The government is set to remove the value added tax (VAT) on electricity.
The Ministry of Energy, Water Resources, and Irrigation said that an agreement has been reached between Energy Minister Biraj Bhakta Shrestha and Finance Minister Swarnim Wagle to remove VAT on electricity.
According to an official from the Ministry of Energy, Minister Shrestha proposed removing VAT during a meeting with Finance Minister Wagle on Sunday.
“We have implemented the Energy Consumption Strategy 2026. To increase consumption, prices should not be higher. From that perspective, the energy minister proposed removing VAT to the finance minister, who responded positively to the proposal,” the official said.
The official said that Finance Minister Wagle has agreed to take the proposal to the Cabinet for a decision.
“The finance minister will now take the proposal to the Cabinet, citing that VAT has placed an additional financial burden on consumers and therefore it should be removed as soon as possible,” the official said.
VAT on electricity will be removed after the Cabinet makes a formal decision.
The government began imposing VAT on electricity from the current fiscal year.
The VAT rates – f5 percent for household consumers and 13 percent for industrial and other non-household consumers – were introduced by Finance Minister Wagle.
The government is now preparing to remove the tax following widespread criticism of the policy.
According to the Energy Ministry official, the prime minister is also positive about removing VAT on electricity.
