Comprehensive Tax Reform in Nepal's FY 2082/83 Budget

Finance Minister Bishnu Prasad Paudel presented the budget for Fiscal Year 2082/83 in the Federal Parliament, announcing major overhauls in Nepal’s tax regime. The new budget introduces changes and provisions across 42 key tax-related areas aimed at modernizing the system and promoting economic growth.

Key Tax Reforms and Highlights

Structural Reforms in Tax Law

Timely revisions to VAT, Income Tax, and Excise Duty laws.
A feasibility study for implementing a multi-rate VAT system.
Non-tax revenue rates to be modernized and updated.

Boost to Industry, Startups, and IT Sector

IT-based industries and resorts will receive tax benefits similar to special industries.
Only 5% final income tax for Nepali individuals exporting IT services from Nepal.
Startups with annual turnover up to Rs. 10 crore will enjoy 5-year income tax exemption.
Customs duty reduced to 1% and other taxes waived for industries importing equipment for wood processing, organic fertilizers, green hydrogen, sports infrastructure, EVs, and charging stations.
Outstanding tax exemptions for deregistering public/private vehicles older than 20 years.

Tax Relief for Renewable Energy & Technology

Tax exemptions for importing solar and wind energy equipment.
Green hydrogen producers to receive full tax waivers on equipment and 6-year income tax exemption.
Manufacturers and assemblers of EV charging machines will pay only 1% customs duty and get 5-year income tax holiday.

Digital Economy and Service Reform

Expanded Digital Service Tax coverage to bring all digital transactions under the tax net.
VAT removed from clearinghouse services to encourage digital payments.
Foreign currency up to USD 5,000 can be brought into Nepal without declaration; declaration required for higher amounts.

Removal of Advance Tax and Price Ceilings

Advance income tax scrapped on goods like food grains, fruits, legumes, etc.
VAT waived on hearing aids.
Rs. 1.6 million price cap on ambulances for import duty exemption lifted.

New Revenue Improvement Measures

Promotion of Voluntary Tax Compliance

Enhanced tax education for taxpayers.
Time-bound reviews and rationalization of tax exemptions and facilities.

Trade Facilitation Measures

Bank guarantee of Rs. 3 lakh for EXIM code removed.
Minimum tax requirement eliminated for inactive businesses.
On-site inspection allowed at business locations for export-import activities.

Revenue Leak Control and Administrative Reforms

Cross-border data-sharing system with neighboring countries to reduce evasion.
Introduction of intelligence-based tax investigation framework.
Inland Revenue Department to go paperless, contactless, and faceless.
Upgrade of Integrated Check Posts at major customs points for efficiency.

The FY 2082/83 budget seeks to simplify economic activities and strengthen productive sectors and innovation-driven enterprises. The tax incentives for startups, digital services, green energy, and industry are expected to expand the tax base and stimulate economic participation.

The reforms aim to ensure transparency, control revenue leakage, and streamline tax services, paving the way for a just and sustainable fiscal system. This budget signals a new era for Nepal in digital transformation, renewable energy adoption, and industrial development.