New Financial Year Begins, New Taxes and Duties Take Effect

Kathmandu. The new financial year 2083/84 begins on Friday. Accordingly, the bills related to the budget brought by the government for the said financial year will also start being implemented from Friday. 

Regarding the implementation of the appropriation bill under the budget, the Ministry of Finance has prepared guidelines for the concerned ministries and bodies. Ministry of Finance Spokesperson Amrit Lamsal says that it is being prepared to be issued on July 17.  

Similarly, according to the revenue target set by the government, the ministry has also determined the monthly revenue target for the concerned bodies and is in the final stage of sending it to the concerned customs and revenue offices. 

The new economic act, which was passed by the parliament some time ago, had placed 44 sections in the list of immediate implementation, while the rest were set to be implemented from July 17.  

Specifically, customs, excise duty, value-added tax, and other taxes on goods that can be stored have been implemented from the day of announcement. However, taxes on goods that cannot be stored and taxes related to income and transactions will be implemented only after the start of the financial year.  

According to the details, the government has made arrangements for the implementation of sections 7, 8, 13, 14, 16, 17, 21, 22, 23, and subsection 1 clause a of section 55 of the Economic Act to be implemented from July 17. Some of these provisions are exactly the same as the previous economic act. Among the mentioned ones, only the impact of the changed rates this year will be visible from Friday.  

These are the new taxes starting from July 17

Among the most significant tax rate changes that will be implemented from Friday according to the new economic act will be in the Income Tax Act. From Friday, income up to 1 million rupees earned by natural persons will be taxed at only one percent. Above that, the income tax slab and rate will also change.  

Now, an income of up to 1 million will be taxed at 1 percent, income from 1 million to 1.5 million at 10 percent, income from 1.5 million to 2.5 million at 20 percent, income from 2.5 million to 4 million rupees at 27 percent, and income above 4 million will be taxed at 29 percent on the excess income.  

Currently, such rates go up to 39 percent, and the slab for one percent is only 500,000 rupees. The remaining rates depend on the consumer. Specifically, luxury tax, skill promotion fee, education equalization fee, health equalization fee, casino royalty, and ride-sharing fee will be implemented from Friday.  

Similarly, in the name of luxury tax, a 2 percent fee will be added from tomorrow on five-star or higher hotels and luxury resorts, as well as imported liquor.  Similarly, in the name of skill promotion fee, a 0.5 percent additional fee will be added to the final consumer when selling gold, silver, or their jewelry. This will make gold jewelry more expensive from Friday.  

Education equalization fee will also be implemented from July 17. Accordingly, from July, private educational institutions will charge this fee at a rate of 3 percent on all fees collected from parents of students. For example, if a parent is paying 10,000 rupees per month for their child's school, 300 rupees will be added to this.  

Similarly, the fee imposed in the name of health equalization will now add a 3 percent additional fee to the cost of treatment in private health institutions.  

From Friday, the royalty to be paid by casinos has also increased. These mini casinos, which have been paying a royalty of 15 million rupees annually so far, will now have to pay a royalty of 30 million rupees annually.  

From Friday, a 5 percent service fee will also be added to the cost of ride-sharing. For example, if a person currently pays 100 rupees for using a ride-sharing service, the fee will increase to 105 rupees after the applicable tax.  

The government has made a provision to impose a 5 percent tax on electricity consumption exceeding 50 units per month from this year. Although the government has stated that it will make alternative arrangements so that the burden does not fall on the final consumer due to opposition regarding this tax, no such alternative arrangement has been made yet. In the absence of a new arrangement, the burden of this item will also be added to the consumer.