Bikes-Scooters Prices to Increase from Rs. 15,000 to Rs. 50,000 as Govt Raises Tax Duty

Nepal Government has brought forth a new budget for the fiscal year 2021/22. It comes as a replacement bill, revising the ordinance budget previously introduced by the last KP Oli-led Government.

Any imported product is subjected to four different taxes: Custom Duty, Excise Duty, VAT, and Road Development Tax.

The new budget includes a provision that increases the Excise Duty and Road Development Tax (RDT) on two-wheelers.

Depending on the engine capacity, the price will increase from Rs. 15,000 to Rs. 50,000.

TechLekh reached out to Yamaha, the brand directly affected by this bill, to get clarification about the upcoming price hike.

As per the Yamaha representative, the company has no other options but to adopt the new duty structure. Furthermore, the final price increments are under consideration. However, the company isn’t quite certain on when the price will be updated as new prices will have adverse impact on the festival season.”

Increased Two-Wheeler Excise Duty

The government has imposed variable excise duty rates depending on the engine capacity. Moreover, the imported two-wheelers will see excise duty increment from 10% to 20%.

Furthermore, the classification table has also been revised.

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Road Construction Rate

Road Construction Rate (also known as RDT) is the tax imposed for the development of road infrastructures.

It is a fixed amount a buyer must pay before purchasing a two-wheeler or four-wheeler product.

The following table represents revised RDT depending on the engine capacity.

Duty Exemption

Interestingly, the Government has decided to give a 50% Excise Duty exemption on locally assembled products. It means that any two-wheelers or four-wheelers assembled in Nepal will be eligible for this tax exemption.

It will encourage popular two-wheeler brands to set up assembly plants in Nepal.

Bajaj and TVS products are currently assembled in Nepal

Furthermore, Honda and Yamaha are also planning to open local assembly plants in the near future.

Conclusion

The current situation has slowed down economic activities in Nepal. However, the two-wheeler sector has seen a significant boost in sales post-lock-down.

According to the Department of Customs, Nepal has imported 3,55,959 two-wheelers (worth Rs. 33.19 billion) in the fiscal year 2020-21. It is a drastic jump from 2,08,793 two-wheelers import (worth Rs. 18.76 billion) in the fiscal year 2019-20.

The revised bill has put Festival Offers in jeopardy. Popular brands like Bajaj and Yamaha are currently planning to handle this situation.

It is a developing situation that will pan out in the coming months.

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