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HomeAutoElectric Vehicles tax in Nepal: Budget FY 2081/82 Latest

Electric Vehicles tax in Nepal: Budget FY 2081/82 Latest

  • Taxes have been revised or let’s say increased taxes on all kW range electric vehicles (EVs) by 10% for FY 2081/82.
  • The new policy to affect vehicles’ costs on account of their kW specs
  • Taxes seem to be contradictory to the government’s policy of encouraging EVs.

The government has revised taxes on electric vehicles (EVs) for the Fiscal Year FY 2081/82. On Tuesday, Jestha 15, 2081, Finance Minister Mr. Barshaman Pun laid bare the government’s new EV tax policies for Nepal in his annual budget speech for the fiscal year 2081/82. As per the announcement, the taxes on EVs have increased and so have the excise duties which means EVs will be more expensive in Nepal.

For 0 to 50 kW EVs, the government has decided to levy a 15% customs charge and 5% excise duty from FY 2081/82. Previously, vehicles coming under this range had 10% customs while there was no excise duty imposed.

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EV tax on 51 kW to 100 kW in Nepal

Likewise, for EVs that are 51 kW to 100 kW in capacity, the customs tax has been increased by 5% reaching 20% while excise duty has also been raised to 15%. The more powerful the kW capacity, the sharper the tax sting gets, however, the government has implemented a balancing act to some extent.

To illustrate, the EVs with kW capacity from 101 – 200 kW see a 10% increase in customs charge which means the EVs coming into the Nepali market will now have a 30% customs charge. However, the excise fee has been maintained the same at 20% for FY 2081/82.

charging station
The number of EV charging stations is growing in Nepal as is the number of EVs. However, the government’s tax perspective has not been as helpful | In the picture: NEA’s Charging Station at Kalika Fuel Station Pokhara

The customs charge has been stiffer for EVs from 201 kW to 300 kW. These vehicles’ customs duty is raised by 40% to 60% but the government has lowered excise duty by 10% meaning it’s now 35%. It gets more punishing for EVs that are 301 kW and above. Starting FY 2081/82, EVs with 301 kW and above will bear an 80% customs charge and 50% excise duty.

EV capacityCustoms charges
FY 2081/82
Excise duty
FY 2081/82
Difference
0 – 50 kW10% 15%0% 5%10%↑
51 – 100 kW15% 20%10% 15%10%↑
101 – 200 kW20% 30%20% (same)10%↑
201 – 300 kW40% 60%45% 35%10%↑
301 kW60% 80%60% 50%10%↑
EV tax structure in Nepal for FY 2081/82

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The contradiction that continues with the latest FY 2081/82 EV tax Nepal

Anyone wishing that the government would be more generous and “logical” with the electric vehicles tax in Nepal was disappointed if not overwhelmingly frustrated. The government has long pitched for the shift towards EVs away from traditional fuel-powered vehicles. And there are some most-know reasons to buy an EV in Nepal. However, the tax policy which plays a prominent role in the business prospects has been unfriendly.

From FY 2080/81 to FY 2081/82, the government has raised total charges of 10%. This doesn’t look too bad but take into account the particular value. For EVs with 301 kW capacity, 80% of customs charges have been levied.

electric cars ev
File image

Not everyone is going to pay this exorbitant fee in customs and an additional 50% on excise duty. That is because normal middle-class to luxury buyers won’t be buying such large-capacity EVs. Their purchase would come in the middle of the table such as BYD Atto 3 and most of the other top electric cars available in Nepal. However, that range is also not exempt from hefty taxes. A 10% total tax is raised on each type of EV. That’s too much on the already high EV tax policy in Nepal.

No doubt the EV trend is rising but how the government perceives this industry is a question that should need answers. In 2023, 6,672 electric cars were imported. Likely, the number might increase further in the coming months and even years. But just because EVs are fine investments with low-maintenance costs, and provide better value, that doesn’t mean the government can impost “indiscriminate” taxes.

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A policy change is a must!

Nepal has a responsibility to reduce air pollution which would get a significant contribution from EVs, while domestic power consumption is also in need of higher consumption levels to reduce outward currency flow. However, the government should be more lenient and revise its policies on EV imports which can actually encourage consumers towards EVs.

How do you think the revised tax on electric vehicles will impact the auto market in FY 2081/82? Will it be counterproductive or the market will see a normal growth trajectory? Do offer your opinion in the comments below.

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