The government of Nepal has finally revoked the infamous 13% Value Added Tax (VAT) imposed on digital transactions. The decision was announced by the finance minister, Bishnu Prasad Poudel, during his budget speech for FY 2082/83 on Jestha 15, 2082. The decision would give some relief to the digital payment users as it addresses their demand for the revocation of the VAT on electronic transactions.
The revocation of the 13% VAT means service charges will also come down. Earlier, the same VAT had increased the total payable cost for customers who relied on smartphones for payment. The 13% digital payment VAT also drew heavy criticism from the public and stakeholders. But the government has paid heed to the issue and rescinded the VAT, but still, the advantage might be a little too underwhelming.
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The government reverses 13% VAT on digital payment, so what are the new charges?
After the removal of 13% VAT on digital transactions, the service charge for payment comes down to Rs 10 from Rs 11.30. At the same time, the Rs 9.4 service charge now comes down to Rs 8. So, while the removal of the VAT is a welcome decision, the customers will still need to pay a sizeable fee for every transaction they perform.
| Previous service | After 13% VAT removal |
| Rs 11.30 | Rs 10 |
| Rs 9.4 | Rs 8 |
The government has continued its bottom line of promoting digital payment and the digital economy. The removal of the 13% VAT on electronic payment is certainly a welcome decision, but still, it still leaves us wanting more.
What’s your opinion on the government removing the 13% VAT on electronic transactions? Should there be more to promote the digital economy? Do share with us in the comment section below.