Electricity Prices Increased by 5 to 13 Percent

Effective from Friday, the government has decided to impose a value-added tax (VAT) increase of 5 percent on customers consuming more than 50 units of electricity for household purposes, and 13 percent on other consumers. The Inland Revenue Department has clarified through its operational guidelines that commercial, industrial, public bodies, and institutional sector customers are not considered end consumers. Although Finance Minister Dr. Swarnim Wagle announced that electricity prices would not increase, the revenue adjustment process has not progressed due to the vacancy in the Electricity Regulatory Commission. Kathmandu, 31 Asar.

Finance Minister Dr. Swarnim Wagle has informed that the VAT on electricity, imposed through the budget, will come into effect from Friday. From the new fiscal year, VAT will begin to apply on electricity and ride-sharing services, with initial preparations completed, according to Prakash Paudel, Director of the Inland Revenue Department. The Economic Bill stipulates a 5 percent VAT rate for electricity end-users. The Inland Revenue Department considers household consumers as end-users and states that only they will be subject to the 5 percent VAT.

Following the provisions in the Economic Act, the department has defined the concept of end consumers through operational procedures. “Consumers who use electricity exclusively for household purposes, not for commercial or industrial activities, are considered end consumers,” explained Paudel. He also mentioned that ride-sharing companies have developed their billing systems accordingly. From 1 Shrawan onwards, household customers consuming more than 50 units will be billed with an additional 5 percent VAT, while others will be charged 13 percent VAT, said Ganesh Luintel, Director of the Finance Department at Nepal Electricity Authority.