5% VAT on Household Electricity Bills Takes Effect, Over 2.6 Million Consumers Impacted

More than 2.6 million electricity consumers across Nepal will begin paying a 5% Value Added Tax (VAT) on their household electricity bills from this month, following the implementation of the government's new tax policy from Shrawan 1. According to the Nepal Electricity Authority (NEA), the measure marks the first time VAT has been imposed on electricity consumed by households. Introduced through the national budget by Finance Minister Dr. Swarnim Wagle, the new provision requires domestic consumers using more than 50 units of electricity per month to pay a 5% VAT on their electricity tariff. Meanwhile, industrial and commercial consumers are now required to pay a mandatory 13% VAT on electricity charges. The government says the policy is part of its broader tax reform agenda aimed at expanding the tax base and increasing domestic revenue collection.