SATV 30 May, Kathmandu: The government has made changes to the various tax rates through the budget for the upcoming fiscal year 2025/26.

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel said that customs duty rate imposed on the import of liquor r, beer, tobacco and cigarettes has been hiked. 

The government has made a modest increase in existing excise duty rates for some items and expanded the scope of the health risk tax.

The government has announced to give tariff exemptions to information technology-based industries, hotels and resorts.

"I have made arrangements for a 75 per cent tax exemption on income derived from the export of information technology services. Similarly, I have made arrangements for only 5 per cent income tax on the income of those residing in Nepal and exporting information technology services abroad, and this tax will be final," he said.

A provision has been made to exempt income taxes for startup businesses with an annual turnover of up to Rs. 100 million for five years.

The government has abolished other taxes and duties by imposing only 1 per cent customs duty on the import of mill machinery required for the wood seasoning industry.

DPM Paudel said that the laws related to Value Added Tax, Income Tax, and Excise Duty would be reviewed to address changes in the tax system.

The government has removed customs duties and abolished other taxes and duties on the import of equipment required for the production of organic and natural fertilisers.

A 1 per cent customs duty has been imposed on the import of equipment, tools and sports materials required for the construction of infrastructure for football, cricket and multi-purpose stadiums, abolishing all other taxes.

The government has made arrangements to exempt all types of taxes and duties on machinery and equipment imported for the green hydrogen production industry for five years. Provision of only a 1 per cent customs duty has introduced on the import of batteries and other equipment required to store electricity from solar and wind energy.

"I have made arrangements to levy a 1 per cent customs duty on the import of equipment required for the establishment of an industry that manufactures and assembles electric vehicle charging machines and to exempt other taxes and duties. In addition, I have made arrangements to provide income tax exemption for such industries for five years," DPM Paudel. The budget has made provision for deducting the remaining income tax for public and private vehicles that are more than twenty years old or cannot be put into operation, if the income tax for the last two years is paid. The government has abolished the value-added tax levied on clearing house services to encourage digital payments.

The advance income tax levied at customs points on food grains, legumes, fruits, as well as plant, animal, and dairy products has been removed.

Similarly, the value-added tax on hearing aids has been abolished. DPM Paudel said that all taxes and duties imposed on electric vehicles have been kept unchanged to encourage the use of electric vehicles, reduce environmental pollution, and increase domestic electricity consumption.

The government has abolished the provision of a bank guarantee of Rs. 300,000 that industrialists and businessmen who import and export goods must provide when obtaining an EXIM code through the budget.