KATHMANDU: The government’s budget for fiscal year 2026/27 has introduced a new tax structure for electric vehicles. However, the prices of several entry-level EVs are unlikely to increase due to the changes.
The government has removed the existing excise duty on EVs and replaced it with a new Clean Infrastructure Investment Fee. It has also shifted the tax calculation method from motor peak power to CIF (Cost, Insurance and Freight) value.
Under the new policy, EVs with a CIF value of up to Rs 2 million are subject to 20 percent customs duty, 2.5 percent Clean Infrastructure Investment Fee, 2.5 percent road construction fee and 13 percent VAT. The total tax burden stands at 42.46 percent.
Previously, most EVs in this category, which generally feature motors below 50 kW, attracted 15 percent customs duty, 5 percent excise duty, 5 percent road construction fee and 13 percent VAT. The total tax burden was 43.27 percent.
As a result, small EVs with a CIF value below Rs 2 million now attract around 0.81 percent less tax than before.
For example, an EV with a CIF value of Rs 1.95 million would have reached a customs-cleared value of around Rs 2.794 million under the previous tax system. Under the new structure, the same vehicle would cost around Rs 2.779 million after taxes, a reduction of about Rs 15,000.
While the new budget has increased taxes on EVs with a CIF value above Rs 2 million, vehicles below that threshold are expected to see little or no impact from the tax revision. However, rising US dollar exchange rates and increasing import costs could still push prices higher.
EVs unlikely to see a price increase
More than a dozen mini EVs and hatchback EVs currently sold in Nepal have CIF values below Rs 2 million. These models are expected to remain unaffected by the new tax structure.
Mini EVs such as the MG Comet EV, Wuling EV, Changan Lumin, Kaiyi e-Qute 02, e-Qute 04, Henery Volts and BAW Brumby fall within this category and could even receive a slight tax benefit.
In the hatchback segment, the Tata Tiago EV, BYD Atto 1 (Standard), Dayun and Dongfeng Box (Nammi) also have CIF values below Rs 2 million. As a result, their prices are not expected to rise due to the budget’s tax changes.
