Banking News – Nepal’s Inland Revenue Department (IRD) has clarified that Value Added Tax (VAT) will not apply to electricity consumed until the end of Asar (mid-July), even if the billing is issued in Shrawan (mid-July to mid-August) or later.

The clarification follows confusion surrounding the implementation of the Finance Act, 2083 (2026/27), under which VAT on electricity consumption becomes effective from Shrawan 1, 2083.

In a public notice, the IRD stated that only electricity consumed from Shrawan 1 onward will be subject to VAT.

According to the department, electricity consumed up to Asar 32, 2083 remains VAT-exempt, as electric power is listed under Schedule 1, Group 2 (Basic Necessities) of the Value Added Tax Act, 2052.

The department further clarified that even if the bill for electricity consumed up to Asar 32 is generated in Shrawan or any later month, VAT will not be charged on that portion of electricity consumption.

The clarification aims to eliminate confusion among consumers and electricity service providers regarding the implementation of the new VAT provisions under the Finance Act, 2083.