We have curated some of the important highlights from Budget of Nepal 2078/79. 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.

  • 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.

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