Tax Changes in the Budget for Fiscal Year 2083/84
May 30, 2026 | Investopaper
Swornim Wagle, finance minister of the Government of Nepal has unveiled the budget for the upcoming fiscal year 2083/84. It seems that the budget has brought a good as well as a bad side for Nepali citizens. Although there is a hike in the salary of the people along with income tax exemption limit, the common man might experience the effect of a new tax introduced on different services and products.
Some of the major highlights of the budget include income tax. The highest tax slab will be of 29 percent whereas, the minimum tax slab of 1 percent has increased to Rs. 10 lakhs. At the same time, there is an increase in salaries for the government employees. This hike in salary has an opposite effect due to the new tax introduced on different sectors such as education, health, electricity, etc.
The government has lowered active income tax and increased taxes on passive income. By raising the income tax exemption ceiling and lowering the highest rate, the reduction in revenue would be made up by raising taxes on stock transactions, real estate, and newly-introduced equalization taxes on education and health care.
Revision of Personal Income Tax Structure
| Annual Taxable Income (Rs.) | Tax Rate |
|---|---|
| Up to 10,00,000 | 1% |
| 10,00,001 – 15,00,000 | 10% |
| 15,00,001 – 25,00,000 | 20% |
| 25,00,001 – 40,00,000 | 27% |
| Above 40,00,000 | 29% |
Higher Capital Gain Taxes in Stock Market
There have also been increases in the capital gains tax rate for shares and properties. For shares which have been kept for more than one year, the rate of tax has risen from 5 percent to 7.5 percent. If the sale happens within a year, there is a huge increase to 10 percent.
| Holding Period | Existing Rate | New Rate |
|---|---|---|
| More than 365 days | 5% | 7.5% |
| Less than 365 days | 7.5% | 10% |
Property Capital Gain Taxes
The government has increased the capital gains tax in real state transaction ranging from 5% to 7.5% and 10%.
| Situation | Existing Rate | New Rate |
|---|---|---|
| Property held for more than 5 years | 5% | 7.5% |
| Property held for less than 5 years | 5% | 10% |
| Government compulsory acquisition | 5% | 2.5% |
| Government valuation for development projects | Tax applicable | Tax exempt |
‘Equality Fees’ on Education and Healthcare Sector
As part of an important step taken by the government, a charge of 3 percent equality fee would be imposed on all fees that are collected by private educational institutes. This money would go towards the development of good quality education and construction of academic infrastructure. Likewise, a fee of 3 percent equality would also be imposed on private hospitals, making their services costly for the patients.
Electricity Consumption and Ride-Hailing Services
The government has imposed a 5 percent VAT on electricity consumption (for those using more than 50 units) and ride-hailing service providers. Presently, VAT in Nepal is charged at 13 percent or no charge at all.
Consolidation of Green Tax
There is an enormous restructuring that involves the consolidation of the “Green Tax”. The Government has cancelled many individual taxes such as infrastructure development tax, road maintenance tax etc., collected at customs and have consolidated it all under the banner of “Green Tax”. Though it has been created for environmental sustainability, its impact can be felt far and wide.
With respect to vehicles, the clean infrastructure investment levy now varies from 2.5 percent on a car whose price is Rs. 20,00,000, to a whopping 112.5 percent additional levy on cars priced over Rs. 50,00,000. The Green tax has also seen a rise in petrol from 10 percent.
- EVs valued up to Rs. 20 lakh: 2.5% customs duty.
- EVs between Rs. 30–40 lakh: 17.5% effective tax.
- EVs between Rs. 40–50 lakh: 72.5% effective tax.
- EVs above Rs. 50 lakh: up to 112.5% effective tax.
- Ride-sharing services subject to 5% VAT.
There are excise taxes imposed on many food products too. Potato chips now face an increase in taxes from Rs. 18 per kg to Rs. 30 per kg. Other snacks including cheese balls and kurkure will face tax increase from Rs. 20 per kg to Rs. 75 per kg.
Non-alcoholic beers will face a 100% hike in excise tax from Rs. 45 to Rs. 90 per liter. Energy drinks will face a hike of Rs. 120 per liter (previously Rs. 52 per liter) and soft drinks will face a hike of Rs. 60 per liter (Rs. 25 previously).
A green tax rate of 5% will be levied on vacuum cleaners and parts of vacuum cleaners. The same will apply to smartwatches, SIM cards, memory cards, and smart cards.
Special Provisions
In response to the destruction caused by the recently held ‘Gen-Z’ protests, the government has allowed for 50% of concessions on customs and excise duties applicable for the importation of items needed for repairing or restoring the destruction suffered by furniture and fittings in industrial/commercial premises and star hotels as per the assessment of insurance surveyors.
The second alteration involves eliminating the 2 percent luxury tax imposed on gold. Nonetheless, an additional 0.5 percent ‘skill promotion fee’ is to be applied when selling gold, silver, along with their jewelry to consumers. On top of that, customs duty on diamond import has been increased to 5 percent per carat from 1 percent previously. Additionally, the annual royalty on casinos that use modern machines will double from Rs. 1.5 crores to Rs. 3 crpres.
Conclusion
Essentially, the budget seems to be a deliberate move of compromises, which involves providing relief to income earners as well as workers, but widening the sources of government revenues through taxation on consumption, luxuries, and certain types of goods identified as superfluous or environmental pollution sources. In this respect, while monthly salaries might see an increase for an ordinary Nepali person, education at private schools, medical treatment in private hospitals, power supply for domestic devices, as well as packets of chips will become more expensive.
