HIGHLIGHTS OF BUDGET & KEY TAX PROPOSALS

FOR
F/Y 2066-67

(only for the reference)

HIGHLIGHTS OF KEY TAX PROPOSALS FOR F/Y 2066-67

The Second Budget of the Federal Democratic Republic of Nepal was presented by Honorable
Finance Minister Mr. Surendra Pandey on Ashadh 29, 2066 for the F/Y 2066/67 i.e. 2009/10.
The direct tax provisions contained in the Finance Bill shall generally apply to F/Y ending
Ashadh 32, 2067 unless specifically stated otherwise. Further, other provisions shall be
applicable w.e.f. from Ashadh 29, 2066.

The Finance Minister has outlined followings, at the time of budget presentation:

Problems and Challenges of the Economy

> Lack of improvement in investment climate.
> High Inflation
> Prioritization in resource utilization
> Weak budget implementation and project management
> Increasing Unemployment
> Weak Performance of Public Enterprises
> Energy Crisis
> Inadequate Physical and Financial Infrastructure
> Climatic Change and Natural Disaster
> Poverty, Inequality and Discriminatory Attitude and Practice

Basic Thoughts of the Budget

> Run on socialism-oriented, people oriented and concepts of public welfare state for the sake of
high economic growth and distributive justice.
> Structural change in the economy.
> Internal source to be increased and external dependency to be reduced for investment sake.
> Foreign assistance to be mobilized for large physical and economic infrastructure of national
priority, rural infrastructure, agriculture, social sector and inclusive development.
> In the long run, to build a self-reliant national economy without the need of foreign assistance.
> Mutual economic relationship with the neighboring countries as well as rest of the world.
> Macroeconomic stability: the precondition for rapid economic development.
Objectives of the Budget:
> To facilitate promulgation of the new constitution as per the people’s expectations and bring
the peace process to an end.
> To create employment by encouraging roles and investments of the cooperative, private and
public sectors pursuant to the concept of inclusive development.
> To emphasize development of large physical & economic infrastructure for rapid economic
growth
> To intensify the relief, reconstruction and rehabilitation for the conflict affected, and To
provide relief to the people by controlling price and facilitating supply system.

Priorities of the Budget

> To help draft the constitution by implementing Comprehensive Peace Accord and bringing
the peace process to an end.
> To maintain law and order by removing impunity.
> To increase investment for employment oriented inclusive development.

> To implement targeted programs for the uplift and development of the disadvantaged groups,
communities and geographical areas
 > To emphasize on physical and economic infrastructure development.
> To commercialize and modernize agriculture for the transformation of the economy.
> To accelerate social development by increasing investment in education, health and drinking water and
sanitation sectors.
> To improve the power distribution system in order to mitigate the increasing energy crisis by
hydroelectricity production and expansion of transmission line.
> To mobilize the international assistance for the promotion of national interest.
> To let the people feel the existence of a responsible government by improving public administration and
service delivery.

Major Sectoral Policies and Programs of Budget

> State Restructuring and Institutional Development of Federal Democratic Republic
> Sustainable Peace, Relief, Rehabilitation and Reconstruction
> Peace and Security: Expectations of People
> Poverty Alleviation and Inclusive Programme
> Women Development and Social Empowerment
> Youth Mobilization for Nation Building
> Transformation in Agriculture for Economic Prosperity
> Irrigation for increased agricultural production
> Improvement in Land Management
> Uplift of the Landless Squatters
> Tourism Development for Wider Economic Growth
> Private Sector Development and Investment Friendly Environment
> Labor and Employment Generation
> Economic Growth and Infrastructure Development Campaign for Employment
> Energy Development for Economic Prosperity
> Knowledge, Information and Communication: A Base to Build New Nepal
> Improvement in Public Distribution System and Price Control
> Education, the Fundamental Right of People : The base of Progress and Prosperity
> Primary and Basic Health Service: Fundamental Right of the People.
> Drinking Water and Sanitation
> Public Enterprise Reform
> Public Transport and Management Reform
> Public Management and Improvement in Service Delivery
> Mobilization and Utilization of Foreign Assistance in Priority Sectors
> Increasing Budget Implementation Capacity and Improvement in Project Management

Revenue Policy, Objective and Strategy

> To mobilize maximum internal resources through voluntary taxpayer compliance.
> To create an investment friendly environment through revenue policy by attracting domestic and
foreign capital and gradually eliminating non-tariff barriers.
> To adopt investigation process based on scientific information system in order to make revenue leakage
control effective.
> To develop non tax revenue contribution an important source of total revenue collection.
> To regulate and systematize the sales and distribution of items hazardous to human health.
> To attract and to give incentive to investment in hydroelectricity and huge infrastructure works.
> To lay emphasis on trade facilitation by developing simple and transparent work procedure through the
use of information system in customs clearance process.
 Growth Rate:
> For the Current Fiscal Year, GDP growth rate is likely to register 3.8 % at basic price and 4.7% at
produces’ price and Annual Average Inflation is expected to surge by 13%.
> From the implementation of the proposed budget, the GDP is estimated to be at 5.5 % at the end of
the coming fiscal year. The growth rate in agriculture sector is expected to be at 3.3 % and the
non-agriculture sector at 6.6 %. It is estimated that the price level will gradually improve and the
inflation rate will be around 7%.

Allocation of Budget and Availability of Resources for F/Y 2066/67:

Allocation of Budget
Total Budget Rs. 285 Billion 930.00 Million.
Recurrent Expenditure Rs. 160 Billion 632.40 Million (56.18%)
Capital Expenditure Rs.106 Billion 284.80 Million (37.17%)
Principal Repayment Rs. 19 Billion 12.80 Million (6.65%)

Allocation of Budget
Total Budget Rs. 285 Billion 930.0 Million.
General Administration Expenses Rs. 135 Billion 582.50 Million (47.42%)
Development Related Expenses Rs. 150 Billion 347.50 Million (52.58%)

Estimated Source of Financing:

Total Budget Rs. 285 Billion 930.00 Million.
Current Source of Revenue Rs. 161 Billion 73.60 Million
Foreign Grants Foreign Rs. 56 Billion 955.60 Million
Loans Rs. 21 Billion 560.60 Million
Deficit Rs. 46 Billion 340.20 Million

This document is intended for private circulation for the use of our clients only to only
provide general outline on the topics covered. Professional Advice to be sought before
acting on any information contained herein. G.K. Agrawal & Co. does not assume any
responsibility for errors or omissions, if any.

HIGHLIGHTS OF KEY TAX PROPOSALS FOR F/Y 2066-67 ARE GIVEN IN

PAGES 5-29

Remark: Amendments for F/Y 2066/67 have been shown in Bold, Italics & Highlighted Fonts.
 (only for the reference)

A. DIRECT TAXATION:
Rate of Taxation:
Tax Rate for Individuals:
Particulars Tax Rate
Individuals:
Resident Individuals - Remuneration Income:
-Married (including widow & widower): Up to Rs. 200,000 1%
-Unmarried : Up to Rs. 160,000 1%
On next Rs. 100,000 15%
On Balance 25%
Resident Individuals - Proprietorship Firm:
-Married (including widow & widower): Up to Rs. 200,000 Nil
-Unmarried : Up to Rs. 160,000 Nil
On next Rs. 100,000 15%
On Balance 25%
On Balance (for Export Income) 20%
On balance (for Income from Special Industry) 20%
Resident Individuals-Presumptive Tax:
Having only Business Income with Annual Turnover up to Rs 20 Lacs and Annual
Income up to Rs. 2 Lacs:
-In the Metropolitan or Sub Metropolitan Cities Rs. 5000
-In the Municipalities Rs. 2500
- In the rest of Nepal Rs. 1500
Non Resident Individuals:
On any amount 25%

Notes:
1. Resident Disabled Individual shall get an additional 50% of Exemption Limit (i.e. 50% of Rs.
200,000 in case of couple & Rs. 160,000 in case of single).
2. Resident Woman, having only Remuneration Income, shall be entitled to a Tax Rebate of 10%.
3. Individual having Life Insurance Policy shall get an additional exemption from hid Taxable
Income to the extent of Rs. 20,000 or Premium Amount, whichever is lower.
4. Husband and Wife, having separate income source, are given option either to get assessed
separately or jointly as family.
5. Annual Remote Area Allowance up to Rs. 30,000 is exempted from tax.
6. Employees working in Nepalese Mission abroad are allowed 75% exemption on Foreign
Allowances.
7. There is no levy of any Additional Income Tax.
 Tax Rates for Entities:
Particulars Tax Rate
Bank, Finance Company, General Insurance Company, Petroleum Entities; Cigarette, 30%
Tobacco, Beer and Alcohol Company
Special Industries & IT Industries 20%
Entities engaged in construction & operation of Road, Bridge, Tunnel, Ropeway, Trolley 20%
Bus and Tram.
Co-operative Institution registered under Co-operative Act, 2048 (other than co- 20%
operatives dealing in except dealers in Exempted Transaction)
Entity wholly engaged in the (BOOT) projects conducted so as to build public 20%
infrastructure, own, operate and transfer it to the HMG & in power generation,
transmission, or distribution
Non-resident person Providing Shipping, Air Transport or Telecommunications 5%
Services in Nepal
Private Limited Co., Limited Co., Partnership Firm not specifically mentioned above 25%.
Airline Services having office in and business in Nepal but not operating flights to and 2%
within Nepal
All Export Entities 20%
Repatriation of income of a Foreign Permanent Establishment of a Non-Resident 5%
situated in Nepal.
Notes:
1. There is no levy of any Additional Income Tax.

Tax Concession and Rebates:

> 10 Years Tax Holiday from date of operation and 50% Tax Rebate thereafter to industries
established in Special Economic Zone (SEZ) of Himalayan Districts and other prescribed Hilly
District.
> 5 Years Tax Holiday from date of operation and 50% Tax Rebate thereafter to industries
established in other Special Economic Zone (SEZ).
> 100% Rebate for first 5 Years from date of operation and then 50% Rebate for next 3 Years on
dividend distributed by industries established in Special Economic Zone (SEZ).
> 50% Rebate on Income Tax on income from Foreign Technology or Management Consultancy or
Royalty earned by foreign investors of industry established in SEZ.
> 10 Years Tax Holiday from date of operation to industries established in remote areas.
> 25% Tax Rebate to IT Industries established in prescribed Information Technology Park.
> Entities having license for Electricity generation, transmission & distribution, if commences
generation / generation & transmission / generation & distribution / generation, transmission &
distribution of Hydro-electricity commercial manner by Chaitra end, 2075; such entities shall
have Tax Holiday for a period of first 7 Years and 50% Tax Rebate thereafter for 3 Years, from
date of such commencement of generation, transmission & distribution. Such facilities shall
also be applicable for Electricity generated from Solar/Wind/Organic Materials.
However, entities already having started commercial production of electricity before Shrawan
01, 2066 shall be eligible for facility as prevalent at the time of obtaining license.
 > 50%, 30% & 25% Rebate on Income Tax for 10 Years including the year of operation to Special
Industries operating in Highly Undeveloped, Undeveloped & Under-developed areas
respectively.
> 10 % Rebate on Income Tax to Special Industries and IT Industries which provide direct
employment to 300 Nepalese nationals throughout the year. [Earlier, it was 500 Nepalese].
> 20 % Rebate on Income Tax to Special Industries which provide direct employment to 1200
Nepalese nationals throughout the year.
> 20 % Rebate on Income Tax to Special Industries which provide direct employment to 100
Nepalese nationals including 33 percent women, dalits (the downtrodden) or the handicapped,
throughout the year.

TDS (Tax Deduction at Source):

> Payments that attract TDS: TDS on following payments needs to be deducted at below given rates:
Particulars TDS Rate Remarks
F/Y 2066/67 Earlier
Remuneration (Sec.87) Normal Rate of Normal Rate of
Individual (deductible Individual (deductible
on monthly basis) on monthly basis)
Investment Returns & Service Fees (Sec.88):
-Natural Resource Payment 15% 15%
-Rent to Individuals 10% * 10% *
-Rent to Others 10% 10%
-Royalty 15% 15%
-Gain from Investment (Life) Insurance 5% * 5% *
-Gains from Unapproved Retirement Interests 5% * 5% *
-Service Fees 15% 15%
-Service Fees paid to Service Oriented Resident 1.50% 1.50%
registered under VAT
-Meeting Allowances 15% * 15% *
-Commission 15% 15%
-Commission paid by Resident Companies to Non 5% 5%
Residents
-Bonus on Sales 15% 15%
-Aircraft Lease Payment 10% 10%
-Lump Sum Retirement Payment from Approved 5% * 5% *
Fund & Nepal Government under Sec 65(1b)
Teaching on Period Basis 15% * 15% *
Dividends:
-Distributed by Resident Companies to Residents 5% * 5% *
-Distributed by Resident Companies to Non Residents 5% * 5% *
Interest:
-On Deposits / Debentures from Resident Bank, 5% * 5% *
Finance Companies or listed companies and on Govt.
Bonds to Individuals not related to business.
 Particulars TDS Rate Remarks
F/Y 2066/67 Earlier
-To Others (not stated above) 15% 15%
Contract # Payments above Rs. 50,000 1.50% 1.50%
Contract # Payments to Non- Residents:
- Contracts related to Service 10% 10%
- Contracts related to Air Craft Repair 5% - Newly Defined
- Other Contracts 5% 5%
-General Insurance Premium paid to Non-Resident Co. 1.50% 1.50%
-General Insurance Premium paid to Resident Co. - -
-Payment to non-resident person under a contract Rate as prescribed Rate as prescribed
by IRD (otherwise, by IRD (otherwise,
as per above) * as per above) *
Others
Wind Fall Gain (Prizes, lotteries, or any other casual 25%* 25%
income either in cash or in kind)
Gain from Commodities Future Market Transactions 10% - Newly Defined
Gain from Disposal of Listed Securities (to be
deducted by Nepal Stock Exchange)
-To Resident Individuals 10% 15% Decreased
-To Others (not applicable to Resident 15% 15%
entity established under prevalent laws for
dealing in purchase/sale of securities)
Gain from Disposal of Non- Listed Securities (to be
deducted by respective companies)
-To Resident Individuals 10% 15% Decreased
-To Others (not applicable to Resident 15% 15%
entity established under prevalent laws for
dealing in purchase/sale of securities)
Capital Gain from Disposal of Building and/or Land
exceeding Rs. 5 Million (to be deducted
by respective Malpot Office at the time of
Registration) in case of Natural Persons:
- Owned for a period up to 5 Years 10% Newly Defined
- Owned for more than 5 Yrs 5% -- Newly Defined
(In case of Building, if the building is owned for more than
10 Years and occupied by the owner for more than 10 Years,
then the Capital Gain Tax shall not be applicable)
* Denotes Final Tax Payment.

Notes:
> Rs. 50,000 referred to in Sec. 89 shall be determined by aggregating a payment under a contract with
any other payment made by the person or an associate of the person during the previous 10 days
under the same contract to the same payee or an associate of the payee.
> Contract has been defined as agreement entered into for supply of goods or labour or
construction/erection/establishment of tangible assets or structure or any work prescribed as contract
by the Inland Revenue Department.
Payments that do not attract TDS:
> Payment of remuneration to the writer of the articles published in Newspaper & Magazines.
> Payment of remuneration for preparation of question paper or checking of answer sheet
> Interregional interchange charges paid to a bank issuing Credit Cards.
> Payment by individual other than payment in course of business and payment of house rent.
> Interest or fee paid by Nepal Govt, under an agreement, to Foreign Govt. or an international
organization (to which Nepal is a party).
> Payment of interest to a resident bank or other resident financial institution.
> Payments to Tax-exempted entities.
> Payment of Annual interest up to Rs. 10000 in the amount deposited to the Micro Credit
Institutions, Rural Development Banks, Postal Saving Bank, and Co-operatives in the rural area
(Previously, there was no such provision).

Income Source Not To Be Sought For:

> Income Source shall not be sought for manufacturing industries (other than cigarette, liquor &
beer industries) using more than 50% indigenous raw materials, employing more than 300
national workers or those of national importance such as hydro electricity projects,
international airports, tunnel ways, road ways or railways until Chaitra end, 2075.

PAN No. Compulsory:

> All income earners and advance tax payers (TDS payers) will have to get PAN Numbers
compulsorily. [As per Budget Speech]

Advance Income Tax:

> Income Tax for F/Y should be paid in 3 installments as follows:
Instalment Time Period Amount
First Up to Mid-January (Poush end) 40%
Second Up to Mid- April (Chaitra end) 70%
Third Up to Mid-July (Ashadh end) 100%
Where an instalment of tax paid by a person is less than 80% of Tax Payable, interest shall be
levied @ 10% for each month and part of month from the date of first installment on the amount
to the excess of 80% of the instalment that would have paid over the installment paid.
The presumptive tax-payers need not require paying any advance tax as above.
Further if the Tax Amount for the F/Y is less than Rs 5000, installment is not required to be paid.

Deduction for General Insurance Business:

> Following Expenses continues to be allowable as deductible expenses for General Insurance
Business:
i. 50 % of Net Insurance Premium provided for Unexpired Risk &
ii. 115 % of outstanding claim at year end as per Insurance Act/Rules.
General Rate of Interest levied by IRD:
> General Rate of Interest levied by the IRD to the assessee continues to be 10%.

Carry Forward of Loss:

> Carry Forward of Loss from Business and Investment can be made up to 7 years.
> Carry Forward of Loss can be made up to 12 years in case of Projects building, operating &
transferring public infrastructure to the Nepal Government, Projects building Electricity
Production House, generating & transmitting electricity and entities dealing in petroleum products
under Nepal Petroleum Act, 2040.
> Loss incurred in business or investment where assessee enjoys full / partial tax exemption cannot
be carried forward.

Penalty for Non-Filing of Income Tax Return on Time:

> Non-Filing of Estimated Income Tax Return Income u/s 95 within due date shall attract penalty of
Rs. 2000 per Return.
> Non-Filing of Income Tax Return Income u/s 96 within due date shall attract penalty of @ 0.10%
of Annual Turnover or Rs. 100 per month whichever is higher.

Sundries:
> Compensation received by a resident natural person on account of physical injuries due to
personal accident shall not be included in his income; likewise, medical expenses incurred in
the treatment for such accident cannot be claimed for Tax Adjustment.
> Annual Vehicle Tax for person running vehicle on rent is as follows. In case of individuals, the
below given tax shall be final:
Vehicles Tax
Mini Truck / Mini Bus / Truck / Bus 1,500
Car, Jeep, Van, Micro Bus 1,200
Auto, 3 Wheeler, Tempo 850
Tractor, Power Tiller 750

Special Provision relating to Delay in Filing of Income Tax Return for F/Y 2062/63 -For
assesses who have not submitted Self Assessment Tax Return for F/Y 2062/63 u/s 96 of Income
Tax Act, 2058 or not deposited fees on account of delay in submission of such Return, following
fee shall be charged if the Return is submitted or below given fee is deposited by Poush end 2066:
For Assesses who have paid Pre-Assumptive Income Tax: Rs. 100 per month of delay. For other
Assesses: Rs. 100 per Month or 0.10% per year of Gross Total Income whichever is higher. Rebate
shall be given for balance fee payable under the existing law.
 Special Provision relating to Income Tax, Charges & Interest of Co-operative
Agencies/Associations
Co-operative Agencies/Associations (other than Tax-Exempted Co-operatives) can deposit Tax
Return along with Tax amount for Income Year 2063/064 and 2064/065 by the end of Poush, 2066
which shall result in waiver of other fee & interest.

Special Provision relating to waiver of Fee, Interest & Penalt

For cases under hearing at Inland Revenue Department/Revenue Tribunal/Court regarding
assessment of Income Tax/VAT/Excise Duty up to F/Y 2060/61, if cases are withdrawn and
assessed Income Tax/VAT/Excise Duty is deposited by Poush end, 2066; Fee, Additional Charges,
Interest & Penalty shall be waived.

Special Provision relating to Tax for Private Educational Institutions

Income earners involved in different employments, occupations or investments without PAN
numbers, who have not paid or only partially paid taxes (people like consultants, brokers, doctors,
engineers, lawyers, auditors, artists, commission agents, employees, professors etc.), if they get
PAN numbers within the Magh End, 2066 and submit the tax returns for the F/Y 2064/65 &
2065/66 and pay the tax, shall be exempt from submitting the tax returns of the previous years and
enjoy exemption on payment of tax, charge, interest and penalty on it.
Those who do not file tax returns and pay tax within this exemption period shall be subject to the
payment of all taxes, charges, interest & penalty from the time they were involved in income
generation.

Casual (Windfall) Income Introduced As Additional Head of Income

Casual (Windfall) Income has been introduced As Additional Head of Income.
Casual (Windfall) Income has been brought under Income Tax Act. Earlier, it was under Casual
(Windfall) Gain Tax.
B. INDIRECT TAXATION:
B.1 Value Added Tax (VAT):

Rate of VAT:
> Rate of VAT continues to be 13%.

Inclusion in the List of VAT Exemption Goods/Services:

> Bath Concentrate (Solid or Liquid) used for Dialysis.
> Scooter used by handicapped people.
> Machinery, tools and spare parts (not manufactured in Nepal) to be imported by Hydropower
Projects, on recommendation of Alternative Energy Promotion Centre / Electricity Development
Department.

Continuity to VAT Exemption availed by Finance Act, 2065 on following

Goods/Services:
> Soyabean Masyaura.
> Raw Material for Feed Supplement under H.C. 23, 28 & 29.
> Limestone Powder under H.C. 25.
> Raw Materials & Packing Materials for manufacture of IOL (Intra Ocular Lens)
> Gear Box of aero plane and helicopter.
> All Hydro Power Projects.
> Prescribed Goods to be imported in the name of Head Office of Nepal Army, Armed Police Force
and Janpath Police under recommendation of respective ministries.

Exclusion from the List of VAT Exemption Goods/Services:

> Kerosene Oil.
> Chyawanprash.
> Garlic.
> Business/Professional Training & Refreshment Training Courses provided by entities other
than Nepal Government

Continuity to Exclusion of VAT Exemption availed by Finance Act, 2065 on following Goods/Services:
> Certified Orthodox Tea from Organic Fertilizer.
> Batteries for Battery-operated-tempo.
> Solar Photo-voltic Flat Plate used for Bio-gas, solar power and
> Duty free sale of cigarettes and liquor. (However, facilities to be purchased from the authorized
bonded ware houses continue to be provided to the persons having diplomatic and exemption
status.)
Abolishment of VAT Refund Facility on Certain Goods:
> 50% Vat Refund Facility upon sale of Mustard Oil by domestic Mustard Oil Industry has been
abolished.
> 50% of Vat Refund Facility upon sale of its product by domestic Vanaspati Ghee Industry and
Other Refined Edible Oil Industry, has been abolished
> 50% of Vat Refund Facility upon sale of Sugar by domestic Sugar Industry.

VAT Refund Facility Reduced on Certain Goods:

> Vat Refund Facility has been reduced to 25% {i.e. 25% of (VAT collected on Sales less Vat paid
on Purchase)} to Maida Industry on sale of Maida. (Earlier, 50% Vat Refund was allowed).

VAT Refund Facility Increased on Certain Goods:

> Vat Refund has been increased to 60% of VAT paid on purchase of Raw Materials of Cellular
Mobile or Finished Goods continues to be refundable to Domestic Manufacturer or importer of
Cellular Mobile, upon submission of evidence of sale of such items. (Earlier, 50% Vat Refund
was allowed).

VAT Refund Facility continued on Certain Goods:

> Vat Refund Facility (VAT collected on Sales less Vat paid on Purchase) continues to be availed to
Textile, Wooden Match and Tyre-Tube Industries.

VAT Refund for Scooter imported/purchased by Handicapped Person:

> Arrangement has been made for refund of VAT paid by the importer on the scooter used by
handicapped person at the time of the registration of such vehicle in his name at Transport
Management Office on the recommendation of the Ministry of Women, Child & Social Welfare
or Chief District Officer.

Limit of Monthly Export Reduced for VAT Refund:

> Person / Entity exporting more than 40 % of their monthly sale Export shall be availed Lump
sum VAT Refund within 30 days from application date. (Earlier, minimum 50% export of
monthly sale was required)

Time Bar for VAT Refund:

> Application for VAT Refund u/s 24 should be made within 3 Years from the date of end of Tax
Period in which the VAT was refundable; otherwise, the same shall not be refunded.

Compulsory Collection of VAT on Construction for Commercial Purposes exceeding

Rs. 5 Million:
> Compulsory collection of VAT on the construction of buildings, apartments or shopping
complexes (or such structures, as prescribed by the IRD) for commercial purposes exceeding the
value of Rs. 5 million, from the owners (though such construction be done by Non-registered
person).
VAT Collection by Local Authority or International Agencies in Nepal:
> VAT to be collected by Local Authority or International Agencies in Nepal, on sale of Taxable
Goods and Services

VAT Collection on Services Acquired from Person Outside Nepal Not Registered in Nepal:
> In case of acquiring services from person outside Nepal not registered in Nepal , VAT on such
services shall be determined and collected by the acquires (whether registered in VAT or not).

Bank Guarantee:
> Industries having an export over 60% of Total Sales during last 12 months, may import Raw
Material to the extent of manufacture of export quantity against Bank Guarantee of VAT Amount
at related custom point.
> 10% Value Addition in Raw Materials continues to be required on such exports.
> Likewise, import for Duty Free Shops through Bonded Warehouse can be done against Bank
Guarantee of VAT Amount at related custom point.
> Such Bank Guarantee shall be released from the related custom point.

VAT Refund Facility for Manufacturers (not having Bonded Warehouse or Pass Book facility):
> Manufacturers (not having Bonded Warehouse or Pass Book facility) shall continue to get
refund of VAT at Flat Rate at custom point against export of finished goods; 10% Value
Addition in Raw Materials continues to be required on such exports.

Mandatory VAT Registration for Operation of Business of Certain Goods in Stipulated Area:
> Taxpayers operating Motor-parts Business in Metropolitan, Sub-Metropolitan, Municipality, or
area stipulated by the IRD have to be registered under VAT within 30 days from operation of
such business.
> Likewise, Hardware, Sanitary Fittings, Furniture, Fixtures, Furnishing, Automobiles, Electronics,
Marbles, Colour-Lab Business operating in above mentioned area continue to be under Mandatory
VAT Registration.

Mandatory VAT Registration for Taxable Imports above Rs. 10,000 at a time:
> Arrangement for compulsory VAT registration has been made for a person importing taxable
items exceeding the value of Rs 10,000 at a time for commercial purpose.
> Turnover in excess of 20 Lacs (dealing in goods) during preceeding last 12 months.
> Turnover in excess of 10 Lacs (dealing in Services) during preceeding last 12 months.
> Turnover in excess of 10 Lacs (dealing in goods as well as Services) during preceeding last 12
months.
Time Bar for Tax Assessment:
> Tax Assessment may be done within 4 Years from the date of submission of VAT Return;
otherwise, the returned submitted shall be deemed as assessed.
> However, in case of tax evasion be means of false records, invoices or documents or other fraud,
the department may order for Re-assessment at any point of time; no time bar shall be applicable in
the case.

Temporary VAT Registration:

> Temporary VAT Registration needs to be obtained by the organizer of Temporary Exhibition, fare
etc. and traders (not registered under VAT) transacting in taxable goods and services in such
exhibitions. Within 7 days from the date of end of such exhibition, return needs to be filed tax
needs to be paid.

Self Attested Purchase & Sales Register for Non-Vat Registered Parties:
> Non-Vat Registered persons dealing in Taxable goods and services should maintain Purchase and
Sales Register duly self-attested.

Sale to Industries Operating In SEZ:

> Sale of Raw Materials and Finished Goods to industries operating in SEZ, established under
prevalent law, shall be taxed at Zero (0) %.

Sundries:
> Zero Rate Facility shall be provided to machinery, tools, equipment and spare parts, manufactured
in Nepal, to be sold to Hydropower Projects, on recommendation of Alternative Energy Promotion
Centre / Electricity Development Department.
> Rate of Interest continues to be 15% for delay in payment of VAT.
> The practice of Advance Ruling is available for clarification of any VAT matters.

Special Provision relating to Voluntary VAT Registration for Health Institutions

Health institutions liable to collect and pay Health Service Tax may opt to collect and pay value
added tax instead by voluntarily registering with the Value Added Tax.
Such institutions shall not collect Health Service Tax.
Such institutions shall collect VAT for 5 Years from the date of Registration.
B.2 Excise Duty:

Levy of Excise Duty:

> For goods under Physical Control System: At the time of removal of goods for sale.
> For goods/services under Self Removal System: At the time of sale.
> For goods imported: At the time of import.
> For service imported: As prescribed by the IRD. ________________________________________
> Import of Vehicles: At the time of import. (Two-tier Levy of Excise on imported vehicles has
been abolished i.e. Excise Duty shall not be levied on Local Sale of imported Vehicles).

Time of Payment of Excise Duty:

> For goods under Physical Control System: At the time of removal of goods for sale.
> For goods/services under Self Removal System: within 25 Days from the month-end in which the
invoices have been issued.
> For goods imported: At the time of import.
> For service imported: As prescribed by the IRD.

Onus of Payment of Excise Duty:

> For goods under Physical Control System: Manufacturer.
> For goods/services under Self Removal System: Manufacturer of goods/services.
> For goods imported: Importer.
> For service imported: Importer.

Time of Submission of Return:

> Time for submission of Monthly Excise Return continues to be 25 th of next month.

Exemption of Excise Duty:

> Excisable goods/services exported out of Nepal or sold through Bonded Warehouse or Duty Free
Shop continues to be exempted from excise duty (except liquor & cigarettes).
> Provision for Cash Deposit / Bank Guarantee before export or sale through Bonded warehouse
or Duty Free Shop has been abolished

Duty Free Sale of Cigarettes & Liquor:

> Duty free sale of cigarettes and liquor continues to be prohibited. However, exemption of excise
continues for purchase of cigarettes and liquor from the authorized bonded warehouses by the
persons/entities having diplomatic and exemption status.

Maintenance of Records:
> Purchase, Production, Removal, Sales and Stock Register, duly attested by the Excise Officer
needs to be maintained.
> Excise Records need to be safely kept for 6 Years.
Time Bar for Excise Assessment:
> Tax Assessment shall be done within 4 Years from the date of submission of Excise Return;
otherwise, the returned submitted shall be deemed as assessed.
> However, in case of evasion of excise by means of false return or other fraud, the department may
order for Re-assessment at any point of time; no time bar shall be applicable in the case.

Excise Exemption to Industries using Domestic Scraps:

> Industries, manufacturing goods by using 90% or more than 90% domestic scraps, shall be
exempted from Excise Duty.

Abolishment of Excise License:

> Excise License for the production, import, export, storage, sale and distribution of all other
excisable items under Self-Removal System have been abolished [except for Brick Industry,
Stone Crusher and Tobacco Products Manufacturer (Pan Masala, Chewing Tobacco, Gutka &
Khaini), Khandsari Industry, import of Khudo & Jaggery].
> Likewise, Excise License for import of Excisable Goods under Diplomatic Facility
recommended by the Foreign Ministry, has been ablosihed.

Domestic Production of Marble:

> Excise Duty continues to be exempted on domestic production of Marbles.

Introduction of Excise in Following New Products:

Products Excise Rate Remarks
F/Y 2066/67 Earlier
Plastic Sheet (H.C. 3920, 3921) 5% 1 New
Kattha Juice Rs.25 / Kg | New

Increase in Excise Tariff for F/Y 2066/67:

Excise Rate Remarks
F/Y 2066/67 Earlier
Drinks other than Beer/Wine with alcohol above 12% (Import) Rs.150 / Litre Rs.140 / Litre Increased
Beer Rs.65 / Litre Rs.60 / Litre Increased
Cigar Rs.5 / Pc Rs.4 / Pc Increased
Pan Masala (containing Lime) Rs.230 / Kg Rs.230 / Kg Increased
Soft Drinks (Alcohol free) Rs.2.50 / Litre Rs.2.50 / Litre Increased
Liquor (30UP) Rs.324 / Litre Rs.302 / Litre Increased
Cigarette 70 MM without Filter Rs. 210 / M Rs. 195 / M Increased
Cigarette 70 MM with Filter Rs. 445 / M Rs. 415 / M Increased
Cigarette (over 70 – up to 75 MM) with Filter Rs. 570 / M Rs. 530 / M Increased
Cigarette (over 75 – up to 85 MM) with Filter Rs. 730 / M Rs. 690 / M Increased
Cigarette (over 85 MM) with Filter Rs. 950 / M Rs. 915 / M Increased
Car, Jeep & Van (Custom Code 8702 & 8703) 50% 45% Increased
 Excise Rate Remarks
F/Y 2066/67 Earlier
Micro Bus 11‐14 Seater (Custom Code 8702) 50% 35% Increased
Double Cab Pick Up (Custom Code 8704) 50% 35% Increased
Three Wheeler (Auto Rickshaw) (Custom Code 8703) 50% 35% Increased
Single Cab Pick Up (Custom Code 8704) 45% 30% Increased
Mini Bus 15‐25 Seater (Custom Code 8702.10.20) 30% 25% Increased
Mini Bus 15‐25 Seater (Custom Code 8702.90.20) 30% 20% Increased
15‐25 Seater Vehicle (Custom Code 8702 ) 30% 20% Increased
Motorcycle (Custom Code 8711) 30% 15% Increased
> There has been slight increase in excise duty of various liquor items.

Decrease in Excise Tariff for F/Y 2066/67:

Products Excise Rate Remarks
F/Y 2066/67 Earlier
Denatured Spirit (80‐99 % Alcohol) Rs.33 / Litre Rs.10 / Litre Reduced

No Changes in Excise Tariff for F/Y 2066/67:

Products Excise Rate Remarks
F/Y 2066/67 Earlier
Bus & Truck (H.C. 8702 & 8704) 5% 5% Status Quo
Equipment with at least 2 functions out of Printer, Copier & Fax 10% 10% Status Quo
Microphone 5% 5% Status Quo
Smart Card 5% 5% Status Quo
Television Camera, Digital Camera & Video Camera Recorder 5% 5% Status Quo
Plates, Cylinders & Equipment for Printing Press (H.C. 84.43) 10% 10% Status Quo
Microphone, Loud Speaker (H.C. 85.18) 5% 5% Status Quo
Television ,Video, digital camera‐ 85.25) 5% 5% Status Quo
Television Receiver (H.C. 83.29) 15% 15% Status Quo
Optical Fibre Cables (H.C. 85.44.70) 10% 10% Status Quo
Insulated Wire, Cables, Conductors 15% 15% Status Quo
Molasses Rs. 40 / Qtl Rs. 40 / Qtl Status Quo
Kattha Rs.115 / Kg Rs.115 / Kg Status Quo
Plastic Packing Goods (H.C. 3926) 5% 5% Status Quo
Plastic Other Goods (H.C. 3926. 90.90) 5% 5% Status Quo
Liquor (50UP) Rs.57/ Litre Rs.57/ Litre Status Quo
Liquor (70UP) Rs.15 / Litre Rs.15 / Litre Status Quo
Pipe Tobacco Rs.575 / Kg Rs.575 / Kg Status Quo
Cement Rs. 170 /M.T Rs. 170 /M.T Status Quo
Parts of Colour Television 15% 15% Status Quo
Junk Food (Kurkure, Kurmure, Cheese Ball, Lays, Pastry etc. Rs7.50 / Kg Rs7.50 / Kg Status Quo
under H.C. 2106.90.10)
Noodles, Macroni & Pasta Rs7.50 / Kg Rs7.50 / Kg Status Quo
Delivery Van (H.C. 8704) 25% 25% Status Quo
Sundries:
> Following Vehicles are exempted from Excise Duty: Ambulance, Dead-Body Carrying Vehicle,
and Chassis of Battery Operated Tempo.
> Collection of Excise Duty on Vehicles’ Stocks purchased up to F/Y 2065-66 shall be as per
Finance Act, 2065 (i.e. Excise @ 15% shall be levied).
> Excise Duty shall be levied @ 15% on domestic production of Motorcycles.
> Electrical Vehicles are exempted from Excise Duty.
> MS Wire Rod in Coil (H.C. 7213.91.10) imported as raw material by industries shall be subject to
Excise Duty Exemption on the recommendation of Department of Industries.
B.3 Custom Duty:

Custom Service Charges:

> Custom Service Charges on import/export of goods continues to be as follows:

Charges per Pragyapan Patra Charges

On Exports Rs. 600
On Imports Rs. 500

LDT (Local Development Tax):

> Local Development Tax (LDT) has been annulled.

Partial Exemption of Import Duty-Major Items:

Particulars Custom Duty Rate
Generator above 10 KW Capacities. 1% Custom Duty
Aircraft, Helicopter, their Gear Box, Engine, Tyre, Battery, Nut, Bolt, Rivet & 1% Custom Duty
Parts.
Seed of Tori, Rayo, Sarsyo and Canola (Rapeseed) 1% Custom Duty
Machine, Equipment, Parts imported by industries (other than H.C. 90.27 1% Custom Duty
goods having Zero Custom Duty)
Diamond under Heading 71.02 1% Custom Duty
Natural, Precious & Semi-Precious Stones under Heading 71.03, 71.04 & 1% Custom Duty
71.05 [Earlier 2%]
Raw Materials & Auxiliary Raw Materials for Tyre Manufacturing Industries. 1% Custom Duty
Vacuum Ironing Table and Steam Iron for Readymade Garments Exporting Industries. 1% Custom Duty
CFL Bulbs (Energy Saver) under Custom Code: 85.39 1% Custom Duty
Generating Parts imported by Generator Manufacturing Industries having 1% Custom Duty
VAT Registration.
Man Made Staple Fibers under Chapter 55 imported by Carpet Industries 50% Rebate
Mill Machinery & Equipment (excepting parts) other than House-hold 4% Custom Duty
Equipment Under Custom Code 84 having Custom Duty Rate of 5% [Earlier 2.50%]
Air condition having capacity above 4 Ton (under chapter 84) imported by the 5% Custom Duty
industries for their industrial purpose.
Tanker (under 87) for transportation of Milk imported by the Dairy Industry. 50% Rebate
Cotton Yarn under heading of custom code 52.05 and 52.07 80% Rebate
LP Gas (Earlier 4%) 5% Custom Duty
Import of Polyester Film, BOPC film, Extracted Poly-film under heading of 5% Custom Duty
39.19, 39.20 and 39.21 by industries registered in VAT and producing
Poly-coating Paper and Printed Lamination Film.
Filler Master Batch under Custom Code 39.20. 10% Custom Duty
Sari, Lungi, Cotton Towel and Cotton Dhoti under Custom Code 62.11. 5% Custom Duty
Gold under H.C. 71.08 Rs. 130 / 10 Grams
Silver under H.C. 71.06 Rs. 3 / 10 Grams
Gold Ornaments under H.C. 71.13 10% Custom Duty
 Particulars Custom Duty Rate
Vehicles under Heading 87 operated on Electricity / Battery 50% Rebate
Tallow Oil (H.C. 15.03), Sodium Silicate (H.C. 2839) & Palm Acid Oil, 50% Rebate
Palm Fatty Acid & Acid Oil (H.C. 3823) imported by Industries
manufacturing Distilled Fatty Acid/ Steric Acid / Glycerin / Soap having
Splitting & Distillation Plant.
Vehicles under Custom Code 87.04 installed with full refrigeration system for 10% Custom Duty
purpose of transport of goods in refrigerated condition
Tanker under Custom Code 87.04 for purpose of transport of Milk imported 80% Rebate
by Dairy Industry
UPVC Corrugated Roofing Sheet (Tiles) under Custom Code 3918 15% Custom Duty
Sunflower Seeds and Soybean Seeds imported for manufacture of Soybean 80% Rebate
Oil and Sunflower Oil
Machinery, Equipment and its parts used for production of organic fuel 1% Custom Duty
Tin box (under 80.07) with its printed name imported by the Dairy Industry. 50% Rebate
Tractor for Agriculture Purpose 2.50% Custom Duty
Raw Material, Auxiliary Materials, Chemicals & Packing Materials of 1% Custom Duty
Pharmaceutical Industry on recommendation of DDA
Iron Pipe (for production of leg-guard) imported by 10% Custom Duty
Leg-guard Manufacturing Industry on recommendation of Department of
Industries.
Cable, Battery & Telecommunication Equipment (other than Tower 7% Custom Duty
Structure & Shelter) imported for establishment of Exchange and network
expansion in rural areas by government / private
sector telecommunication operator upon recommendation of Information &
Communication Ministry, having Custom Duty more than 5%

Changes in Import Duty-Major Items:

Custom Code Description Custom Duty Rate
F/Y 2066/67 Earlier Year
1511.10.00 Crude Palm Oil & Crude Palmoline 5% 1%
1701.11.10 Sugar 15% 25%
1701.12.00 Chukandar Sugar 15% 25%
1704.10.00 Chewing Gum, whether or not sugar coated 25% 20%
1704.90.00 Other Sugar Confectionery 25% 20%
1806.10.00 / 1806.20.00 Chocolate & other food preparation containing 25% 20%
/ 1806.31.00 / cocoa
1806.32.00 / 1806.90.00

1902.11.00 / 1902.19.00 Uncooked Pasta,not stuffed or otherwise prepared 30% 40%

/ 1902.20.00 /
1902.30.00 / 1902.40.00

1905.90.20 Potato Chips 20%

2004.10.00 Preserved Potatoes 20% 15%
2004.90.00 Other vegetables or mixture of vegetables 20% 15%
 Custom Code Description Custom Duty Rate
F/Y 2066/67 Earlier Year
2005.10.00 Homogenised Potatoes 20% 15%
2005.20.10 Frozen French Fry 20% 15%
2005.20.90 Other Preserved Vegetables 20% 15%
2106.90.20 Pan Masala 30% 40%
2201.10.00 Mineral Water and Aerated Water 30% 40%
2201.90.00 Other 30% 40%
2202.10.00 Waters including mineral waters and aerated water, 30% 40%
containing added sugar or other sweetening matter or
flavoured
2206.00.10 Country Beer 30% 40%
2402.10.00 Cigars, cheroots, cigarillos & cigarettes containing Per Per
tobacco Thousand Thousand
2402.20.00 Cigarettes containing tobacco sticks Rs sticks Rs
2402.90.00 Other 1500 1000
2515.11.00 Marble & travertine - Crude or roughly trimmed 10% 15%
2516.11.00 Granite - Crude or roughly trimmed 10% 15%
2523.10.00 Cement Clinkers Per M.T Rs Per M.T Rs
1600 1400
Portland Cement - White cement, whether or not 30% 40%
2523.21.00 artificially coloured
2523.29.00 Portland Cement – Other Per M.T Rs Per M.T Rs
2800 2500
3918.10.10 / 3918.10.90 Floor Coverings of Plastic, whether or not 30% 25%
3918.90.10/ 3918.90.90 self-adhesive

3919.10.00 Self Adhesive Plates, Sheets, Film, Foil, Tape, Strip-in 30% 40%
Roll with 20 cm Width
Self Adhesive Plates, Sheets, Film, Foil, Tape, Strip – 30% 25%
3919.90.00 Others
39.22 Bath, Shower Baths, Sinks, Wash Basins and similar 30% 25%
sanitary ware of Plastic
3923.10.90 / 3923.21.00 Articles ofor the Conveyance or packing of goods of 30% 25%
3923.29.00 / 3923.90.00 plastics; stoppers, lids & other closure of plastics

3925.30.00 Shutters, Blinds 30% 25%

57 Carpets & other Textiles Floor Coverings 30% 25%
72.13 Bars & Rods, Hot-Rolled, in irregular wound coils, 30% 15%
of iron or non-alloy steel
73.04 Tubes, Pipes & Hollow Profiles, seamless, of iron 20% 15%
(other than cast iron) or steel.
Import Duty on Vehicles:
> Motor Cycles : 30 % [Earlier 40%]
> Tractor (H.C. 87.01) : 5% [Earlier 10% & 15%]
> Bus / Mini Bus (H.C. 87.02) : 30% [Earlier 25, 30% & 40%]
> Car / Jeep / Van (H.C. 87.02) 80% [No change]
> There is no change in duty rate of vehicles having Custom Duty @ 80% in earlier year
> Vehicles having Custom Duty @ 40% in earlier year has been reduced to 30%

Increment in Import Duty - Few Major Items:

> Crude Palm & Palmoline Oil, Alcohol, Cigarette, Portland Cement etc.
> New Vehicles or any Mode of Transportation can be imported from the Manufacturer Company
or Authorized Agent situated at manufacturing company’s country only. Non compliance of this
provision may lead to confiscation of such imported vehicles.

Decrement in Import Duty:

> The prevailing rate of customs duty of 40 % has been reduced to 30 % in all cases.

Full Exemption of Import Duty-Major Items:

> Pet Chips (Custom Code: 3907.60.00) by POY Manufacturing Industries (within limit prescribed
by the Department of Industries).
> Fertilizer under chapter 31.
> Raw Jute under Chapter 53 to be imported by Jute Industries.
> POY & Human made Staple Fibers under Chapter 54 & 55 imported by VAT registered Yarn
Industries.
> Chassis, Engine, Motor & Battery Charger imported by Manufacturing Industry of
Electricity/Solar/Battery operated 3-Wheeler or 4-Wheeler Vehicles.
> Various Goods (viz. White Cane, Brale Printer etc.) used by blind people.
> Various Goods (viz. Wheel Chair, Tricycle, Artificial Organs, Hearing Aid, Shoes etc.) used by
handicapped people. _______________________________________________________________
> Spare Parts imported by Jute Industries for operation of industry under recommendation of
Department of Industries.
> Bath Concentrate (Solid or Liquid) used for Dialysis under H C 38.24 for Kidney Patients.
> Machinery, tools and spare parts (not manufactured in Nepal) and raw material (Steel Sheet
required to manufacture such equipment to be imported for generation / transmission /
distribution / operation / maintenance by Hydro-power, on recommendation of Electricity
Development Department.
^ Zatropa (Sajiwan) grain and seed for manufacture of Organic Fuel.

Continuity to Abolishment of Import Duty - Few Major Items:

> Cellular Mobile Phone, Smart Cards, Television/ Digital Camera & Video Camera Recorder,
Plates, Cylinders and other Equipment used by Printing Press (Custom Code 84.43), Computer
Hard Disk, Parts of Television Receiver etc.
Sundries:
> The rate of custom duty on import shall be levied as per Annex 1 of the Finance Act, 2066.
> Rebate in Custom duty on goods of Indian Origin imported from India (other than the goods on
which custom duty is levied on quantitative rate) continues to be as follows:
For goods falling under Duty Rate up to 25% : 7% Rebate
For goods falling under Duty Rate Above 25% : 5% Rebate
> Rebate in Custom duty on goods of Chinese Origin imported from China through Letter of Credit
(other than the goods on which custom duty is levied on quantitative rate) continues 4%.
> Concessional Custom duty on goods imported from SAARC Countries other than goods listed
under Section 20 of Annex 1 of the Finance Act, 2066 through Letter of Credit has further been
reduced:

Custom Duty Rate as on New Custom Duty Existing Custom

Poush 17, 2062 Rate Applicable Duty Rate
5% 5% 5%
10% 8% 9%
15% 12% 13%
25% 18% 21%
36% 24% 27%
40% 24% 27%
80% 24% 27%

(Note: In case the Custom Duty Rate above is higher than the rate prescribed under Annex 1 of the
Finance Act, 2066; the lower rate shall be applicable.)
> Raw Materials and Auxiliary Materials (including Packing Materials not manufactured in Nepal)
can be imported by industries not having facility of Bonded Warehouse upon deposit of custom
duty and LDT (on Dharauti), for manufacture of its finished products for the purpose of exported
through L/C or Banking Channels or Local Sale in Convertible Foreign Currency within 12 months
from the date of import. At least 10% Value Addition is required for the same. However, in
case of strike, natural disaster or circumstances beyond control, extension up to 3 months may
be given by the Customs Chief, if applied for. Likewise, 10% penalty shall be imposed if such
finished products are not exported / sold in convertible foreign currency within the stipulated period
i.e. 12 months. However, such imports have to be made from one custom point only.
> Arrangement has been made for refunding the customs duty paid by the importer on the scooter
used by handicapped people at the time of the registration of such vehicle in his name at
transport management office on the recommendation of the concerned agency.
Export Duty:
> Export Duty has been abolished on certain live stocks and certain agriculture products.
> Export Duty of certain items have been revised as given below:
Sub Heading Item Export Duty Rate
F/Y 2066/67 Earlier Year
1404.90.20 Rudraksha Seed Rs. 2/kg New
2505.10.00 Silica Sand and Quartz Sand Rs. 400/m3 Rs. 150/m3
2505.90.00 Other Sand Rs. 400/m3 Rs. 150/m3
2516.20.10 Gravel, Broken or Crushed Stone, Concrete, Rs. 200/m3 Rs. 90/m3
2517.10.10 Pebbles up to 2.5 inch
2517.20.10
2516.20.20 Gravel, Broken or Crushed Stone, Concrete, Rs. 400/m3 Rs. 350/m3
2517.10.20 Pebbles above 2.5 inch
2517.20.20
2516.20.30 Broken or Crushed Stone and Mixture of
2517.10.30 Sand and Crushed Stone Rs. 400/m3 Rs. 150/m3
2517.49.10 Dust of Stone produced in Crusher Industry Rs. 200/m3 Rs. 150/m3
2517.49.90 Other produced in Crusher Industry Rs. 200/m3 Rs. 150/m3
3203.00.10 Khayar Kutchh Rs. 3/kg Rs. 10/kg
3203.00.90 Other Rs. 3/kg Rs. 10/kg
C. Miscellaneous:

Formation of Due Settlement Commission

For the recovery/settlement/recommendation for settlement of due taxes (Custom Duty, Income
Tax, VAT, Excise Duty, Entertainment Tax, Contract Tax, Sales Tax, Air Flight Tax, Hotel Tax)
and non-tax amount; a ‘Due Settlement Commission’ shall be formed.

Special Provision relating to Education Service Tax

-1 % Education Service Tax shall be collected on the Admission Fee and Monthly Fees charged by Private
Sector Academic Institutes in Kathmandu valley, Metropolitan city, Sub-metropolitan cities, and district
headquarters.
-Such Service Tax should be collected by raising Invoices.
-Education Service Tax, so collected, and 4-Monthly Return for the same needs to be deposited at the IRO
within 25 days from the end of the 4-Month period.
-Fine Rs. 1000 per Return shall be levied upon Non submission of Return.
-Interest @ 15% p.a. shall be levied in case of non-deposit of Service Tax on time. The Tax Officer may
order the closure of such institution upon non-deposit of due Service Tax for a period of 3 months,
-1 % Education Service Tax shall be collected from students pursuing abroad for studies, out of foreign
exchange allowed. The onus to deduct such Tax and to deposit the same within 15 days from the month end
at the Inland Revenue Office shall be on banks providing foreign exchange.
-Likewise, arrangement has been made for academic institutes having not paid Education Service Tax to get
exemption on payment of charge and penalty, if they pay the Education Service Tax of F/Y 2065/66 within
Ashwin end, 2066 through self-declaration.

Reduction in Agriculture Reform Fee

-Agriculture Reform Fee has been reduced to 5%. (Earlier, it was 8%).
-No such fee shall be charged, if custom duty is levied

Special Provision relating to Pass Book / Bank Guarantee for Sugar Industries
Vegetable Ghee Industry not being able to export their products whose raw materials were imported
on payment of 10% of customs duty, are allowed to sell their product in domestic markets by paying
1% customs duty within Ashwin end, 2066. Pass Book Deposit as well as Bank Guarantee for the
same shall be released.

Special Provision relating to Pass Book / Bank Guarantee

Industries having imported raw materials in Pass Book/Bank Guarantee facility and timely
exported the finished goods with a value addition of 20% and 10% during F/Y 2064/65 and 2065/66
respectively and having received forex payments but not applied for release of Pass Book / Bank
Guarantee, if apply for release within Bhadra 2066; Pass Book/Bank Guarantee shall be released.

Special Provision relating to waiver of Fee & Penalty of Khandsari Industries

Annual Renewal Fee up to F/Y 2065/66 payable by Khandsari Industries utilizing Vertical Roller
& Horizontal Roller (up to 10 HP), if paid as per rate prescribed for F/Y 2066/67; balance late fee
and penalty shall be waived.
 Special Provision relating to waiver of License fee for Sugar Cane Industries
License fee for sugar cane industries producing molasses using power crusher has been reduced to
50 %.

Health Service Charges:

> Health Service Charges @ 5% on Health Services provided by entities other than Nepal
Government Community Hospital. (Alternately, they may be voluntarily registered with VAT)
> Health Service Charges, so collected, and 4-Monthly Return for the same needs to be deposited at the
IRO within 25 days from the end of the 4-Month period.
> Fine Rs. 1000 per Return shall be levied upon Non submission of Return.
> Interest @ 15% p.a. shall be levied in case of non-deposit of Service Tax on time. The Tax Officer
may order the closure of such institution upon non-deposit of due Service Charges for of 3 months.

Casino Royalty:
> Annual Casino Royalty continues to be Rs. 20 Million ____________________________________
> The royalty has to be paid within 2 months from the start of the Financial Year. System of Payment
of monthly royalty on pro-rata basis has been discontinued

Pollution Control Fee:

> Pollution Control Fee @ Rs. 0.50/Litre shall be levied on local sale of petrol & diesel within Nepal.
(Earlier, the fee was levied on sale within Kathmandu Valley.)
> NOC has to deposit the Monthly Fee for the same within 25th of next month.

Road Construction & Improvement Fee:

> Road Construction & Improvement Fee, levied at the time of import, continues to be levied as
follows:
Items Fee Amount
Petrol Rs 2 / Litre
Diesel Re 1 / Litre

Road Construction & Maintenance Fee:

> Road Construction & Maintenance Fee, levied at the time of registration of vehicle, continues to be
levied as follows:
Items Fee Amount
Car, Jeep, Van, Microbus, Bus & Truck 3 % of Cost
Motorcycle Rs. 5000
> However, the above shall not be applicable to diplomatic mission, person with diplomatic facility,
ambulance and Dead-Body Carrying Vehicle.

Tourism Service Fee:

> Provision of Tourism Service Fee has been removed from July 16, 2009.
> Arrangement shall be made such that Nepal Tourism Board could reach an agreement with airline
companies to collect Rs. 1000 per passenger at air ticket itself effective from that date.
Vehicle Tax:
> Vehicle Tax for Private Vehicles continues to be as follows:
Private Vehicles Tax
Car, Jeep, Van, Micro Bus:
Up to 2000 CC 15,000
2001-2900 CC 25,000
Above 2900 CC 40,000
Dozer, Excavator, Loader, Roller, Tripper, Crane 26,000
Auto, 3 Wheeler, Tempo, Tractor, Power Tiller:
Auto Rickshaw, 3 Wheeler & Tempo 4,000
Tractor 2,500
Power Tiller 2,100
Mini Truck / Mini Bus 13,000
Truck / Bus 20,000
Motor Cycle:
Up to 150 CC 1,800
Above 150 CC 3,000

> Vehicle Tax for Public Vehicles shall be as follows:

Public Vehicles Tax
Car, Jeep, Van, Micro Bus
Up to 1300 CC 5,000
1301-2000 CC 6,000
2001-2900 CC 7,500
2901-4000 CC 9,600
Above 4000 CC 11,800
Dozer, Excavator, Loader, Roller, Tripper, Crane 12,500
Auto, 3 Wheeler, Tempo, Power Tiller
Auto Rickshaw, 3 Wheeler & Tempo 2,900
Tractor 1,450
Power Tiller 1,150
Mini Truck / Mini Bus 8,200
Truck / Bus 10,600

> Government Vehicle shall be subject to 50% Tax Exemption.

> Electric Vehicles shall be subject to 100% Tax Exemption.
> Vehicles other than Petrol Vehicles shall be subject to 20% Tax Exemption.

Land / Building Registration Fee:

> Registration Fee for Flats constructed under Housing Projects continues to be 1.50%.
> Registration Fee for Bungalows (house along with land) constructed under Housing Projects
continues to be 2 %.
 > Registration Fee for Rajinama above Rs. 50,000 shall be levied @ 4% in Municipality and @
2% in VDC.
> 0.50% Additional Registration Fee continues to be charged for buying and selling the
land/building within the metropolitan, sub-metropolitan, municipalities of Kathmandu Valley
and VDC adjoining these areas.
> Registration Fee @ 3% shall be levied @ 3% in designated VDCs of Kathmandu, Lalitpur &
Bhaktapur District.
> Rebate in Land Registration Fees continues to be 25% if land is transferred in women’s name.
> Rebate in Land Registration Fees to be 25% if land is transferred in person above 70 years age.

Service Charges for Mortgage Registration against loan from Financial Institution &
Co-operative Society:
> Mortgage Registration Fee has been reduced as follows:
Loan Amount Fee
Up to 1 Lac 300
Above 1 Lac - 5 Lacs 500
Above 5 Lacs - 10 Lacs 1,000
Above 10 Lacs - 20 Lacs 1,500
Above 20 Lacs - 50 Lacs 2,500
Above 50 Lacs - 100 Lacs 10,000
Above 100 Lacs - 200 Lacs 15,000
Above 200 Lacs 30,000

Administrative Review (Appeal at DG)

> Provision has been made to file an application in the department for the administrative review in
the cases related to Income Tax, Value Added Tax as well as Excise Duty. Cash deposit of 1/3rd
of disputed tax and 100% of undisputed tax payable is required. In case of non-decision within
60 days from the date of application, resort may be taken to Revenue Tribunal.

Special Provision relating to Insurance

Compulsory Insurance by banks and financial institution deposit up to Rs.200,000 in fixed and
saving deposit shall be introduced.
Compulsory arrangement shall be made to make third party insurance for Rs. 500,000 in case of
public and private vehicles to be effective from Bhadra 01, 2066.

D. Following Major Special Provisions related to Finance Act, 2065 has been repealed:
> Contribution of 1 Day’s remuneration in Youth Self-Employment Fund.
> 50% Exemption in License Fees of Brick Industry having emission below 50% of prescribed
standard.
> Voluntary Disclosure of Income Scheme (VDIS).
> Declaration of House Rent Income.