Budget 2082/83: Taxes on Electric Vehicles Remain Unchanged

Finance Minister Bishnu Paudel, while presenting the national budget for the fiscal year 2025–26 to the federal parliament, announced that the existing tax structure for electric vehicles (EVs) will remain unchanged.

The government has maintained the taxes and duties on the import of electric vehicles as they are. Minister Paudel stated that despite the annual increase in electric vehicle usage, the tax rates will remain the same in the coming fiscal year. He added, “To promote the use of electric vehiclesall types of taxes and duties levied on such vehicles will be kept unchanged.”

Furthermore, Minister Paudel mentioned that a customs duty of only 1% will be imposed on the import of equipment required for establishing industries that produce and assemble electric vehicle charging stations, with no additional taxes or duties applied. These industries will also be granted an income tax exemption for five years.

This decision offers policy stability to consumers and businesses in Nepal’s growing EV sector, which has been expanding steadily amid rising fuel prices, increased environmental awareness, and a global shift toward clean energy alternatives. However, some stakeholders expressed disappointment as they had hoped for further tax relief or additional incentives to accelerate EV adoption.

Industry observers had anticipated tax revisions, leading many companies to stockpile electric vehicles in expectation of a tax increase. The current tax structure is as follows:

• For electric cars with motor capacity up to 50 kW: customs duty 15%, excise duty 5%
• For motor capacity between 51 kW and 100 kW: customs duty 20%, excise duty 15%
• For motor capacity between 101 kW and 200 kW: customs duty 30%, excise duty 20%
• For motor capacity between 201 kW and 300 kW: customs duty 60%, excise duty 35%
• For motor capacity above 301 kW: customs duty 80%, excise duty 50%

The decision to maintain the existing tax regime underscores the government’s cautious approach as the EV market continues to develop in Nepal.