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Budget highlights for Budget of Nepal 2080/81.

In a parliamentary session held on Monday, Finance Minister Dr. Prakash Sharan Mahat presented Nepal’s budget for the fiscal year 2080-81. This budget, with a strong focus on the nation’s prosperity and the eradication of poverty, encompasses various crucial sectors while placing significant emphasis on sustainability and inclusivity.

According to the ruling party’s members, the budget announcement reflects the government’s commitment to ensuring a comprehensive and balanced approach to address the country’s economic challenges and social development goals. They claim that by prioritizing sustainable practices and inclusive policies, the government aims to create an environment where economic growth is accompanied by social progress, leaving no one behind.

Here are some of the major highlights of the budget 2080/81 curated by BizSewa. If you need specific information or analysis on any point or sector, please write down in the comments below.

  1. Abolition of incentives and additional allowances to civil servants
  2. No salary increment of civil servants
  3. Rs. 15.56 million budget in forest and environment sector
  4. Increment of excise duty on entry level electric vehicle and decrease of excise duty on high-end electric vehicles.
  5. Vaccines will be produced in the country to control epidemics of livestock
  6. Removal of minimum limit of foreign investment in information technology
  7. Budget 8.8 billion for the Ministry of Labor and Social Security
  8. Allotment of land is released. (Kitta-kaat is open)
  9. Announcement of ‘Production in hand, grant in hand’ programme. So, grants will be provided based on production volume rather than production plan.
  10. Will provide land titles (lalpurja) to 25,000 landless people of 110 local levels
  11. A provision to open a company with an authorized capital of Rs 100 and no fees on company registration and capital increment
  12. Legal arrangements will be made to promote and regulate the trade of Nepali goods and services through e-commerce
  13. Revised Prime Minister’s Employment Program, 5.94 billion budget was allocated
  14. 58 billion budget for the Ministry of Agriculture and Livestock
  15. The scope of work of the cooperative will be concentrated in certain geographical areas
  16. Study the feasibility of cannabis cultivation
  17. Subsidiary highway work up to Rs. 25 lakhs from the concerned state
  18. 7 billion to provide employment opportunities at all local levels
  19. Continuation of the old age allowance to support elderly citizens.
  20. Commitment to ensuring universal access to electricity for the entire population within a span of two years.
  21. Restructuring the Digital Nepal Framework to improve connectivity and enhance digital services across the country.
  22. Enhancing the country’s credit rating to strengthen financial stability and attract investment.
  23. Construction of the Federal Parliament house, symbolizing the government’s commitment to democratic governance.
  24. Addressing the issue of unauthorized settlements along the banks of the Bagmati and Bishnumati rivers, aiming to ensure proper urban planning and environmental preservation.
  25. Construction of an international standard cricket ground in Kritipur, showcasing the government’s commitment to promoting and enhancing cricket infrastructure.
  26. Establishment of the Girija Prasad Koirala Cricket Stadium in Biratnagar, emphasizing the focus on developing cricketing facilities in different regions of Nepal.
  27. The government has declared the years 2023-2033 as the Tourism Decade, with a focus on promoting Nepal as a prime tourist destination.
  28. Legislation will be enacted to facilitate the sale of Nepali goods and services through e-commerce platforms.
  29. Establishment of an Infrastructure Fund in collaboration with foreign investors, aimed at mobilizing resources for infrastructure development projects. This initiative seeks to attract foreign investment and accelerate economic growth.
  30. Allocation of 1% of the total budget to a fund dedicated to science, technology, innovation, and research. This allocation emphasizes the government’s commitment to promoting and supporting advancements in these fields, which can contribute to overall development and economic progress.
  31. Implementation of e-Bidding in all government offices to enhance transparency and efficiency in public procurement processes. This shift to electronic bidding systems aims to streamline procurement procedures and ensure fair competition.
  32. Auctioning of scrapped government vehicles within six months, contributing to the efficient utilization of resources. This initiative seeks to generate revenue and avoid the wastage of assets.
  33. Halting the acquisition of new government vehicles, furniture, and buildings. This step aims to control unnecessary expenses and prioritize efficient resource management.
  34. Introduction of cash allowances for government employees using government vehicles instead of fuel facilities. This measure aims to rationalize expenses and provide flexibility while promoting responsible use of government resources.
  35. Abandonment of 20 government institutes: As part of the streamlining process, 20 government institutes will be discontinued. This move aims to optimize resources, eliminate duplication of functions, and enhance operational efficiency.
  36. Merger of similar government bodies: Similar government bodies will be merged to streamline operations and reduce administrative overhead. This consolidation of institutions will lead to better coordination, improved service delivery, and cost savings.

Budget Highlights of Previous Financial Year (2079/80)

We have curated some of the important highlights from Budget of Nepal 2079/80 (2022/23). If you need to know about any specific aspect of the budget (including any not included in this highlight), Feel free to send a message to us or comment below.

Finance Minister Janardan Sharma announces a budget of Rs.1798.83 billion for FY 2079/80. Here is a summarized highlight of the budget.
What is the expenditure size in the Nepal Budget 2079/80?

Total Budget Size: Rs.1798.83 billion
Revenue Expenditure: 753.40 billion (42%)
Capital Expenditure: 380.38 billion (21.2%)
Financial Management: 230.22 billion (12.8%)
Provincial/ local grants: 429.83 billion (24%)

1. Continuity of constituency strategic road, 7 billion budget.
2. Now you can get an old-age allowance (Briddha bhatta) at 68 years.
3. Government announces building of three expressways connecting Chitwan with Kathmandu, Butwal and Pokhara.
4. 6.53 billion budget allocation for railway construction.
5. Imports to be reduced by 20 per cent next year, the government aims the trade balance in 5 years.
6. 55.97 billion budget for the Ministry of Agriculture and Livestock Development.
7. Announcement of Kisan Pension Scheme. (10% contribution by Nepal Government)
8. 3 billion budget for construction of industrial infrastructure.
9. Budget Industries that consume more than Rs 100 million per month are exempted from tariffs.
10. To find an alternative, the Supreme Court has to allocate a budget for the construction of Nijgadh International Airport!
11. Budget The government has made arrangements for free kidney transplants.
12. 70.05 billion budget for the education sector.
13.2.46 billion budget to the Ministry of Youth and Sports.
14.13 billion allocations in the forest and environment sector.
15. 9.38 billion for the tourism sector.
16. 6 billion 70 million budget has been allocated for the postal highway.
17. Concessional loans to returnees from foreign employment.
18. Employment will be increased by 30 per cent annually.
19. The economic growth rate will be 5.8 per cent.
20. 69.38 billion budget for health.
21. LPG subsidy will be removed, and the price of cooking gas will increase.
22. Lifelong monthly life increase for Asian and Olympic medalists.
23. 80 per cent premium of agricultural insurance will be borne by the government.
24. Announcement to expand Narayanghat road section.
25. Government announces support for the construction of Gautam Buddha Stadium.
26. Announcement to start technical education in 12 hundred schools across the country.
27. The government has given priority to roads connecting China.
28. Provision of safe housing for the extremely poor, Dalit and endangered castes.
29. Accelerate the construction of the East-West Railway Bardibas-Nijgadh section.
30. Shares of Nepal Electricity Authority will come.
31. Now also public welfare advertisements to online media.
32. Reduced internet service charges.
33. Announcement to develop Marin of Sindhuli as a new city.
34. Insurance companies must invest a certain percentage of their profits in the infrastructure sector.
35. 1.42 billion budget for the construction of all local-level administrative buildings within two years.
36. Entrepreneurial housewife program will be conducted.
37. Five billion to Nagdhunga tunnel.
38. 9.33 billion budget for Pushpalal Highway.
39. 1 billion budget for the expansion of the ring road.
40. 15 per cent salary increase of Government officials (nijamati karmachari).
41. To give ‘A’ class identity cards to the completely blind.
42. Those who have gone for foreign employment will be ensured investment in IPO.
43. Government announces the operation of the Hetauda textile industry.
44. Local infrastructure department dismissed.
45. Income tax limit increased, an exemption for married people up to Rs 600,000.
46. Reservations to be ensured for Nepalis abroad in IPO subscription
47. Minimum threshold for paid-up capital for Foreign Direct Investment is reduced to 2 crores from 5 crores.
48. Rs 8.3 billion has been allocated for Technical and Vocation Education programs
49. Rs 200 million has been allocated for installing dialysis machines at each provincial hospitals
50. Green Hydrogen and Green ammonia-based fertilizers factory will be established in the collaboration with Investment Board
51. Kidney transplant services will be provided free of cost
52. Business Incubation centres will be established in all provinces, for which a total of Rs 26 crores has been allocated
53. The government has lowered the threshold of foreign direct investment to Rs 2 crores, reducing it from the previous limit of Rs 5 crores.
54. Industries consuming monthly electricity of Rs 10 crores or more will get discounts of 2% to 15%
55. Provisions will be made to allow for the leasing of land to the industries for up to 50 years
56. The window period for getting initial approval for the investments above Rs 10 crores will be reduced to 7 days and overall
57. Government plans to attract 10 lakhs, of international tourists, in the coming year
58. The government will establish charging stations in 85 places to encourage the use of EVs
59. Nepal Electricity Authority to issue IPO at a premium very soon
59. 10,000 youths will be trained under a business incubation centre in the collaboration of local level governments and the banks
60. The loans for startups and young entrepreneurs on the collateral of their educational certificate have been continued.

A few interesting announcements have also been made in the FY 2079/80 budget speech by the finance minister. Sharma promises to develop National Statistics systems to record all the data under a digital system. “Made in Nepal” and “Make in Nepal” campaigns are to be promoted with the aim to increase consumption of locally produced goods and aid the aim of the government to reduce imports. A great emphasis has been given to the hydroelectricity sector. The government again is trying to facilitate the growth of startups with some attractive promises. Hetauda Garments Factory will exclusively produce all government employee’s uniforms.

Our verdict: If implemented successfully, they can help grow the national economy and help local businesses thrive. Implementation and action plan to support the policies are other important factors to watch. There has been a tendency to include attractive policies and promises but never implement them. Let’s hope this year, things will be different. Student loans, facilitation of startups, promotion of Nepali products and services, reduction of imports, promotion of Induction stoves and EVs, support for farmers, starting technical education in 1200 schools etc are a few beautiful aspects of the budget. Overall the budget seems fair and promising. We will keep updating the progress on the implementation of the action plans.

  • Free COVID-19 vaccines will be provided to all citizens.
  • 20% waiver on a purchase of rice, sugar, gas, salt, flour, lentils, cooking oil from Food Management and Trading Company Limited or Salt Trading Corporation (STC) during the prohibitory period.
  • 100% waiver of electricity charges for households consuming up to 20 units, 50% waiver on households using up to 120 units and 25% off on using up to 240 units.
  • 100% waiver on the drinking water bill for consumers consuming only 20,000 litres per month during the prohibitory period.
  • Income tax exemption for 5 years for a startup company.
  • Loan at 1% interest rate for students buying a laptop.
  • Free Internet in all public schools.
  • Up to Rs. 2.5 million loans for undergraduate degree holders with education degrees (Certificates) as collateral.
  • Hotels that have shut down can be used as isolation centres, with government incentives as per rules.
  • Senior citizens allowance increased from Rs. 3,000 to Rs. 4,000 and all social security allowances increased by 33 percent.
  • Increment in the salary of Civil servants amounting to Rs 2,000 p.m. Increment of salary of school’s workers including basic level teachers up to Rs 15000 p.m. Tourism leaves with an amount equal to 10 day’s salary will be granted to the civil servants.
  • Prime Minister Employment program will be continued and 200,000 jobs to be created.
  • Children’s paradise in Damak, Jhapa and senior citizens home will be set up in Gothatar, Kathmandu.
  • Targeted programs will be launched for income generation for women belonging to deprived communities.
  • The government will buy agricultural produce of farmers, the budget allocated for concessional farmer-loans.
  • Free visa to tourists for a month in a bid to promote tourism in Nepal.
  • GPS tracking system in all trekking routes.
  • Integrated Tourism Promotion Program will be launched.
  • Mero Kitta will be used across the country for digital land registration and transfer of land ownership.
  • Light petrol vehicles will be displaced by electric vehicles by 2088.
  • ‘Made in Nepal, Make in Nepal’ campaign will be launched.
  • Water from the Himalayan region will be exported.
  • Modern Park from Narayanhiti Durbar to Dasharath Rangasala in Kathmandu (Greater Tundikhel).
  • Madan Bhandari Technical University will start from next financial year.
  • National identity card for Nepalese citizens within 2 years.
  • Plastic bags less than 40 microns to be banned from next fiscal year
 
Budget updates RELATED TO INCOME TAX in Nepal
 
  • Compulsory Registration requirement in VAT based on the nature of business has been removed.
  • Provision for certification of Purchase Books and Sales Books by tax officer has been removed.
  • Taxpayer having a pending case in IRD or Revenue Tribunal against the tax assessment done of till 2077 Asadh end if pays assessed tax amount and 50% of the interest of such tax amount till Mangsir end 2078 need not pay additional interest, charge, penalty and fee.
  • Fee, penalty and charge shall be waived off if 75% of overdue excise duty assessed as per Excise Duty Act, 2015 and 100 % of excise duty assessed as per Excise Duty Act, 2058 if the amount is paid till 2078, Poush end.
  • 6th Custom Reform and Modernization Plan to be started from Shrawan 1 and One Door System to be implemented thoroughly.
  • Electronic payment system for payment of all taxes and charges to be paid in custom point. Import /export numbers can be renewed once in 5 years.
  • Equipment like container scanners, weighing machines and other modern equipment to be installed in Mechi, Biratnagar, Birgunj,
  • Bhairahawa, Nepalgunj, Rasuwa and Tatopani and new custom office to be opened in Gautam Budhha International Airport, Pokhara International Airport and Janakpur Railway Station.
  • An integrated laboratory shall be opened on the basis of priority in custom offices for controlling the import of materials imposing a threat to national security, human health, and nature.
  • Integration of QR code of excise sticker in the system of IRD.
  • The license holder of excise duty not renewing license can renew by paying renewal charge for each year till 2078 Shrawan end. No extra charges shall be levied on such renewal.

Some of the major highlights of the Budget of Nepal for Financial year 2077-78

  • Budget allocation of NRs. 41.40 Billion is made for agriculture and NRs. 25.96 billion for the irrigation project.
  • Budget allocation of NRs. 1.26 Billion for tourism infrastructure development.
  • NRs. 100 billion refinancing facilities shall be provided for SMEs, tourism and agriculture sectors. The interest rate will be 5 % on these types of loan.
  • Budget allocation of NRs. 2.46 Billion is made for the Sunkoshi Marine Diversion Multipurpose project.
  • The government will provide a loan of NRs. 3.60 Billion to the co-operative sector with the objective of making unemployed youths self-employed.
  • Budget allocation of NRs. 11.60 Billion is made for Prime Minister Employment Program to provide employment to 2,00,000 people through this program.
  • Budget allocation of NRs. 6 Billion is made for President Educational Reform Program.
  • 40 percent of the population will be brought under health insurance coverage. Budget allocation of NRs 7.50 Billion is made for the health insurance scheme.
  • Budget allocation of NRs. 6 Billion in order to disburse immediate COVID-19 treatment tools.
  • Budget allocation of NRs. 1 Billion for skill development and training programs for those who have lost their jobs or employment.
  • Budget allocation of NRs. 67.50 Billion is made for social security.
  • All types of social security allowances that the government has been providing have been given continuity.
  • Emphasis is given on virtual classroom operation. Budget allocation of NRs. 2.76 Billion in order to provide free books to the students.
  • Budget allocation of NRs. 1.25 Billion to build infrastructure and start educational programs of Madan Bhandari Science and Technology University.
  • Budget allocation of NRs. 2.23 Billion for the mobilization of 6,000 health volunteers.
  • Allocation of NRs. 13.96 Billion is made to provide 50% subsidy on insurance premiums against COVID-19 disease.
  • Free health insurance of insured amount up to NRs. 5,00,000 for all health workers and security personnel serving against coronavirus and other contagious diseases.
  • Budget allocation of NRs. 43.10 Billion is made for drinking water and sanitation.
  • Budget allocation of NRs. 8.66 Billion for railway sector.
  • Post-earthquake reconstruction works to be completed in coming fiscal year for which NRs. 55 Billion is allocated.
  • 130 industrial village is to be established, for which NRs 2.64 Billion is allocated. Industries will be provided 50% rebate in electricity use during the lockdown.
  • Budget allocation of NRs 5.89 Billion for sewage management.
  • 1300 MW electricity production to be added in the upcoming fiscal year.
  • Single women, old age person, children, disabled people will be provided free legal services.
  • Only frontline workers involved in Corona pandemic will be provided allowance.
  • The tourism-related subject shall be included in the curriculum above secondary level education.
  • Bank and Financial Institutions will be encouraged to be merged and acquired.
  • Saving and credit-based cooperatives will be encouraged to merge with each other.
  • Prime Minister Agriculture Modernization Program will be strengthened.
  • Travel allowance and other allowance to the employee, procurement of engine, furniture, new vehicles etc. will face cut in the budget.
  • Free treatment of senior citizens with Alzheimer’s and rehabilitation for persons with physical and intellectual disabilities.

Budget highlights and impacts of the 2077/78 budget over various industries:

A. BANKING INDUSTRY

  • Government plans to increase the access to banking service to a maximum number of citizens. With the increase in banking facilities and reach of banking service to a greater population, growth opportunities in various other sectors and industries will also increase.
  • Restructuring and further expansion of convenient loan ( 5% lending rate) provided by the banking sector to corona hit industries may help in credit growth. Although the clear explanation and interpretation not given, this helps to restore some amount of hope to the badly hit industries.
  • Trading of debt instruments issued by the banks in the secondary market will make them attractive to the investors,  enabling more  BFIs to go for debentures.  This will give banks the option to manage liquidity efficiently.
  • The digitization of NEPSE can provide a big opportunity for the banking sector in terms of expanding their services in the stock trading business. Also, this will help brokers, share traders and analysts.

B. HOTEL INDUSTRY

  • Tax rebate,  interest subsidy to be provided to hotels will help to reduce the incurred loss by decreasing their expenses.
  • 20%  exemption in tax for the hotel sectors will give some financial relief.  However,  for the hotels listed in Nepse, it is more likely that they will register loss for this year due to lockdown brought about by pandemic.

C. INSURANCE INDUSTRY

  • Access to insurance service,  especially health insurance,  will be expanded,  thereby opening growth opportunities.
  • The fund allocation for insurance coverage for 40% of the population of each local body will impact the health insurance business. This could have a huge positive impact on growth in the insurance sector.  However,  it depends upon the modality which government uses to implement this program, i.e. self-operated by government or through existing insurance companies.
  • The business of an insurance company is expected to grow as the insurance facility will be made affordable and accessible to the general public.
  • Non-life insurance will be benefited from the promotion of agro insurance and microinsurance.
  • The government policies support the expansion of the market reach of the insurance sector, hence, the increment in business and subsequently, the profitability of the insurance companies can be expected.
  • Extension in the insurance of industries and public transportation affected by lockdown might increase the claim ratio and expenses of the insurance companies.
  • Free  Corona  Virus  Insurance of  Rs.  100,000  to all the permanent and temporary government employees of   Nepal   Government might give opportunity in business increment for the government-owned non-life insurance company,   i.e. Rashtriya Beema Company Ltd if the government decides to insure through it.

D. HYDROELECTRICITY INDUSTRY

  • Construction of 400  KV  capacity inter-nation electricity transmission line will reduce the evacuation risk of electricity generated for hydropower projects. This will also encourage new hydro projects in the country.
  • By discouraging and cancelling the licenses of hydropower companies holding a license for a long period without construction will force timely construction of the projects.
  • Competitive method for the  PPA might negatively impact on the profitability of new projects. However, this might also enforce companies to improve operational efficiency.

The complete budget statement for FY 2079-80 is added below. You can use the zoom button or use fullscreen mode for better readability.

  • Expenditure ko jastai income ko source ma kati chha highlight dinusna ( revenue , grant , loan? )..thanks in advance

  • Hey there,
    Can you elaborate more on these, please?

    6. Removal of minimum limit of foreign investment in information technology?
    – Does this mean a foreign entity can hold 100% of an IT company? For example, ESEWA can be acquired buy a foreign company? Did I understand it correctly?

    One major thing for freelancers/remote workers who bring in dollars from outside Nepal now has a different tax applicable. Would be great if you could explain what changed?

    Thank you 🙂
    Have a great day.

  • What’s the tax provision for Nepalese software company that only sells it’s services abroad and brings in dollar revenue?

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