Govt plans to scrap VAT on electricity – The Himalayan Times – Nepal’s No.1 English Daily Newspaper

KATHMANDU, SEPTEMBER 21

The government is preparing to remove value-added tax (VAT) on electricity after Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha and Finance Minister Swarnim Wagle reached an in-principle agreement on the issue.

According to the reports, the Finance Ministry will propose removing the VAT at the Cabinet meeting. The decision will come into effect after formal approval by the Cabinet.

The government introduced VAT on electricity from the current fiscal year 2026/27, charging 5 percent to household consumers using more than 50 units a month and 13 percent to industrial and other non-household consumers.

The ministry said VAT collected on electricity bills since the beginning of the fiscal year will be adjusted in subsequent bills once the decision to scrap the tax is implemented.

The VAT proposal was included in the current fiscal year’s budget. Its removal follows calls for the tax to be withdrawn.