KATHMANDU, June 19: Finance Minister Dr. Swarnim Wagle has said that the government has begun reforms in the tax system as part of the budget for fiscal year 2026/27, and indicated that a special budget provision could be introduced if required.
Responding to lawmakers’ queries in the House of Representatives on Friday during discussions on the Economic Bill, 2026, Minister Wagle said the government is advancing the concept of a “liberal economy with social justice”.
“We are in favour of a liberal economy, but one that is grounded in social justice,” he said.
He clarified that the 3 percent service charge imposed on the education sector applies only to the private sector, and added that 25 percent of education-related expenditure is exempted through tax deductions. He urged lawmakers to avoid misinformation regarding tax provisions.
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The finance minister also stated that individuals earning up to Rs 1 million annually are not brought under the income tax net.
On the energy sector, he said taxation in the electricity sector is natural, adding that only higher electricity consumption is subject to additional charges, while households consuming up to 50 units are exempt.
“If consuming around 150 units means paying an additional 22–24 rupees that contributes to national development, then it is justified,” he said.
Wagle also said the capital market is being brought back on track after recent volatility, while noting that the personal income tax rate has been reduced from 39 percent to 29 percent.
He emphasized the need to formalize Nepal’s large informal economy, stating that development is not possible without bringing more economic activity into the formal sector.
“All taxes collected from different sources go into a single consolidated fund, which is used wisely by an elected government,” he said.
The minister also said that taxes collected for infrastructure and environmental purposes are not being misused, and added that a special budget arrangement could be considered based on parliamentary direction if necessary.
