Nepal’s government has presented a Rs 2.124 trillion budget for fiscal year 2083/84, laying out major changes to taxes, civil servant pay, electricity trading, diplomatic missions and public-sector management.
Finance Minister Swarnim Wagle announced the spending plan as revenue growth has slowed in recent years. The budget is built on a projected revenue base of Rs 1.405 trillion, excluding revenue-sharing arrangements.
The budget raises civil servants’ salaries by 10 percent and keeps the dearness allowance at Rs 5,000. With the revised pay structure, total compensation for some employees is expected to rise by about 21 percent. The highest salary level will cross Rs 100,000.
Wagle also announced changes to personal income tax. The income tax exemption threshold has been raised to Rs 1 million, up from Rs 500,000. The top personal income tax rate has been reduced to 29 percent from 39 percent.
The budget increases excise duty on cigarettes and alcohol by 10 percent. The government said the move is aimed at reducing health risks while raising revenue.
In the energy sector, the government plans to allow private companies to trade electricity in international markets. Wagle said legal arrangements will be made for private firms to build transmission lines, collect billing charges and take part in power trading.
The government also plans to restructure the Nepal Electricity Authority into three separate companies for power generation, transmission and distribution, and electricity trade. The budget says licenses may be canceled for projects that have signed power purchase agreements but have not started construction.
The budget also proposes converting Nepal Airlines Corporation into a company model as part of wider management reforms. Wagle said the government will identify a suitable strategic partnership model to improve the airline’s operations, competitiveness and long-term sustainability.
To encourage digital transactions, the budget offers a 10 percent discount on the VAT amount for purchases made through digital payment systems. Consumers currently pay 13 percent value-added tax on goods and services.
The government also announced plans to close six diplomatic missions, including embassies in Denmark, Brazil and South Africa. The list also includes Nepal’s consulates in Chengdu, China, and San Francisco, United States, as well as a branch office in Visakhapatnam, India.
Another budget provision would allow the government to manage and use funds from bank and financial institution accounts that have been inactive for 10 years or more. The government said rightful claimants would be able to recover the funds if they make a valid legal claim.
The budget sets a 90-day target to collect details of long-inactive accounts and identify other resources. Under existing rules cited in the report, savings accounts with no activity for three years and call or current accounts with no activity for more than one year are considered inactive.
The budget also proposes applying VAT at a concessional rate on monthly electricity consumption above 50 units for end-level consumers.
Wagle said the government will hold a broader political debate on providing state grants to nationally recognized political parties based on votes received in the last general election. He said any such grant would be audited by the Office of the Auditor General.
The budget also offers a 10-year income tax exemption for new cinema halls opened outside metropolitan and sub-metropolitan areas. It also includes support for music, art and literature studies, including funding for a Guthi Research Institute and Ethnomusicology Center at the Tripureshwar Mahadev Temple complex.
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