KATHMANDU: The new budget publicised by the government yesterday has determined the tax on electric cars based on their value. The new tax policy set by the government is set to increase the price of small electric cars.
The Government of Nepal has changed its previous policy of taxing based on kilowatt-hour and has instead levied tax based on the purchase price. In addition to this, the excise duty that was being levied previously has also been abolished.
At first listen, it might seem like the tax has decreased. However, in reality, the tax appears to have increased. Previously, customs duty, excise duty, road construction fee, and Value Added Tax (VAT) were levied on electric cars up to 50 kilowatts. But this time, the government has abolished the excise duty and imposed a tax under a new heading.
Now, a new tax heading has been added under the name “Clean Infrastructure Investment Fee”. Under this heading, a 2.5 percent tax has been determined for cars with a transaction value (at the customs point) of up to 2 million.
It appears that the previous 5 percent excise duty has been removed, and a lower new Clean Infrastructure Investment Fee has been levied.
Currently, the tax appears to have increased compared to before.
A 20 percent customs duty has been maintained on all types of vehicles. With this, a provision has been made where a uniform 20 percent customs duty will be charged regardless of the power or price of the EV.
Now, let’s look at the tax according to the old and new provisions:
For electric cars with a motor power of up to 50 kilowatts, a 15 percent customs duty, 5 percent excise duty, 5 percent road construction fee, and 13 percent VAT were levied. Even in a straight calculation, the tax appeared to be 38 percent.
Now, according to the new provision, a total tax of 40.5 percent will be levied, comprising a 20 percent customs duty, 2.5 percent clean construction fee, 5 percent road construction fee, and 13 percent VAT.
Even looking at it straight, the price is seen to increase by 2.5 percent. The new tax could increase the price of small EVs by 3 percent.
