Finance Minister Barshaman Pun has presented a budget of Rs 1.86 trillion for the upcoming fiscal year. This is Pun’s first budget after being appointed as Finance Minister for the second time. He presented the budget at a joint session of the federal parliament. Here are the key 18 highlights of the budget presented by Pun:
1. Feasibility of Podway transportation
For the first time, the government has included a program in the budget itself to study the feasibility of podway as a public transportation system.
It has announced to study the feasibility of a podway transportation system and determine the investment modality to construct it from Vimalnagar of Prithvi Highway to Liglig kot-Bhachek-Barapak-Bungkot-Gorkha Bazar-Manakamana-Benighat of Gorkha. Podway transportation technology is new for Nepal.
2.Tax on EVs
The government has increased taxes on electric vehicles (EVs). It has increased customs duty on some and excise duty on others, altogether increasing the tax by 10 percent. There was a big debate on social media about increasing taxes on EVs.
For EVs up to 50 kilowatts, the government has increased the customs duty from 10 percent to 15 percent by adding 5 percent. There was an excise duty exemption, which has now been increased to 5 percent. In total, the tax has been increased by 10 percent.
For 51 to 100 kilowatts, it has increased the customs duty and excise duty by 5 percent each. Previously, it was 15 percent customs duty and 10 percent excise duty.
For 101 to 200 kilowatts, customs duty has been increased to 30 percent, and excise duty to 20 percent. Previously, customs duty was 20 percent, and excise duty was 20 percent.
For 201 to 300 kilowatts, customs duty has been increased by 20 percent, and excise duty has been reduced by 10 percent.
For more than 300 kilowatts, customs duty has been increased by 20 percent, and excise duty has been reduced by 10 percent. In total, the tax has been increased by 10 percent.
3. Priority to Information Technology
The budget has declared the Information Technology Decade. An ambitious goal of earning Rs. 30 billion in exports from the information technology sector in the next 10 years has been set forth. Under this plan, the target is to create 1 million direct and 5 million indirect jobs in 5 years and 10 years respectively.
4. Plan to bring 1.6 million tourists
The government has set forth a plan to bring 1.6 million tourists in the upcoming year. Currently, around 1 million tourists are visiting Nepal. An ambitious target of increasing the annual tourist arrivals to 1.6 million, an increase of 600,000, has been set.
5. Generating 900 MW of electricity, starting construction of Budhi Gandaki
The government has set a target of generating 900 MW of electricity in the upcoming year. By generating 900 MW of electricity, the country’s installed capacity will reach 4,500 MW. The target is to start the construction of projects like 1,200 MW Budhi Gandaki, 1,061 MW Upper Arun, 106 MW Jagdulla, among others. The installed capacity has currently reached 3,060 MW. The target is to achieve a per capita consumption of 450 kilowatts.
6. Rs. 5.63 billion for flyovers, tunnels, and an intersection at Koteshwor
Rs. 5.63 billion has been allocated for the construction of flyovers, intersections, and tunnels.
Finance Minister Barshaman Pun, while presenting the upcoming fiscal year’s budget, announced that the Nagdhunga-Naubise tunnel road will be completed, and transportation will be operated. The target is to complete the main tunnel of the Siddhababa tunnel road.
A flyover will be constructed at Gwarko Chowk, and transportation will be operational. It is under construction.
There is a plan to start the construction of an intersection at Koteshwor. The intersection will be constructed with the support of the Japanese government.
Rs. 3.88 billion has been allocated for the development of railways. Rs. 150.53 billion has been allocated for the Ministry of Physical Infrastructure and Transport.
7. Rs. 116 billion for social security allowances
The government has allocated Rs. 116 billion for social security allowances. The government has been providing a monthly social security allowance of Rs. 4,000 to citizens aged 68 and above. The government aims to systematize the social security allowance system.
8. VAT on potatoes and onions abolished
The government has abolished the VAT on potatoes and onions, prioritizing domestic production.
9. Legalizing cannabis cultivation
The government is preparing to legalize cannabis cultivation for medicinal purposes. An announcement has been made in the upcoming budget to provide legal validity and open it up. There have been public discussions on opening up cannabis cultivation for some years.
10. Cold storage facilities at Domestic and International airports
Cold storage facilities will be arranged at Domestic and International airports to manage the temperature of vegetables, fruits, flowers, meat, and dairy products imported from third countries.
11. Rs. 29.88 billion for the expansion of the East-West Highway
The government has allocated Rs. 29.88 billion for the expansion of the East-West Highway.
Finance Minister Barshaman Pun, while presenting the upcoming fiscal year’s budget, stated that the government’s target is to complete the four-lane expansion of the Butwal-Narayangarh and Kamala-Kanchanpur sections of the East-West Highway in the upcoming year. The expansion work of Kakadvitta-Laukahi and Butwal-Gorsinge will also begin.
12. Establishment of a cooperative regulatory body
Necessary amendments will be made to the law to ensure that cooperatives operate following the principles and policies of cooperatives.
A regulatory body will be established to regulate savings and credit cooperatives. The government’s policy is to facilitate the merger of savings and credit cooperatives.
The budget mentions that arrangements will be made to return the deposits of up to Rs. 500,000 to member depositors and secure the collateral in the form of property owned by the operators and their family members of the distressed cooperatives to resolve the problems seen in savings and credit cooperatives.
13. Increase in liquor tax
The government has increased the tax on liquor. According to the Finance Act, the tax has been increased by up to Rs. 60 on whiskey, vodka, gin, and rum with 48.5 percent alcohol content. Finance Minister Barshaman Pun has imposed an excise duty of Rs. 1,860 per liter on liquor with 48.5 percent alcohol content, which is Rs. 60 higher than the previous rate of Rs. 1,800.
According to the Finance Act, the excise duty on liquor with 42.8 percent alcohol content has been increased by Rs. 45 to Rs. 1,390, on liquor with 39.94 percent alcohol content by Rs. 40 to Rs. 1,290, on liquor with 34.23 percent alcohol content by Rs. 20 to Rs. 650, on liquor with 28.53 percent alcohol content by Rs. 5 to Rs. 490, and on liquor with 17.12 percent alcohol content by Rs. 10 to Rs. 60.
The excise duty on beer has been increased by Rs. 5 per liter. Similarly, the excise duty on wine with up to 17 percent alcohol content has been increased by Rs. 16 to Rs. 460 per liter, and on wine with more than 17 percent alcohol content, it has been increased by Rs. 19 to Rs. 516 per liter.
14. Rs. 100 million budget for the Prime Minister’s Daughter Self-Reliance Program
The government will implement the Prime Minister’s Daughter Self-Reliance Program in the upcoming fiscal year. A budget of Rs. 100 million has been allocated for this program. The government has also declared the upcoming fiscal year as the Women’s Investment Year and plans to organize a National Youth and Women’s Conference.
15. Economic Growth Target of 6% and Inflation Target of 5.5%
The government has set an ambitious target of 6 percent economic growth for the upcoming fiscal year. The target is to maintain inflation at 5.5 percent.
16. Green Tax Introduced for the First Time in Nepal’s History
The government has imposed a green tax on coal, petroleum products, stone coal, and others. This tax will be levied at the customs point.
Through the upcoming fiscal year’s budget made public by Finance Minister Barshaman Pun on Tuesday, a provision has been made to levy a green tax of 50 paisa per kg on the import of anthracite, bituminous coal, other coal and briquettes, ovoids and similar solid fuels manufactured from coal under the heading of crushed or uncrushed but unagglomerated coal.
Similarly, a green tax of 50 paisa per kg has also been provisioned for coal, lignite or peat coke and semi-coke, whether agglomerated or not, and retort carbon.
The government has made a provision to levy a 1 percent green tax on the total value of petroleum oils and bituminous minerals such as gasoline (motor spirit), high speed diesel, hexane (food grade), others, lubricating oils, polychlorinated biphenyls, PCBs, polychlorinated terphenyls, polybrominated biphenyls, among others.
Likewise, the government has made a provision through the upcoming fiscal year’s budget to levy a 0.5 percent green tax on the total value of spindle oil, transformer oil, mineral turpentine oil, oils used in rubber processing, liquid paraffin oil, white oil, distilled and distillates.
17. Development of the Corridor from Nijgadh to Dhalkewar as Nepali Blanket Corridor
The government is going to make arrangements from the upcoming fiscal year that public agencies have to purchase blankets made in Nepal itself. The government is set to develop the corridor from Nijgadh to Dhalkewar as the Nepali Blanket Corridor.
Finance Minister Barshaman Pun has also announced in the budget to develop the corridor from the Himalayas of Salyan and Jumla to the Tila River basin as the Marse Corridor in cooperation with the provinces and local levels.
18. Investment Decade Announced
The government has announced an Investment Decade for agriculture. Although the Investment Decade for agriculture has been announced, the budget could not be increased accordingly.
Questions have also been raised about the effectiveness of the announced Investment Decade when the budget has been reduced. For this program, new initiatives have been brought forward ranging from seedling production and fruit farming to wildlife farming.
