	No specific VAT exemption for green hydrogen production equipment.	Equipment, machinery, and instruments required for green hydrogen production are now VAT exempt, as recommended by the Ministry of Energy, Water Resources, and Irrigation.
16	Electric Vehicle Charging Equipment	Schedule    1, Group 11, Item (Aa)-21	No specific VAT exemption for EV charging station assembly.	Equipment and assembly components required for manufacturing or assembling electric vehicle charging machines are now VAT exempt, as recommended by the Department of Industry.
17	Sports Infrastructure (Multipurpose Stadiums)	Schedule    1, Group 11, Item (Aa)-23	No specific VAT exemption for sports infrastructure construction.	Equipment, machinery, and instruments required for construction of football, cricket, and multi-purpose stadiums are VAT exempt, as recommended by the Ministry of Education and Sports.
18	Bonded Warehouse / Passbook Facility	Schedule    1, Group 11, Item (Aa)-17	No specific VAT exemption for bonded warehouse or passbook facility raw material imports.	Industries using bonded warehouses or passbook facilities may import required raw materials, auxiliary raw materials, and packaging materials (not produced in Nepal) VAT free, with VAT refunded at the
				applicable rate upon export of finished goods within the prescribed timeframe.
19	Hydropower Projects	Schedule    1, Group 11, Item (Aa)-12	VAT exemption for hydropower projects with financial closure completed by Chaitra 2082 and capacity above 2 MW.	VAT exemption threshold revised: now applies to reservoir and semi-reservoir hydropower projects with capacity above 200 MW that achieved financial closure by Chaitra 2082. Construction materials, plant, machinery, and parts for such projects remain VAT exempt, subject to detailed engineering design report.
20	Community School      Bus Import	Schedule    1, Group 11, Item (Aa)-16	No specific VAT exemption for community school buses.	Import of one bus with capacity of 30 or more seats for community educational institutions (for student transport) is VAT exempt, as recommended by the Ministry of Education and Sports. Such buses cannot be transferred/sold for 10 years; full VAT applies if transferred before 10 years.
21	Wood- Processing Industry Machinery	Schedule    1, Group 11, Item (Aa)-22	No specific VAT exemption for wood-processing machinery.	Mill machinery required for the wood and timber processing industry is VAT exempt, as recommended by the Department of Industry.
22	Jute Industry Spare Parts	Schedule    1, Group 11, Item (Aa)-7	No specific VAT exemption for jute industry spare parts.	Spare parts supplied to jute industries for their own operational use are VAT exempt, as recommended by the Department of Industry.
23	Woolen    Yarn (Hand-woven, Domestic)	Schedule    1, Group 11, Item (Aa)-8	No        specific             VAT exemption        for woolen yarn used in hand-woven sweaters.	Woolen yarn (excluding artificial and acrylic) used domestically in hand-woven sweaters is VAT exempt.
24	Disaster Relief Goods (Government Grant)	Schedule    1, Group 11, Item (Aa)-9	No specific VAT exemption for goods received as grants for disaster/charitable purposes.	Goods received by any person as a grant approved by the Government of Nepal, Ministry of Finance, for disaster relief or charitable purposes are VAT exempt.
25	Personal Goods Imported   via Air/Baggage	Schedule    1, Group 11, Item (Aa)-10	Personal goods carried by air or as baggage under customs duty exemption were subject to VAT.	Personal goods imported through air travel or as baggage under customs duty exemption provisions are also exempt from VAT.

3.   Excise Duty

 

S.N.	Good / Category	HS Heading	Unit         of Measure	Duty Rate
ALCOHOLIC BEVERAGES (Heading 22)
1	Beer (malt-based)	22.03	Per litre	Rs. 255/litre
2	Grape wine - up to 12% alcohol	22.04	Per litre	Rs. 490/litre
3	Grape wine - 12–17% alcohol	22.04	Per litre	Rs. 490/litre
4	Grape wine - above 17% alcohol	22.04	Per litre	Rs. 570/litre
5	Sparkling wine (champagne etc.)	22.05	Per litre	Rs. 490–570/litre by alcohol %
6	Other fermented beverages (cider, sake etc.)	22.06	Per litre	For Country Beer – 50/litre For Others : Rs. 490–570/litre
	Ethyl alcohol ≥80% - ENA (Extra Neutral)	22.07	Per litre	Rs. 80/litre
	Ethyl alcohol ≥80% - Anhydrous ethanol	22.07	Per litre	Rs. 12/litre
	Denatured spirits	22.07	Per litre	Rs. 35/litre
10	Whisky - 15 UP (≥48.5% alc) manufactured	22.08	Per litre	Rs. 1,860/litre OR Rs. 2,188/LP litre
11	Whisky - 25 UP (42.5% alc) manufactured	22.08	Per litre	Rs. 1,390/litre OR Rs. 1,853/LP litre
12	Whisky - 30 UP (39.94% alc) manufactured	22.08	Per litre	Rs. 1,290/litre OR Rs. 1,843/LP litre
13	All types of alcoholic substances (including spirits) used as raw materials for brandy	2208.20.10	Per litre	Rs. 235/litre
14	All types of alcoholic substances (including spirits) used as raw materials for  Rum & tafia	2208.40.10	Per litre	Rs. 235/litre
15	Gin & geneva - 15 UP strength	2208.50	Per litre	Rs. 1,860/litre
16	Vodka	2208.60	Per litre	Slab by UP strength (same as whisky)
TOBACCO PRODUCTS (Heading 24)
1	Cigarettes - filter-less	2402.20.10	Per M (1,000 sticks)	Rs. 780/M
	Cigarettes - filtered, ≤70mm	2402.20.21	Per M	Rs. 1,845/M
	Cigarettes - filtered, 70–75mm	2402.20.22	Per M	Rs. 2,490/M
	Cigarettes - filtered, 75–85mm	2402.20.23	Per M	Rs. 3,275/M
	Cigarettes - filtered, >85mm	2402.20.24	Per M	Rs. 4,578/M
	Bidi (Indian-style cigarettes)	2402.90.10	Per M	Rs. 100/M
7	Cigars (all types)	2402.90.20	Per         stick (khilli)	Rs. 35/stick
8	Hookah/water-pipe tobacco (shisha)	2403.11.00	Per kg	Rs. 2,100/kg
9	Pipe tobacco	2403.19.10	Per kg	Rs. 2,100/kg
10	Chewing tobacco, cut tobacco (khaini, snuff, gutka)	2403.99.10	Per kg	Rs. 900/kg
11	Dust tobacco (snuff/dip)	2403.99.20	Per kg	Rs. 500/kg
12	Lime-mixed chewing tobacco (retail)	2403.99.30	Per kg	Rs. 550/kg
13	Hookah flavour	2403.99.91	Per kg	Rs. 1,600/kg
14	Homogenised/reconstituted tobacco	2403.91.00	Per kg	Rs. 525/kg
15	Raw/processed cutting tobacco for cigarettes	2403.19.20	Per kg	Rs. 360/kg

 

MOTOR VEHICLES (Heading 87)
1	Passenger bus >25 seats - diesel	8702.10.10	% of value	5%
2	Passenger bus 11–25 seats - diesel	8702.10	% of value	45%
3	Passenger bus 11–25 seats - EV	8702.40	% of value	5%
4	Passenger car - electric motor only (EV)	8703.80	% of value	5%
5	Motorcycle ≤50cc		% of value	40%
6	Motorcycle 50–125cc		% of value	40%
7	Motorcycle 125–200cc		% of value	40%
8	Motorcycle 200–250cc		% of value	60%
9	Chassis - passenger vehicle 11–25 seats	8706.00.20	% of value	45%
10	Chassis - Jeep/van	8706.00.40	% of value	60%
11	Chassis - three-wheeler/auto-rickshaw	8706.00.50	% of value	55%
12	Chassis - pickup double cab	8706.00.61	% of value	60%
13	Chassis - pickup single cab	8706.00.62	% of value	50%
14	Chassis - delivery van	8706.00.63	% of value	30%
COSMETICS, LUXURY & OTHER
1	Perfumes & toilet water	33.03	% of value	15%
2	Beauty & make-up preparations	33.04	% of value	15%
3	Hair preparations	33.05	% of value	15%
4	Industrial aromatic raw materials	33.02	% of value	5%
5	Aerated/carbonated soft drinks	22.02	% of value	5%
6	Energy drinks	22.02	% of value	Rs. 120/ltr
7	Builder's ware (plastics)	39.25	% of value	5%
8	Paints & varnishes	32.08–32.10	% of value	15%
9	Iron/steel structural products	73.07 etc.	% of value	Rs. 25,001/MT (approx)
ENTERTAINMENT, GAMING & LUXURY
1	Video game consoles & machines	95.04	% of value	10%
2	Billiard/casino gaming equipment	9504.20	% of value	10%
3	Coins, banknotes, bank cards for gaming	9504.30	% of value	10%
4	Amusement rides, fairground equipment	95.08	% of value	10%
SPECIAL ITEMS
1	Plastic bags (except direct agri use)	39.23	% of value	5% (interior movement excise)

 

Other Provisions:

•      Excise on liquor/spirits computed per LP (liquid proof) litre. If actual alcohol content differs from declared by ≤1%, the declared slab applies. If >1% difference, the nearest higher slab applies. Imported liquor subject to same rule.

•      Any cocktail prepared using liquor is subject to excise at the rate applicable to heading 2206.00.40.

•      Ambulances, hearses, scooters ≤155cc, and tempo chassis exempt from excise. Scooters supplied to disabled persons: exempt with MoWSCSS/district recommendation. Must register in recipient's name within specified period; if transferred, excise is refunded by the excise office.

•      Domestically produced Chau-Chau (instant noodles, not ready-to-eat) exempt. Manufacturing using >50kW electric power (own generation) also exempt from excise on production.

•      Personal goods imported under customs duty exemption (baggage allowance) also exempt from excise duty.

•      Buses with ≥40 seats (minimum 5 units) registered for public transport by cooperatives/companies: excise exempt. Cannot be sold/transferred for 10 years. Full excise applies if transferred early; after 10 years, standard excise applies.

•      Vehicles imported under diplomatic privilege for use ≤10 years exempt from excise. On expiry of 10 years or mission end, vehicle transferred to GoN at no cost. If vehicle damaged/unfit due to accident/technical reasons (certified by MoFA), excise exemption applies for replacement; if scrapped and de-registered, the replacement is exempt from excise.

•      Beer, wine, cider produced in underdeveloped areas using domestic fruit by industries registered under Industrial Enterprises Act 2076 (Annex-10): 80% rebate on applicable excise.

•      Wine and cider produced domestically from fresh fruit (headings 22.04, 22.05, sub-headings

2206.00.29, .51, .52, .53): 40% excise rebate. If 100% domestic raw material used: 50% rebate.

Industries under Para (8) not eligible for this rebate simultaneously. Raisin wine exempt from all rebate.

•      Industries assembling vehicles (87.02, 87.03, 87.11) from CKD kits: excise duty applies; 50% rebate on excise for domestically assembled/sold vehicles.

•      Goods listed under headings 1–11 identified by 4-digit heading; if listed under an 8-digit subheading, both heading and sub-heading must match for exemption/rate. 'Other' sub-headings do not impede grant of exemption where specifically listed. Classification/harmonisation code interpretation to be decided by Department in consultation with Customs.

•      Goods under heading 21.06 (sub-headings 2106.90.20 and 2106.90.60) and heading 24.03 (subheadings 2403.99.10, .20, .30): excise calculated on total weight per kilogram.

•      All sub-headings under headings 15.06, 33.03–33.05, 33.06, and sub-heading 3307.90.00: domestic production subject to 5% excise.

•      Producers of liquor, beer, and cigarettes must notify the Department of the retail selling price at the start of each fiscal year. Any price change during the year must be notified within 7 days of the change.

•      For the excise duty schedule, the Director General may assign 8-digit sub-headings to goods based on Excise requirements.

•      2 buses with ≥30 seat capacity for student transport by community educational institutions:

excise exempt (Ministry of Education recommendation). Cannot be transferred for 10 years; if transferred, full standard excise applies.

•      Raw materials PE film (3920.49.90) and perforated PE film (3921.19.90) used for sanitary pad manufacturing: excise exempt.

•      Headings 72.13, 72.14, 72.15: domestic production subject to 60% excise rebate. Heading 72.17: 50% rebate on domestic production.

•      Construction and      operation        of        water,             solar,   and     wind    electricity generation/transmission/distribution projects:     construction equipment,      machinery, explosives, steel plates, high-capacity batteries, and related parts: excise exempt for approved projects by NEA, AEPC, and Investment Board. Hydropower projects with financial closure by Chaitra 2082 (>2MW): exempt.

•      Equipment, machinery, parts, and construction materials for setting up industrial estates or industrial villages (with Investment Board recommendation): excise exempt. Detailed engineering design report required.

•      Industries manufacturing or assembling EV charging machines/equipment: excise exempt with Department of Industry recommendation.

•      Mill machinery for wood and timber industry: excise exempt with Department of Industry recommendation.

•      Equipment, machinery, instruments for football, cricket, and multi-purpose stadium construction: excise exempt with Ministry of Education and Sports recommendation.

•      Equipment, machinery, instruments for green hydrogen production: excise exempt with Ministry of Energy, Water Resources, and Irrigation recommendation.

 

4.   Customs Act

•                   Customs duty on industrial raw materials for 273 types of goods has been reduced to be at least one level lower than the duty on finished products.

•                   The existing eleven levels of customs duty have been reduced to seven levels.

•                   Customs duties on EVs, previously based on peak power capacity, will now be based on valuation (value-based).

•                   Customs duty shall be exempted on raw materials imported by industries producing artificial limbs and disability assistive devices.

 

Original Provision	Amended Provision
Section 13(5): Authority for specific customs determinations rested broadly with the "Ministry."	Section 13(5): Authority is now transferred to a "Prescribed Officer," streamlining the decision-making process at the operational level.
Sections 14, 15, and 16: Restricted focus on "Raw Material" inputs for industrial benefits.	Sections 14, 15, and 16: Expanded to "Raw Material or Auxiliary Raw Material," explicitly including packing materials not produced in Nepal.
Penalty Adjustments: Specified monetary penalties for procedural non-compliance were set at five thousand rupees.	Penalty Adjustments (Section 16k): Monetary penalties have been doubled to ten thousand rupees to ensure a more robust deterrent against regulatory infractions.

 

Administrative Review and Appeal

The insertion of Section 28C regarding "Administrative Review and Appeal" (प्रशासकीय पनिावलोकन ु तथा पनिावदेु न) provides a robust legal recourse for traders. It grants individuals the right to challenge decisions made by customs officers concerning classification or valuation.

 

Structural Revisions to Export Customs (Schedule 2)

Export duties are utilized as a surgical tool to manage the depletion of natural resources and incentivize domestic value addition, particularly within the forestry sector.

 

Focus on Forest Products (Code 44.01)

The 2081 amendments target the exportation of primary wood products. The bolded revisions under Code 44.01 encompass firewood, logs, wood chips/particles, sawdust, wood waste, and pellets.

To discourage the outflow of raw timber, the Act applies targeted duty rates:

•20% Duty (Sub-code 4401.21.10): Specifically applied to Salla (Pine species).

•50% Duty (Sub-code 4401.21.90): Applied to "Other" wood species and general wood waste.

             

 

Overhaul of Import Duty Classifications (Schedule 3)

The following table highlights some adjustments to specific commodity codes and their corresponding duty rates.

Chapter/Code	Bolded Commodity Description	Duty Rate (SAARC vs. Others)
04.02.10.10	Skimmed milk (concentrated/sweetened)	30% / 30%
04.05.10.00	Butter, Dairy Spreads, and Fats	30% / 30%
09.02.10.00	Green/Black Tea (not exceeding 3kg packaging)	30% / 30%
19.02.11.00	Pasta, Spaghetti, Macaroni, and Noodles	30% / 30%
19.05.90.60	Cakes, Cookies, and Pastries	30% / 30%
21.06.90.20	Pan Masala and Scented Supari	30% / 30%
22.01.10.10	Mineral Water and Aerated Water	30% / 30%
22.06.00.21	Champagne, Cider, and Perry	80% / 80%
24.02	Cigars, cheroots, cigarillos & cigarettes
2402.10.00	Cigars, cheroots and cigarillos (containing tobacco)	Per Thousand Sticks 12,000 / 12,000
Cigarettes containing tobacco:
2402.20.10	-Non-filter cigarettes	Per Thousand Sticks 6,000 / 6,000
Filter cigarettes:
2402.20.21	-Up to 70 mm length	Per Thousand Sticks 6,000 / 6,000
2402.20.22	-70 mm to 75 mm length	Per Thousand Sticks 6,000 / 6,000
2402.20.23	- 75 mm to 85 mm length	Per Thousand Sticks 6,000 / 6,000
2402.20.24	- Above 85 mm length	Per Thousand Sticks 6,000 / 6,000
Others:
2402.90.10	- Prepared Bidi	Per Thousand Sticks 6,000 / 6,000
2402.90.20	— All types of Cigars	Per Thousand Sticks 12,000 / 12,000
2402.90.90	— Others	Per Thousand Sticks 12,000 / 12,000
24.03	Other Manufactured Tobacco & Extracts (includes Homogenized/Reconstituted tobacco and tobacco essences)	80% / 80%
24.04.12.10	Electronic Cigarettes (Vapes)	30% / 30%
28.01	Fluorine, Chlorine, Bromine and Iodine	5% / 5%
28.04	Hydrogen, Rare Gases & Other Non-Metals	5% / 5%
30.06.93.00	Medical Diagnostic Kits (Clinical Trials)	5% / 5%
38.24.99.20	Solid or liquid dialysis bath concentrate used in the treatment of kidney disease.	Exempt

 

             

 

5.   Others

•      A minimum parity fee will be imposed on private sector education and health services established in remote areas to support infrastructure.

•      For pending tax disputes, if the determined tax amount is paid with an additional 1 percent, fees, fines, additional charges, late fees, or interest will be waived.

•      Taxes including the infrastructure development tax and road maintenance and improvement fee have been merged into the green tax.

•      The bill completely abolished the 2% luxury tax on gold and diamonds. Previously, a 2% luxury tax was levied on high-end jewelry and ornaments valued over Rs. 1 million.

•      Alongside the luxury tax removal, the 13% Value Added Tax (VAT) on diamonds has been completely removed to curb illegal smuggling and boost domestic trading compliance.