नेपाली
September 21, 2026 | Kathmandu
The government is preparing to withdraw value-added tax (VAT) on electricity following an in-principle agreement between Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha and Finance Minister Swarnim Wagle.
The Finance Ministry is expected to table a proposal to remove VAT on electricity at an upcoming Cabinet meeting. The decision will take effect after formal approval by the Cabinet.
The government had introduced VAT on electricity from the current fiscal year 2026/27. Under the existing provision, household consumers using more than 50 units of electricity per month are charged 5 percent VAT, while industrial and other non-household consumers are subject to a 13 percent tax.
According to the ministry, VAT already collected from electricity bills since the beginning of the fiscal year will be adjusted against subsequent bills once the decision to abolish the tax is implemented.
The VAT provision was incorporated into the government’s budget for the current fiscal year. The proposed withdrawal comes amid calls for the tax on electricity to be scrapped.
Source Reference: The Himalayan Times
