Government weighs scrapping VAT on electricity
Summary
The government is considering scrapping VAT on electricity just months after introducing it, citing concerns over rising costs for consumers. Ministers say the proposal is under discussion and could be taken to the Cabinet for a final decision.
Key Points
- Energy Minister Biraj Bhakta Shrestha and Finance Minister Swarnim Wagle have reached an in-principle understanding to remove VAT on electricity.
- The tax, introduced in the current fiscal year's budget, imposed 5 percent VAT on household consumers and 13 percent on other users, bringing more than 2.6 million households into the tax net.
- Stakeholders have criticized the tax for raising bills and potentially distorting consumption patterns, while the government has already reversed another tax introduced this fiscal year.
- The Inland Revenue Department clarified that electricity consumed up to July 16 would not be subject to VAT even if bills were issued after July 17.
