The Nepal Electricity Authority has decided to impose only a 5 percent value-added tax (VAT) on electricity consumption starting from Saun 1 (mid-July). VAT will not be charged on electricity consumed until the end of Ashar (mid-July), and the VAT previously collected will be adjusted in the bill for Bhadra (August), the authority has announced. Due to technical issues in meter reading, the Authority is internally discussing how to separately account for electricity consumption of Ashar and Saun months. (12 Saun, Kathmandu)
The Authority clarified that VAT at 5 percent will apply only to electricity consumed after Saun 1. Accordingly, customers will pay VAT in Bhadra only for electricity consumed during Saun. Earlier, when the Authority issued bills for Ashar consumption during Saun and collected VAT, it sparked widespread protests. Following instructions from Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha, the Authority sought legal interpretation from the Inland Revenue Department.
After the Revenue Department clarified that VAT applies only to electricity consumed after Saun 1, the Authority confirmed it will implement accordingly. However, another practical issue has emerged. Since the Authority reads meters for a given month during the first week of the following month, there is no immediate mechanism to segregate the consumption of Ashar and Saun separately. As a result, meter readings taken during Saun capture consumption until the end of Ashar along with consumption from Saun 1 onward combined.
An official from the Authority said internal discussions on this matter are ongoing. “The problem lies in meter reading; a single reading covers consumption from both Ashar and Saun months. The current system does not allow separate display of consumption for the two months,” he explained. Therefore, the Authority has already confirmed that VAT will not be charged on Ashar consumption. Arrangements will be made to levy VAT only on actual electricity consumption after Saun 1.
