Nepal’s government has unveiled a NPR 1.96 trillion budget for the fiscal year 2081/82 (2024/25), aiming to balance development priorities with fiscal discipline. Here’s a quick breakdown:
Budget Allocation (in NPR billions):
Total Budget: 1,960
Recurrent Expenditure: 1,180 (60.1%)
Capital Expenditure: 407.89 (20.8%)
Debt Servicing: 375.24 (19.1%)
Transfers to Provinces & Local Levels: 417.83
💰 Revenue Sources (in NPR billions):
Internal Revenue: 1,310
Foreign Grants: 53.45
Foreign Loans: 233.66
Domestic Borrowing: 362
🌱 Strategic Priorities:
Sovereign Wealth Fund (SWF) to channel surplus remittances into productive investments, job creation, and import substitution.
- Emphasis on infrastructure development, fiscal stability, and social welfare.
- A forward-looking push to diversify the economy and build resilience against global shocks.
While the budget sets an optimistic tone for economic revival and structural reforms, detailed sector-wise allocations and execution strategies are awaited.
Income Tax Related Highlights
- IT-based industries and hotels/resorts to receive tax and electricity tariff exemptions similar to special industries.
- 75% income tax exemption on income from IT service exports.
- Only 5% final income tax on income of individuals residing in Nepal who export IT services abroad.
- Startups with annual turnover up to NPR 100 million (10crore) will get 5 years of full income tax exemption.
- Transport service providers paying rent to natural persons can deduct such payments as expenses if advance tax is withheld.
- Tax settlement opportunity for taxpayers who failed to file income statements and were assessed by the tax office just by paying the actual tax and interest on such tax if paid within Poush without paying fines and penalties.
- Advance income tax 2.5% at customs abolished for grains, legumes, fruits, plant-based, animal-based, and dairy products.
- Minimum tax requirement removed for taxpayers without taxable transactions.
- Income Tax Exemption for Special and Tourism Industries (excluding Casinos)
📌 Eligibility Criteria:
- Capital investment of at least NPR 1 billion
- Creation of direct employment for more than 500 people
- Must be a special industry or a tourism industry (except casinos)
🧾 Tax Concession:
| Scenario | Tax Exemption |
|---|---|
| New Industry | ✅ Full tax exemption for 5 years from the date of commencement of business ✅ 50% exemption for the following 3 years |
| Existing Industry (Expansion) | ✅ If the industry: Expands capacity by at least 25% Reaches at least NPR 2.5 billion capital Creates direct employment for at least 300 people Then: ✅ Income from the expanded capacity will receive full tax exemption for 5 years, and then ✅ Now updated to 75% exemption (previously 50%) for the next 3 years |
VAT and Other Taxes
- Interest, penalties, late fees waived for delayed VAT/excise filings if taxpayers now comply.
- Airlines and agents that pay outstanding VAT will benefit from waivers on additional charges.
- VAT on digital payment services abolished.
- Expansion of the central electronic invoicing system to improve taxpayer compliance.
- NPR 3 lakh bank guarantee requirement removed for businesses obtaining import-export (EXIM) codes. VAT amnesty scheme for taxpayers with unpaid VAT liabilities up to Chaitra 2081 If such taxpayers pay the due VAT and 25% of the applicable interest by the end of Poush 2082, they will be fully exempt from remaining interest, penalties, and late fees.
Miscellaneous Tax and Administrative Reforms
- Legal review of VAT, income tax, and excise laws to align with global tax reforms and evolving business models.
- Retirement funds must be managed through approved institutions like EPF, CIT, SSF, or other authorized bodies.
- Expansion of Digital Service Tax (DST) to cover all forms of digital transactions.
- Tax administration to become more paperless, contactless, and faceless, with a focus on specialization and capacity development.
- Automated customs valuation system to replace manual reference pricing using international pricing trends.
- Women Entrepreneurship Support
- Full waiver of registration and renewal fees for industries registered in the name of women, encouraging gender-inclusive business growth. Introduction of Health Risk Tax on annexure 6 products that include like cigarettes, alcohol etc.
- Government plans to establish a fully digital Neo Bank by fiscal year 2082/83