Budget 2083/84 Tax Changes in Nepal — FY 2026/27

Nepal's Budget for FY 2083/84 (2026/27) was presented on 15 Jestha 2083 BS (29 May 2026) by Finance Minister Dr. Swarnim Wagle in the Balen Shah-led government. Total budget size NPR 2,124.34 billion — the largest in Nepal's history, up 25.2% from the revised FY 2082/83 estimate. The Budget marks the most aggressive personal-tax reset in a decade: the income tax exemption doubles to NPR 1 million, the top marginal rate drops 10 points from 39% to 29%, the customs structure collapses from 11 tiers to 7, and excise duty is abolished on 360 goods. Several smaller but consequential measures sit alongside: a 10% instant VAT refund for digital payments, a 5% VAT levy on electricity consumption above 50 units, a 5% VAT on ride-hailing services, a universal VAT-bill lottery, and a new Green Tax that consolidates the prior infrastructure development tax and road maintenance fee at customs.

This 2026 guide to Budget 2083/84 tax changes in Nepal sits inside Alpine's tax-law practice area — covering the new personal income tax structure, corporate and sectoral changes, VAT measures, customs and excise restructuring, the Green Tax, IT and startup incentives, capital gains treatment, the tax-dispute settlement window, and what businesses and taxpayers should do now. For last year's comparison see our Budget 2082/83 guide; for slab fundamentals see the income tax rate in Nepal reference.

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Three angles matter for clients. First, salaried taxpayers and small-business owners get the largest real-income lift in years — the NPR 500,000 to NPR 1 million exemption raise plus the 10-point top-rate cut materially shifts effective rates across the slab table, but the intermediate bands are still being operationalised through Inland Revenue Department circulars. Second, IT and tech companies face a mixed picture: the export-earnings exemption is rolled back from 75% to 50%, while the new 100% sweat-equity exemption is genuinely useful for stock-based compensation. Third, importers and customs-facing businesses see the cleanest structural simplification in years — 11 customs tiers compressed to 7 and excise lifted on 360 goods.

What is the Budget 2083/84?

The Budget for FY 2083/84 (2026/27) was tabled on 15 Jestha 2083 BS (29 May 2026) by Finance Minister Dr. Swarnim Wagle in the Federal Parliament under the Balen Shah-led government. Total outlay NPR 2,124.34 billion — recurrent NPR 1,270.58 billion, capital NPR 431.10 billion, financing NPR 422.64 billion. The fiscal year runs from 1 Shrawan 2083 (16 July 2026) to 31 Ashadh 2084 (16 July 2027). The accompanying Finance Bill 2083 carries the statutory tax changes.

What are the new personal income tax changes?

Personal income tax sees its largest reset in over a decade. The exemption threshold doubles from NPR 500,000 to NPR 1 million — every taxpayer earning under NPR 10 lakh now pays no income tax. The top marginal rate falls 10 percentage points from 39% to 29%, narrowing Nepal's gap with regional peers. The Budget announces broad slab reform; the exact intermediate band structure is being published through IRD circulars and the Finance Act 2083 schedule.

How do the new slabs compare to FY 2082/83?

Last year's slabs (FY 2082/83) were: 1% SST on NPR 0-500K; 10% on 500K-700K; 20% on 700K-1M; 30% on 1M-2M; 36% on 2M-5M; 39% above 5M. The FY 2083/84 reset lifts the exemption to NPR 1 million and caps the top rate at 29%. The intermediate bands are being redrawn — confirm exact figures with the IRD circular issued under the Finance Bill 2083 before computing payroll deductions.

What are the corporate tax changes?

The corporate framework keeps the 25% standard rate and the 30% rate for banks, insurance, telecom, tobacco, and alcohol. The headline corporate change is the rollback of the IT-export earnings exemption from 75% (Budget 2082/83) to 50% (Budget 2083/84) — still a meaningful incentive but materially less generous than last year. Companies that built FY 2082/83 plans on the 75% exemption should re-model effective tax-rate forecasts.

What is the IT sweat equity exemption?

Budget 2083/84 introduces a 100% income-tax exemption for sweat equity received by employees in the IT sector — stock or stock-equivalent compensation issued in lieu of cash salary is excluded from the recipient's taxable income. This is a structurally significant change for Nepali tech startups using equity-based hiring to compete for talent against cash-heavy multinationals. Operational definition follows IRD guidance.

What customs duty changes were announced?

Customs duty is the cleanest structural change in the Budget. The tier count drops from 11 to 7 — fewer brackets, lower compliance friction, easier classification. Industrial raw materials see duty cuts across 273 categories, with the rule that raw-material duty must sit at least one tier below the finished-good duty. The reform reduces the long-standing tariff-inversion problem where imported finished goods sometimes carried lower duty than the inputs needed to make them domestically.

What excise duty changes were announced?

Excise duty is abolished on 360 categories of goods — the broadest single-stroke excise simplification in years. Excise rises about 10% on cigarettes, liquor, and beer, continuing the annual sin-tax escalation. The combined effect: dramatically narrower excise net (fewer goods on the list), with rate compression for retained categories targeting health-policy and luxury goals rather than revenue maximisation across consumer goods generally.

What is the Green Tax?

The Green Tax is not a new levy but a consolidation. Scattered customs-stage taxes — the infrastructure development tax and the road maintenance and improvement fee — are unified into a single Green Tax line at the customs point. The intent is environmental signalling at the import stage; the rate schedule is set under the Finance Bill 2083. Importers should expect the same total burden but a cleaner accounting line, with the trade-off that one consolidated levy is harder to negotiate exemptions on than several small fees.

What are the VAT changes for FY 2083/84?

The VAT rate stays at 13% — see our companion guide on VAT registration in Nepal for thresholds. Four new VAT measures land in Budget 2083/84: (1) a 10% instant VAT refund on purchases made via digital payment; (2) 5% VAT on electricity consumption above 50 units per billing cycle; (3) 5% VAT on ride-hailing services; (4) a universal VAT-bill lottery treating every issued VAT invoice as a draw ticket. VAT refunds are also moving to an automated system.

How does the VAT-bill lottery work?

Every VAT invoice issued in Nepal automatically becomes a lottery ticket. Daily draws produce winners — the Finance Minister announced the scheme will create "millionaires every day", but specific prize tiers, draw frequency, and operational mechanics are pending publication. The scheme explicitly covers remittance recipients — Nepali migrant workers sending money home are eligible. The goal is to incentivise consumers to demand VAT invoices, expanding the formal-economy VAT base.

What is the capital gains tax treatment?

Capital gains on listed-company securities transactions are now classified as a final tax — the withholding deducted at trade settlement closes the tax obligation, with no further filing or settlement required on the same gain. This simplifies investor compliance materially. Capital gains on land and building, unlisted securities, and other asset classes continue under the standard framework — verify the specific applicable rate with the IRD before any transaction.

What is the tax dispute settlement window?

Budget 2083/84 opens a one-time settlement window for pending tax disputes in court or appellate forums. Disputing taxpayers can close a case by paying the principal amount plus a 1% premium — interest and penalties beyond that 1% are waived. The scheme targets the long backlog at the Revenue Tribunal and is genuinely useful for businesses with frozen working capital tied up in disputed assessments. Eligibility windows and procedural detail follow IRD circulars.

What are the startup and innovation allocations?

NPR 4 billion is allocated for science, technology, and innovation (STI). NPR 500 million funds the Nepal Enterprise Facility — a state-supported financing channel for early-stage and growth ventures. The combined NPR 4.5 billion direct funding sits alongside the IT sweat-equity exemption and the 50% IT-export exemption to form the Budget's tech-and-startup package. For Alpine clients structuring tech ventures, the operational definitions of "startup" and "innovation" published by the relevant ministries will determine eligibility.

How are civil servants affected?

Civil servant remuneration rises about 21% net. The base salary scale increases by 10%, supplemented by a monthly incentive allowance of 10% of the new scale — multiplicatively producing roughly a 21% effective raise. The change is effective from 1 Shrawan 2083 (16 July 2026), the start of the fiscal year. The pay bump is the largest single-year increase in recent memory and reflects the new government's coalition with civil-service unions.

What changed for digital service providers?

The 2% Digital Service Tax (DST) framework introduced in Budget 2082/83 carries forward — foreign B2C providers with NPR 3 million-plus Nepal turnover continue to register, file, and pay 2% on Nepal revenues. The new Budget layers on the universal 10% VAT digital-payment refund, which incentivises consumer-facing payment digitisation broadly, plus the 5% VAT on ride-hailing services which captures domestic digital-platform consumption. The combined effect strengthens VAT collection from digital channels.

When does the Budget take effect?

The Budget proposals take effect from 1 Shrawan 2083 (16 July 2026), the start of FY 2083/84. The implementing Finance Bill 2083 must pass Parliament — debate, amendments, vote, and Presidential authentication — before the new tax structure becomes Finance Act 2083 and binding law. The IRD then issues operational circulars during early Shrawan covering rate tables, registration mechanics, dispute-settlement procedures, and sectoral certifications.

When should you involve a lawyer?

For business-level tax planning under Budget 2083/84 — particularly for IT companies modelling the 75% to 50% export-exemption transition, for tech startups using sweat-equity compensation, and for importers re-classifying inputs under the new 7-tier customs structure. For tax-planning advisory on personal income — projecting effective rates under the new exemption and top-rate cut. For tax-dispute matters — evaluating the 1% one-time settlement against continued litigation. To get advice on Budget 2083/84 matters, speak with our lawyers today.

Last reviewed: June 2026