KATHMANDU: The government is preparing to withdraw the 5 percent value-added tax (VAT) levied on electricity consumption.
The development follows an agreement reached between Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha and Finance Minister Dr. Swarnim Wagle.
According to sources, Finance Minister Wagle has agreed to Energy Minister Shrestha’s proposal to remove the tax. The proposal is being prepared for submission to the upcoming Cabinet meeting for formal approval. The VAT will be scrapped once the Cabinet endorses the proposal.
The 5 percent VAT on electricity was introduced through the budget for the current fiscal year, applying to households consuming more than 50 units of electricity per month. The two ministers had previously held several rounds of discussions on the issue but had failed to reach an agreement.
An official at the Ministry of Energy said the Finance Minister’s agreement during the latest meeting has paved the way for the proposed policy change. The formal process for implementing the decision will begin following Cabinet approval.
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