Nepal Won’t Withdraw VAT on Electricity, Says Finance Minister Swarnim Wagle

Nepal will not roll back the newly introduced VAT on electricity, Finance Minister Swarnim Wagle said during a post-budget discussion in Kathmandu. He added that the tax will move ahead from July, while the government looks for ways to prevent ordinary consumers from bearing the full burden.

The announcement puts fresh focus on one of the budget’s most closely watched policy changes. The government has already said electricity consumption above 50 units per month will face a concessional VAT rate, with the measure framed as a way to widen the tax base while protecting low-usage households.

What the government is changing

Under the new budget provision, electricity users who consume more than 50 units per month will be charged VAT at a concessional rate, rather than at the standard rate. The policy is set to take effect in the new fiscal year beginning in July, according to the budget announcement.

Wagle’s latest comments make clear that the government is standing by the decision. Instead of withdrawing the tax, officials are considering alternative relief measures so final consumers are not hit too hard.

Why it matters

Electricity pricing affects households, businesses, and industrial users across Nepal, so even a targeted tax change can have broad ripple effects. The government’s challenge is to raise revenue without triggering a public backlash over higher bills.

The 50-unit threshold is designed to cushion smaller consumers, but the impact on middle-income households and regular power users could still become a political issue once billing begins. The finance minister’s assurance suggests the administration is already aware of that risk.

What happens next

For now, the policy remains on track for July implementation. The key question is what form the promised concessions will take, and whether they will be enough to offset the added cost for consumers who exceed the exempt usage band.

As Nepal moves toward implementation, the electricity VAT debate is likely to become a major test of how far the government can go in expanding revenue collection while keeping essential utility costs politically and economically manageable.