Taxes revised on Electric Vehicles, Inconsistent Policy?

• Taxes revised on electric vehicles by the government.
• The new policy to affect vehicles’ costs on account of their kW specs
• Taxes seem to be contradictory to the government’s own policy of encouraging EVs.

The government has revised taxes on electric vehicles. The finance minister Janardan Sharma announced the new tax policies in his annual budget speech for fiscal year 079/80. As per the announcement, the customs charge stays the same for EVs up to 100 kW but for those with higher specs, the tax has increased.

The tax revision is again another reflection of the government’s ambiguous take on EVs. The government does offer encouragement for a shift towards electric vehicles. On the other hand, its tax policies contradict its own stand on them.

As per the new tax scheme,  EVs of 100 kW to 200 kW has been slapped with a 30 percent excise duty. Likewise, the customs charge has also been fixed at 30 percent on such EVs. Also read: Largest Solar Charging Station in Nepal Ready Can Charge 16 EVs Once

Similarly, EVs running on 200 kW to below 300 kW will pay 60 percent excise duty of their total cost.

For EVs above 300 kW, both customs charge and excise duty has been fixed at 45 percent each. “This new policy is in line to reduce facilities for those who can afford expensive vehicles. Meanwhile, those who can buy moderately priced EVs will be encouraged to make a switch from their petroleum-run vehicles, Finance Ministry argues.

A progressive policy!

The government has called it a progressive policy. It reasons that the new charges will encourage mid-income Nepali consumers to buy EVs. But it will also work to curb the import of expensive ones. This could be to conserve dollar reserves which have caused great worries in recent months.

As per the finance ministry, low specs EVs are bought by mid-income earners. That is why excise duty has not been imposed on them.

But how far this supposedly two-pronged policy works will be interesting to see.

EVs are a growing trend in Nepal. Forced by the ever-increasing fuel prices and a desire for green transport, many have entertained the idea to ride an electric vehicle. It is a new allure in the auto industry in Nepal.

Asper the customs department’s stats, 1,500 EVs were imported to Nepal from the beginning of the fiscal year 078/79 (Shrawan) 2078 to Baisakh 2079. Do read: Sajha Yatayat Brings Electric Buses to the Kathmandu Valley

How do you think the revised tax on electric vehicles impacts its market? Will it be counterproductive or spurn its usage further? Do offer your opinion in the comments below.