2020-21 Budget impact: Electric Vehicles to be more costly in Nepal
"The new budget of Nepal has now imposed customs duty on the price of electric cars like other vehicles and has also increased excise duty."
Amidst huge challenges and uncertainties due to the spread of COVID-19 in the country, the Finance Minister of Nepal Yubaraj Khatiwada yesterday unveiled a federal budget of Rs 1.475 trillion for fiscal 2020-21 at the joint session of the House of Representatives and National Assembly.
The pandemic has created a crisis in the entire region and sales of all types of vehicles have come to a standstill in Nepal. While automobile dealers had few expectations from the Budget, in general, the automobile sector has not been affected as the budget did not increase any tax on two-wheelers and four-wheelers in both petrol and diesel variants.
However, electric vehicles (EV) have been affected and will now cost more.
In Nepal, the government had earlier introduced policies to encourage EVs adoption. Unlike fossil fuel-powered four-wheelers, which incurred taxes of up to 261 percent, private EV four-wheelers were taxed only 23 percent (10 percent import tax and 13 percent VAT).
The new budget has now imposed customs duty on the price of electric cars like other vehicles and has also increased excise duty. The previous tariff rate of 10 percent has been increased to up to 40 percent and excise duty will also be levied on the basis of motor capacity. For vehicles up to 50 kW the excise duty is 30 percent, 50-100 kW is 40 percent, 100-150 kW is 50 percent, 150-200 kW is 60 percent, 200-300 Kw 70 percent, 300 and above is 80 percent.
Let’s suppose the cost of an EV was Rs 130/- in Nepal prior to this budget, it will now cost Rs 216/- for the same car, which is of 50 Kw after the budget speech, Rs 232.60 for the car, which is of 50-100 Kw, Rs 249.17 for the car, which is of 100-150 Kw, Rs 265.78 for the car, which is of 150-200 Kw, Rs 282.40 for the car, which is of 200-300 Kw and Rs 299/- for the car, which is above 300 Kw.
The price of an EV has now almost tripled due to the government's plan of 80 percent increase in customs and excise duties.
However, the budget has some concessions for entrepreneurs who want to install electric vehicle charging stations. It gave some concessions in the operation of electric vehicle charging stations and 50 percent discount on the price of night electricity.
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