Government grants nearly Rs 53 billion in customs tax waivers in first half of fiscal year

Kathmandu: The Government of Nepal has waived nearly Rs 53 billion in customs revenue during the first six months of the current fiscal year 2025/26, according to data released by the Ministry of Finance. The concessions were granted on imports worth Rs 408 billion, with total customs exemptions amounting to Rs 52.85 billion over the review period.

A significant portion of the waiver stems from provisions under the Value Added Tax Act, 1996. By invoking Section 5(3) of the law, the government exempted VAT on goods worth Rs 216.02 billion, resulting in tax relief of Rs 29.70 billion. In addition, customs exemptions were provided on imports valued at Rs 597.5 million under diplomatic privileges, with Rs 482.9 million in duties waived in line with the Customs Act, 2007.

The government also extended concessions under various customs facilities, waiving Rs 42.1 million in taxes on goods worth Rs 80.8 million imported under special provisions. Imports by non-profit public and community institutions, government bodies, and state-owned enterprises totalling Rs 37.54 billion received tax exemptions of Rs 9.5 billion.

Project-based imports accounted for another substantial share of the waivers. Goods worth Rs 39.92 billion imported for projects under formal development agreements with the government, either directly by project offices or through appointed contractors, were granted tax exemptions amounting to Rs 14.97 billion.

Similarly, imports made under the South Asian Free Trade Area framework benefited from significant concessions. Goods valued at Rs 42.40 billion imported under South Asian Free Trade Area (SAFTA) received tax exemptions totalling Rs 2.77 billion during the six-month period.

Under a broad “miscellaneous exemptions” category, the government waived Rs 17.40 billion in taxes on goods worth Rs 140.78 billion.

Compared to customs exemptions, tax relief provided through inland revenue measures was relatively modest. As per provisions in the Finance Act 2025, the Inland Revenue Department granted tax exemptions and concessions worth Rs 555.76 million to 3,477 taxpayers during the same review period.