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Understanding Electric Vehicle Tax Structure in Nepal: Past and Present!

The EV sector in Nepal is a growing market, still decades away from its full potential.

electric vehicle tax in nepal
Electric Vehicle Tax in Nepal

In hopes to achieve that potential quickly, the Nepal Government brought forth various incentives to properly promote the EV market. Generous import taxation duties and a yearly road tax exemption were among the more renowned incentives.

However, those incentives were taken away in the Budget 2077/78. It brought any future developments of the EV sector in Nepal to a complete halt.

The controversial tax hike was revised later in that fiscal year, but the damage had been done.

Fortunately, Budget 2078/79 introduced more friendly taxation in hopes to jump-start the EV-craze back to its good-old-days.

The positive effects are being noticed, especially with renewed interest back in the EV sector.

With that more people are interested to understand the key details of the Electric Vehicle Tax Structure in Nepal.

Electric Vehicle Tax in Nepal

Before starting the breakdown, there are four key terms to understand.

Custom Duty: It is a tax imposed on goods (vehicles) that are transported across the international border.

Excise Duty: It is a tax imposed on the consumption of goods (vehicles) for manufacturing, importing, selling, and storing excisable goods.

VAT (Value-Added Tax): It is indirect taxation on sales of goods (vehicles) to the final customer.

RDT (Road Development Tax): It is a tax imposed for the development of road infrastructures.

Yearly Renewal EV Tax Rates in Nepal
Four-Wheeler EV Rs. 15000 – Rs. 30000
Two-Wheeler EV Rs. 1500 – Rs. 3000

Four-wheeler Electric Car Tax in Nepal

Taxation Before Budget 2077/78

Before the Budget 2077/78, the EV sector saw more relaxed taxation. Every EV import was taxed equally regardless of the peak power.

Interestingly, EV four-wheelers were only subjected to 1% customs duty and 10% excise duty.

Peak Power Custom Duty Excise Duty
0 – 301kW+ 1% 10%

*VAT = 13%, RDT = 5%, Distributor Profit: 15-20%

Taxation After Budget 2077/78

Then-Finance Minister Yuba Raj Khatiwada introduced the controversial taxation policies in the Budget 2077/78.

The taxation policies were comparable to fuel-driven vehicles, defeating the incentive to go green.

Peak Power Custom Duty Excise Duty
0 – 50kW 80% 30%
51kW – 100kW 80% 40%
101kW – 150kW 80% 50%
151kW – 200kW 80% 60%
201kW – 300kW 80% 70%
301kW – above 80% 80%

*VAT = 13%, RDT = 5%, Distributor Profit: 15-20%

In retrospect, the taxation policies were harsh, completely going against Govt’s initial promise to promote green energy.

Thus, the EV policies were later revised.

The revised taxation saw drastic changes to Excise Duty only. However, the damage had been done.

It is reported that 2020/21 has a record-low in imports of EV vehicles.

Peak Power Custom Duty Revised Excise Duty
0 – 50kW 80% 6%
51kW – 100kW 80% 10%
101kW – 150kW 80% 15%
151kW – 200kW 80% 45%
201kW – 300kW 80% 52.2%
301kW – above 80% 60%

*VAT = 13%, RDT = 5%, Distributor Profit: 15-20%

Improved Taxation After Budget 2078/79

Perhaps learning from its error, Finance Minister Bishnu Prasad Paudel introduced all-new taxation policies to rejuvenate the EV market back to its glory days.

Budget 2078/79 will continue to implement different tax rates based on different peak powers. However, the overall policies are more relaxed and welcoming.

More importantly, the taxation removes excise duty completely while drastically decreasing the custom duty rate.

Peak Power Custom Duty Excise Duty
0kW – 100kW 10% 0%
101kW – 200kW 15% 0%
201kW – 300kW 30% 0%
301kW – above 40% 0%

*VAT = 13%, RDT = 5%, Distributor Profit: 15-20%

While knowing how many duties are applied is interesting, it would be even more interesting to visualize the price change of popular EV products in Nepal.

EV Model Old Taxation Price Revised 2077/78 Budget Price Current 2078/79 Budget
Kia Niro EV Rs. 66.90 Lakhs Rs. 1.25 Crore Rs. 69.90 Lakhs
Hyundai Kona 100kW Rs. 55.96 Lakhs Rs. 76.96 Lakhs Rs. 56.96 Lakhs
Hyundai Kona 150 kW Rs. 66.96 Lakhs Rs. 94.96 Lakhs Rs. 71.96 Lakhs
Hyundai Ioniq 100kW Rs. 54.96 Lakhs Rs. 76.96 Lakhs Rs. 57.96 Lakhs
MG eZS Rs. 50 Lakhs Rs. 59.99 Lakhs Rs. 50.99 Lakhs

Four-Wheeler Electric Vehicle Yearly Road Tax

While the taxation is improved, the Electric Vehicle Yearly Road Tax in Nepal continues to be compulsory. In the latest Budget 2078/79, four-wheeler EV Yearly Road Tax remains unchanged.

Peak Power Yearly Tax
50kW – 125kW Rs. 15000
126kW – 225kW Rs. 20000
226kW – above Rs. 30000

Two-Wheeler Electric Tax in Nepal

In light of recent drastic price changes in EV products, it was only fair for people to expect a price decrease on electric two-wheelers.

Unfortunately, that didn’t happen.

Unlike the electric four-wheelers, the taxation on electric two-wheelers has only gone through minimal changes.

ALSO READ: Super Soco Electric Scooters Price in Nepal: Features and Specs

Old Taxation vs New Taxation

Regardless of peak power, there was a provision for 10% customs duty and 0% excise duty. On top of that, 13% VAT and Rs. 12,000 for RDT is further added.

In the past few years, there hasn’t been a drastic change in policies. However, the new taxation has waived Rs. 2000 from RDT.

The new taxation of electric scooters and bikes in Nepal is 10% Customs Duty, 0% Excise Duty, 13% VAT, and Rs. 10,000 RDT.

Hence, the price difference is negligible for new or old electric scooters and electric motorcycles.

Peak Power Custom Duty Excise Duty
250W – above 10% 0%

*VAT = 13%, RDT = Rs. 10,000, Distributor Profit: 15-20%

ALO READ: Pure EV Electric Scooters Price in Nepal: Features and Specs

Two-Wheeler Yearly Electric Vehicle Road Tax

While the taxation is improved, the Yearly Electric Vehicle Road Tax in Nepal remains compulsory. In the latest Budget 2078/79, two-wheeler EV Yearly Road Tax remains unchanged.

Peak Power Yearly Tax
250W – 1000W Rs. 1500
1001W – 1500W Rs. 2000
1501W – above Rs. 3000

Conclusion on Electric Vehicle Tax Rate in Nepal

The latest Budget 2078/79 has put faith back into the Electric Vehicle market in Nepal. Interestingly, the Government is going well beyond its friendly taxation policies.

Nepal currently aimed to replace fuel-driven vehicles with EVs by 2031.

In a bit to do so, NEA is under process to establish 50 charging stations across the nation, which will be expanded to 500 in the future.

Additionally, consumers are promoted to convert existing petrol engine to electric. In doing so, five years of yearly renewal tax will be waived.

Moreover, it planning to build policies to encourage top EV brands to establish assembly plants in the country.

In conclusion, the Nepal Government is committed to establishing EV as its primary transportation.

Will it succeed? Well, only time will tell.

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