Nepal Revises General Tax Rates in Fiscal Budget 2082/83: Fuel, Tobacco, Education, and Green Levies Adjusted

In the recently announced fiscal budget for 2082/83, the Government of Nepal has implemented several notable changes to the general tax regime. These modifications aim to streamline revenue collection, curb harmful consumption, and align national tax policies with evolving economic and public health priorities.

One of the key adjustments is in the health risk tax category. To discourage the consumption of tobacco and smokeless tobacco products, the government has raised the excise duty. Now, bidi is taxed at 30 paisa per stick, cigarettes and cigars are charged 60 paisa per stick, and products such as khaini, surti, pan masala, and gutkha incur a duty of 60 rupees per kilogram. These changes reflect a continued push toward reducing public health burdens associated with tobacco use, particularly in low-income communities.

A significant fiscal policy shift comes with the introduction of an Infrastructure Development Tax of NPR 10 per liter on the import of petrol and diesel at the customs point. This tax, framed as a means to support infrastructure financing, is expected to generate billions in additional revenue that will be funneled into road, bridge, and transport development projects across the country. While the measure has raised concerns over its potential to indirectly hike transportation costs, the government maintains it is essential for long-term infrastructure sustainability.

Additionally, a 3% education service fee has been imposed on students exchanging foreign currency to go abroad for studies. This move, although controversial, is projected to generate funds for Nepal’s own education system development, especially in technical and vocational sectors. However, students and education consultancies have voiced concern over increased financial strain on those pursuing higher education overseas.

In terms of environmental policy, a revamped Green Tax structure has been introduced to address the carbon footprint and promote cleaner industrial practices. The tax applies to several categories: coal and goods manufactured from coal, coke, and related products are now taxed at 0.5 NPR per kilogram. Similarly, petrol, diesel, and hexaneattract a green tax of 1 NPR per liter, while lubricating oils, petroleum oils, and mineral oils are also taxed at 1 NPR per liter. Other oils carry a lower rate of 0.5 NPR per liter. This is part of Nepal’s broader commitment to international environmental protocols and carbon reduction strategies.

The casino sector has also come under tighter fiscal scrutiny. The annual royalty for general casinos has been revised to 50 million NPR, while casinos using modern machine equipment are now mandated to pay 15 million NPR. To ensure better compliance, the government has structured the payment schedule: 40% of the royalty is to be paid by the end of Poush, 70% by the end of Chaitra, and full payment must be completed by the end of Ashad. This staggered model aims to ease the financial burden on operators while ensuring timely revenue collection for the state.

Collectively, these measures indicate a shift toward a more progressive and targeted tax system. By focusing on sectors with externalities—like tobacco, fossil fuels, and luxury entertainment—the government hopes to broaden its tax base without disproportionately affecting lower-income populations. The Ministry of Finance has assured that the new tax structure is designed to balance revenue needs with social equity and sustainable development goals.

However, businesses and civil society groups have called for more clarity and consistency in tax administration, fearing potential confusion or double taxation due to overlapping categories. The government has pledged to release a detailed implementation guideline and hold consultations with key stakeholders before full enforcement begins.