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Excise Duty On Electric Vehicles revised in Nepal

1st December 2020
"The government has slightly reduced the excise tax on electric vehicles from the current FY 2077-78."

The government has slightly reduced the excise tax on electric vehicles from the current FY 2077-78 economic activity. A meeting of the Council of Ministers held today has decided to reduce the excise duty on electric vehicles. Government spokesperson Pradip Gyawali informed that it has been decided to reduce excise duty on few items. The government has fixed the excise duty on electric vehicles according to different capacities.

Also read: 2020-21 BUDGET IMPACT: ELECTRIC VEHICLES TO BE MORE COSTLY IN NEPAL

From the current year’s budget, the government has allocated 30 per cent for 50 kW motor, 40 per cent for 50 to 100 kW, 50 per cent for 100 to 150 kW, 60 per cent for 150 to 200 kW, 70 per cent for 200 to 300 kW, and all over 300 kW. The excise duty on vehicles was fixed at 80 per cent. These rates have been reduced according to capacity. According to sources, low-capacity electric vehicles have been reduced by a large percentage, while high-capacity vehicles have been reduced by a small percentage.

The customs duty on electric vehicles was increased from 10 per cent to 40 per cent and the excise duty was fixed at a higher rate for the first time during the budget for FY 2077/78.

Despite the reduction in excise duty, the same tariff rate will be applicable to all capacity vehicles. The government has fixed  80 per cent customs duty and has given a 50 per cent discount. The price was doubled from the new tax added by the government to electric vehicles. 

The revised excise duty at a glance as below: 

Capacity (Kilowatt)    Previous Duty (%)    Revised Duty (%)
50 KW                               30 %                                06 %
50-100 KW                        40 %                               10 %
100-150 KW                      50 %                                15 %
150-200 KW                      60 %                               45 %
200-300 KW                       70 %                               52.2 %
Above 300 KW                   80 %                              60 %

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  • EV
Compiled by : Reviewer Team Reviews

2020-21 Budget impact: Electric Vehicles to be more costly in Nepal

1st December 2020
"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.

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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.

electric vehicle tax in nepal 2020-2021

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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Compiled by : Debashish S Neupane Debashish S Neupane

Future of electric cars in Nepal and Budget 2020/021

30th November 2020
"Switching to electric vehicles has also been a core target."

In fight against air pollution and greenhouse gas emissions, the electrification of the transport sector is an important goal because widespread electrification would greatly improve the quality of the air we breathe. And in fact, switching to electric vehicles has also been a core target of the Ministry of Forests and Environment since 2015, in doing that Nepal has a comparative advantage in terms of production of its own hydroelectricity, a local energy resource, with a huge potential to replace imported fossil fuel in upcoming days resulting the energy security of country.

Also, EVs are the cleaner, greener, and quieter alternative money saving and cheaper in the long run and is dependent on domestic energy sources of Nepal.

Earlier days of EVs

history-of-electric-bus

Earlier policies and budgets tried to encourage the use of EVs with favourable tax policy, even though the lack of charging stations remained a major concern issues. While Introduction of policies favourable to battery powered vehicles have at least replace this incremental rate by EVs. Reduction in purchase and operation costs, charging duration could have created a huge acceptability of electric vehicles in Kathmandu Valley.

Similarly, construction of charging infrastructure around the valley could provide solution to worries of the general public while purchasing an EV. And a lot of investments were already done domestically as well as from FDIs to build these high power charging stations for long route EV travelling. We already have a history of electric public transportation like trolley bus and safa Tempo which are still in use till date inside Kathmandu valley in various major routes. But this is just in the past times before the new tax policy.

Current Days of EVs in Nepal

electric-public-bus-in-current-nepal

However the future of Electronic Vehicle now in Nepal seems to have unclear future, with the new tax policy introduced this fiscal year. The Nepal government’s decision in late May to hike taxes on electric vehicles is one of the most criticized decisions because the 2020-21 budget raised customs duty on electric vehicles to 40 percent, introduced excise duty ranging from 30 to 80 percent and kept VAT unchanged at 13 percent.

Previously, EVs only paid up to 10 percent customs and 13 percent VAT. Electric vehicles of peak power 50-100kW will now have to pay 40% excise, 50% if it is 100-150kW. The excise goes up to 60% for battery cars with peak power of 150-200kW. Because the EVs which would have cost 55 lakh before the new budget will now cost more than 1 crore 30 lakhs, this is an absurd situation for EV market in Nepal.

All the addition of tax on EVs now

future-of-electric-car-nepal

Here is the example of tax calculation after the Budget 2020/021. Let us assume the price of an EV is Rs 55,00,000. Now, according to the new budget, the price will be subjected to 40% customs duty. After adding customs duty i.e. Rs 22, 00,000 new price will be = Rs 77,00,000. Now let’s assume the EV has a power ranging between (100-150Kw), then add the excise duty of 50% (Electric cars with peak power ranging between 50-100kW will bear an excise duty of 40%, 50% if it’s between 100-150kW, and 60% for 150-200kW).

The new price will be = Rs 1,15,50,000 (Rs 77,00,000 + 50% Excise duty i.e. Rs 38, 50,000).

Now the VAT is also there to be added  that is 13% VAT = Rs 1,30,51,500 (Rs 1,15,50,000 + 13% VAT i.e. Rs 15,01,500).

And here at the end comes 5% road toll which will depend upon every local level government policy  = Rs 1,37,04,075 (Rs 1,30,51,500 + 5% road toll i.e. Rs 6,52,575). 

The final price will be Rs 1,37,04,075 (excluding 20% dealer margin).

Result in reverse growth of Environment friendly, EVs in Nepal

future-unclear-budget-nepal-electric-cars

Instead of having electronic vehicle friendly budget our country’s tax policy is actually going against the global trend. Electric vehicles are being imported by Renault, Mahindra, Kia, Hyundai, MG, Peugeot, Audi and BYD. Other importers which were also planning to add electric cars to their showrooms will now cancel their orders. These have made the EVs business intangible and risky for the dealers. As well as an impractical decision the consumers who earlier had made their mind to own electric vehicle in near future.

 

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