Tax Changes for the Fiscal Year 2082/83
May 30, 2025 | Investopaper
For the fiscal year 2082/83 (2025/26), the Economic Bill unveiled by the government signals a strategic push to bolster economic growth, as outlined by Finance Minister Bishnu Prasad Paudel during Thursday’s joint session of the federal parliament. Beyond the dozen-plus tax exemptions, the bill aims to stimulate investment in key sectors, fostering a business-friendly environment.
The Economic Bill offers income tax and electricity tariff exemptions to information technology-based industries, hotels, and resorts, treating them as special industries. Startups with an annual turnover of up to 10 crore rupees will be exempt from income tax for five years. The government has also abolished the value-added tax previously applied to electronic transactions.
For electric vehicles, existing taxes and tariffs remain untouched. Additionally, for public and private vehicles over 20 years old or deemed inoperable, the government has introduced a provision to waive remaining income tax if the last two years’ income tax is paid. Machinery and equipment imported for green hydrogen production will be exempt from tariffs, and green hydrogen producers will enjoy a five-year income tax exemption.
To ease compliance, individuals unable to submit value-added tax or excise duty details or pay taxes will benefit from waivers on interest, additional fees, late charges, and penalties upon submission and payment. The bill also provides a 75% tax discount on income from IT service exports. Individuals exporting IT services from Nepal to foreign countries will now face only a 5% income tax on their earnings.
The government has ramped up taxes on health-risk items, effective immediately from Thursday night. Liquor imported from third countries faces steep customs duties of up to 80%, while cigarettes and cigars carry a 60-paisa per-stick health risk tax, and e-cigarettes and vapes are hit with a 30-rupee per-unit levy. Chewing tobacco, khaini, gutkha, and pan masala now incur an extra 60 rupees per kilogram. A new 2% luxury tax on gold and jewelry sales aims to tap revenue from high-end consumption.
