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New Tax Rules 2083-84 New Fiscal Year Brings Major Tax and Economic Changes
Nepal has entered a new fiscal year with a number of important changes to the country’s tax and economic system.
As fiscal year 2083/84 began on Friday, the government’s new budget and economic policies officially came into effect. Nepal Rastra Bank’s latest monetary policy has also started being implemented.
The new rules cover everything from personal income tax and customs duties to electricity bills, luxury purchases, ride-sharing services and the capital market. Some taxpayers and businesses will receive relief, while others will have to pay new or higher charges.
Here are some of the biggest changes people and businesses need to know about.
Personal Income Tax Rates Have Been Revised
One of the most noticeable changes is in the personal income tax system.
The government has increased the annual income limit for the 1 percent tax bracket from Rs 500,000 to Rs 1 million. This means people earning up to Rs 1 million annually will now fall under the lowest tax rate.
The maximum personal income tax rate has also been reduced. Previously, the top rate was 39 percent, but it has now been brought down to 29 percent.
Under the new structure, annual income up to Rs 1 million will be taxed at 1 percent. Income between Rs 1 million and Rs 1.5 million will face a 10 percent rate, while income from Rs 1.5 million to Rs 2.5 million will be taxed at 20 percent.
For annual earnings between Rs 2.5 million and Rs 4 million, the applicable rate will be 27 percent. Income above Rs 4 million will be taxed at 29 percent.
The government has also announced a 21 percent increase in employee salaries.
Customs Duty Structure Has Been Reduced to Seven Levels
The customs system has also been reorganized.
The number of customs duty levels has been reduced from 11 to seven. The government has additionally lowered customs duties on 273 types of industrial raw materials.
The goal is to make imported production materials cheaper and help domestic industries reduce their overall manufacturing costs.
For businesses that depend heavily on imported raw materials, the change could provide some relief and potentially improve their competitiveness.
Excise Duty Removed From 360 Categories of Goods
The new fiscal policy has also changed the excise duty system.
Excise duty will no longer apply to around 360 categories of goods. However, the government has increased duties on several products, particularly alcoholic beverages, cigarettes, tobacco products, junk food, juice and certain luxury items.
This means consumers may see different effects depending on what they purchase, with some products becoming cheaper while others face higher taxes.
New Green Tax Combines Several Existing Charges
Another major change is the introduction of a consolidated green tax.
Several existing charges, including infrastructure development and road maintenance-related fees, have been brought together under the new green tax arrangement.
The government says the move is part of its broader effort to restructure taxation while supporting infrastructure and environmental objectives.
Farmers Can Receive Incentives for Agricultural Investment
The government has also introduced incentives aimed at encouraging larger-scale agricultural production.
Farmers investing up to Rs 20 million in agricultural production and commercialization can qualify for incentives of up to 40 percent.
The measure is intended to encourage investment in agriculture and help move farming toward more commercial and organized production.
Intraday Trading and Short Selling Planned for Nepal’s Stock Market
Nepal’s capital market is also expected to become more flexible under the new policy.
The government plans to gradually introduce intraday trading, short selling and derivatives transactions.
Another important change relates to listed shares. Capital gains tax paid on the sale of shares of listed companies will be treated as the final tax.
These measures are intended to make Nepal’s capital market more modern and competitive.
Private Schools and Hospitals Face New 3 Percent Charges
Private-sector education and healthcare services will also be affected by the new tax rules.
A 3 percent education equity charge will apply to fees collected by private educational institutions. Private healthcare institutions will similarly face a 3 percent health equity charge on their services.
These additional charges could eventually influence the amount paid by customers, depending on how institutions incorporate them into their pricing.
Households Using More Than 50 Units of Electricity Face 5% VAT
Electricity consumption is another area where taxpayers will notice a change.
Households consuming more than 50 units of electricity will now be subject to a 5 percent value-added tax.
The government has said it will make arrangements so that the additional tax does not create a direct burden on final consumers. However, the details of how this will work have not yet been fully clarified.
Luxury Hotels and Imported Alcohol Get a New 2% Charge
A new 2 percent luxury charge will apply to five-star and higher-category hotels, luxury resorts and imported alcoholic beverages.
Mini-casinos will also face a significantly higher annual royalty. Their yearly payment has increased from Rs 15 million to Rs 30 million.
Gold and Silver Jewelry Buyers Face an Additional Fee
People buying gold and silver jewelry will also have to account for an additional charge.
The government has introduced a 0.5 percent skill development fee on purchases of gold and silver jewelry.
For expensive jewelry purchases, this additional percentage could result in a noticeable increase in the final bill.
Ride-Sharing Services Such as Pathao and inDrive Face New Fee
Ride-sharing has also been included in the new tax measures.
Services operating through platforms such as Pathao and inDrive will face an additional 5 percent service charge.
The impact of the charge on passengers and drivers will depend on how individual platforms adjust their pricing and commission structures.
Nepal Rastra Bank’s New Monetary Policy Takes Effect
Alongside the government’s tax measures, Nepal Rastra Bank’s monetary policy for fiscal year 2083/84 has also come into force.
The central bank is looking to encourage credit expansion and support economic activity through several policy measures. These include maintaining stability in the interest-rate corridor and allowing commercial banks to invest in foreign government securities.
The central bank has also eased some provisions related to blacklisting caused by bounced checks.
For the wider economy, Nepal Rastra Bank has set a target of keeping inflation within 5.5 percent. It is also targeting an 11 percent expansion in private-sector credit and a 14 percent increase in broad money supply.
What the New Tax Rules Mean for Ordinary Nepalis
The new fiscal year brings a mixture of tax relief and additional charges.
People in certain income brackets could benefit from the lower personal income tax rates, while businesses may benefit from reduced customs duties on industrial raw materials.
At the same time, consumers could face higher costs for selected luxury goods, alcoholic beverages, jewelry and some services.
The actual impact will become clearer as businesses, financial institutions and consumers begin operating under the new rules.
For now, the start of fiscal year 2083/84 marks one of the more significant changes to Nepal’s tax and economic framework, with the government hoping that the combination of tax reform, investment incentives and monetary measures will help stimulate economic activity while keeping inflation under control.
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