Increase in excise duty on cigarettes, alcohol

Kathmandu, May 30: The government has increased excise duties on cigarettes, alcohol and beer through the budget for the upcoming fiscal year.

Presenting the budget for fiscal year 2026/27 in Parliament on Friday, Finance Minister Dr. Swarnim Wagle announced an increase of around 10 per cent in excise duty on cigarettes. 

The government has also announced plans to introduce an umbrella law to make the mobilisation of non-tax revenue more effective, according to the Finance Minister.

The government has announced a concessional value added tax (VAT) on electricity consumption exceeding 50 units per month sold to final consumers.

The government has also revised customs duty on electric vehicles (EVs), replacing the existing pick-power capacity-based system with a value-based mechanism.

In addition, a clean infrastructure investment fee will be imposed at import points to support domestic EV production, the construction of charging stations, and battery management systems.

To promote the export of Nepali branded alcoholic beverages, the government would encourage the production of quality spirit and maturation processes.

From the next fiscal year, microbreweries will also be registered as liquor industries and brought within the excise duty framework, the government announced.

"We will mandatorily integrate all businesses with an annual turnover exceeding Rs. 100 million and issuing electronic invoices into the Central Invoice Monitoring System. Small businesses will be encouraged to accept payments through electronic means," said the budget.

In addition, customs duty exemptions will be provided on the import of raw materials brought in under industries producing artificial limbs and assistive devices for persons with disabilities within Nepal.

The budget has also introduced a provision allowing taxpayers to deduct up to Rs. 10,000 for residential house insurance premiums for income tax purposes.

Likewise, capital gains tax will not be levied on amounts up to the government-assessed valuation for house and land registration during land acquisition for development and construction projects, Minister Wagle said.

To promote agro-processing industries, the government has announced a full income tax exemption for the first 10 years of operation. 

Similarly, value added tax (VAT) exemptions will be provided on the import of machinery and equipment, including cold storage, packaging and testing laboratories used in the sector. 

To promote wedding tourism, the budget has proposed to establish automatic system for declaring goods brought for wedding purposes, collecting deposits, and refunding those deposits upon return after the wedding ceremony.

"We will develop a paperless, faceless, and contactless revenue administration system. Arrangements will be made to automate services such as tax filing, payment, refunds, and other related processes," said Dr. Wagle.