The Government of Nepal has revised the taxation structure on electric vehicles (EVs) through amendments in the Economic Bill, reducing the road construction fee for lower-priced EVs while maintaining higher charges for premium segments.
Key Policy Change
| Category | Earlier Provision | Revised Provision |
|---|---|---|
| EVs up to NPR 20 lakh | 5% road construction fee | 2.5% road construction fee |
| EVs above NPR 20 lakh | 5% road construction fee | 5% road construction fee (unchanged) |
| Customs duty (all EVs) | — | 20% |
Additional Tax Structure
| Component | Rate |
|---|---|
| Customs duty on EV imports | 20% |
| Infrastructure / “clean investment” fee | 2.5% to 130% (based on category) |
| Road construction fee | 2.5% to 5% depending on price bracket |
Government Rationale
The revision was introduced after concerns that the earlier structure would significantly increase EV prices. Officials stated that the tax system was adjusted due to disputes over valuation methods (motor peak power vs. price-based valuation) and to make the system more practical and balanced.
According to the revised provision, EVs valued up to NPR 20 lakh under customs classification codes 8703.80.91 and 8703.80.99 will now be taxed at 2.5% road construction fee.
Official Views
Officials from the government stated that the correction was made to address inconsistencies in the earlier bill and to ensure price stability in the EV market.
The Minister of Finance stated that:
- EVs under NPR 50 lakh will remain relatively affordable
- Tax adjustments aim to protect middle-class access to EVs
- Luxury EVs (above NPR 1 crore) should be treated as premium consumption items
Policy Direction
| Area | Focus |
|---|---|
| EV market | Maintain affordability for mid-range buyers |
| Revenue policy | Higher taxation on luxury imports |
| Transport strategy | Shift toward electric mobility and public EV systems |
| Infrastructure | Expansion of charging and waste/battery management systems |
Outlook
The revised policy is expected to stabilize EV prices in the lower and mid-price segments while maintaining higher taxation pressure on luxury electric vehicles. The government has also emphasized long-term transition toward sustainable transport systems, including electric public transportation and improved charging infrastructure.
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