Nepal Budget FY 2026-27 & Finance Bill 2083: Complete Guide

On 29 May 2026 (Jestha 15, 2083 B.S.), Finance Minister Dr. Swarnim Wagle stood before a joint session of Nepal's Federal Parliament and presented the largest budget in the country's history — NPR 2,124.34 billion for Fiscal Year 2083/84 (2026/27). Alongside it came the Finance Bill, 2083, the legal instrument that actually changes how much tax you, your business, or your investments will owe starting Shrawan 1, 2083 (16 July 2026).

This is the first full budget of the Balendra "Balen" Shah-led government, and it doubles the income tax exemption limit, slashes the top personal tax rate by 10 percentage points, restructures VAT and customs duty, and introduces an entirely new set of fiscal levies. If you're a salaried employee, a business owner, an investor, or simply trying to understand what changes on your next payslip, this guide breaks it all down in plain language.

At-a-glance summary of Nepal's Budget and Finance Bill 2083/84 (FY 2026-27)

What Is the Finance Bill 2083?

Every year, Nepal's government tables a Finance Bill alongside the annual budget speech. While the budget speech sets out spending priorities, the Finance Bill is the actual piece of draft legislation that amends the country's core tax laws — this year, the Income Tax Act 2058, the Value Added Tax Act 2052, the Excise Act 2058, and the Customs Act 2082. It only becomes binding law once it clears both houses of Parliament and is authenticated by the President, after which it is published in the Nepal Gazette as the Finance Act 2083.

Some provisions of the Finance Bill 2083 took effect immediately from 29 May 2026, but most tax measures — including the new VAT rules for electricity and ride-sharing — apply from Shrawan 1, 2083 (16 July 2026), the start of the new fiscal year.

Budget Size & Financing Structure

The total outlay of NPR 2,124.34 billion is split into recurrent expenditure of NPR 1,270.58 billion (59.8% of the budget), capital expenditure of NPR 431.10 billion, and financial management/debt-servicing of NPR 422.64 billion.

Revenue and grants together still fall short of total spending by roughly NPR 657.29 billion. To close that gap, the government plans to raise NPR 247.28 billion in foreign loans and NPR 410 billion in domestic borrowing — though after repaying NPR 245.89 billion of maturing domestic debt, the actual net new domestic borrowing works out to about NPR 164.11 billion. In short, this budget's ambitious spending plans hinge on hitting revenue targets that sit well above what the current fiscal year is on track to collect.

On growth, the government has set a target of 7% GDP growth with inflation capped at 6% for FY 2083/84 — a notably optimistic goal given that the Central Bureau of Statistics estimated actual growth for the outgoing fiscal year 2082/83 at just 3.85%.

Major Tax Reforms Under Finance Bill 2083

This year's Finance Bill stands out for how many new fiscal levies it introduces — several dressed up as "fees," "charges," or "royalties" rather than taxes, but functioning as real financial obligations on individuals and businesses. Here are the changes that matter most.

1. Personal Income Tax: The Biggest Reset in a Decade

The tax-free income threshold has doubled from NPR 500,000 to NPR 1,000,000, meaning any resident individual earning up to 10 lakh a year now pays no income tax at all. At the other end, the top marginal rate has been cut from 39% to 29% — a 10-percentage-point reduction that narrows the gap with regional tax rates.

Note: The exact width of each intermediate slab is being finalized through IRD circulars and the formal Finance Act 2083 schedule — confirm final figures with the Inland Revenue Department before filing.

2. Capital Gains Tax Goes Up

Investors should take note: capital gains rates have moved higher, not lower. For listed securities, gains are taxed at 10% if held for 365 days or less, and 7.5% if held longer — and this remains a final tax. For land and buildings, the rate is 10% if owned for under five years and 7.5% for five years or more, with a special concessional 2.5% rate applied when the government compulsorily acquires the property.

3. VAT: More Flexibility, New Levies

Nepal has applied a flat 13% VAT rate for years. The Finance Bill 2083 changes that by letting the government prescribe different VAT rates for specific goods or services through a gazette notice, as long as the rate doesn't exceed 13%. Alongside this flexibility come several new, specific VAT measures:

• A 5% VAT on ride-sharing platform services, collected by the platform operator.
• A 5% VAT on electricity consumption above 50 units per month.
• A 10% instant VAT refund for consumers paying digitally, aimed at pushing more transactions into the formal, traceable economy.
• A universal VAT-bill lottery to encourage customers to demand proper VAT bills.

4. Customs, Excise & the New "Green Tax"

Customs duty on 273 categories of raw materials has been cut so that industrial inputs stay taxed at least one tier below finished goods, and the entire customs tariff structure has been simplified from 11 tiers down to 7. Excise duty has been scrapped entirely on 360 different goods. In place of the old infrastructure development tax and road maintenance fee collected at customs, the Finance Bill consolidates both into a single new Green Tax.

5. Digital Services & IT Sector Incentives

The 2% Digital Service Tax (DST) on foreign B2C digital platforms earning more than NPR 3 million from Nepal remains in force. On the incentive side, IT-exporting companies are positioned to receive tax relief and financial support, sweat equity arrangements get clearer tax treatment for the IT sector, and international payment gateways are set to gain formal legal recognition — a change that should make it materially easier for freelancers and export-oriented tech companies to bring foreign earnings home and manage tax compliance.

6. Dispute Settlement & Amnesty Windows

Businesses with old compliance issues get a limited window to regularize them. A Companies Act compliance waiver is open until the end of Ashoj 2083 (17 October 2026), while a separate amnesty for UN and diplomatic mission employees runs until the end of Mangsir 2083 (15 December 2026).

Legal & Business Environment Reforms

Beyond taxation, the budget signals a broader legal clean-up for the business environment:

• The Company Law will be amended to clarify conflict-of-interest rules, improve disclosure requirements, and simplify the company liquidation process.
• The Insolvency Act will be updated to better address financial distress among consumers and micro, small, and medium enterprises (MSMEs).
• A new Limited Liability Partnership (LLP) law is planned to encourage angel investment into venture capital and private equity funds.
• Nepal plans to sign additional Bilateral Investment Protection Agreements and Double Taxation Avoidance Agreements with more countries.

Civil Servant Salaries & Social Security

Effective from Shrawan 1, 2083 (16 July 2026), the base salary scale for public servants rises by 10%, plus a new performance-based monthly incentive equal to another 10% of the revised salary — a combined take-home increase of roughly 21%. Minimum monthly remuneration is set at around NPR 40,000 and can exceed NPR 100,000 depending on grade. Similar pay improvements are proposed for the military, police, and teachers. Interestingly, the government says part of this is funded by streamlining the state itself: 31 government bodies are being abolished, 6 merged, and 18 restructured.

On social protection, NPR 120 billion — the single largest consolidated allocation in the budget — goes toward social security. The child nutrition allowance for Dalit families doubles to NPR 1,000 per month, and nutrition support continues for children in 25 high-poverty districts concentrated in Madhesh, Karnali, and Sudurpaschim.

Energy Sector Push

The energy sector receives NPR 85.54 billion, targeting 1,040 MW of new generation capacity in the coming year — 670 MW hydropower and 370 MW solar — which would take Nepal's total installed capacity to 5,535 MW. Major projects moving forward include Upper Arun (1,061 MW), Uttarganga (828 MW), Chainpur Seti (210 MW), and Tamakoshi-5 (99 MW), while the large Budhigandaki storage project (1,200 MW) is set to advance toward construction under an empowered-authority model. Structurally, the Nepal Electricity Authority will be split into three separate companies covering generation, transmission, and distribution, and private companies will be allowed to trade electricity internationally under new "take or pay" power purchase agreements.

Implementation Timeline

What This Means for You

If you're a salaried employee

The doubled tax-free threshold means a much larger share of your annual income is now untaxed, and if you fall into the higher brackets, the drop from 39% to 29% at the top end noticeably improves your take-home pay. It's worth re-running your annual tax estimate once the final Finance Act slabs are published.

If you invest in the stock market

Capital gains tax has actually gone up, not down — 10% for short-term holdings and 7.5% for anything held over a year. Long-term investing remains more tax-efficient than frequent trading, and the gain continues to be treated as a final tax rather than added to your other income.

If you run a business

Lower customs duty on raw materials and the abolition of excise on 360 goods should ease input costs for manufacturers, while the simplified 7-tier customs structure reduces classification headaches. If your business has outstanding compliance gaps under the Companies Act, the waiver window closing in October 2026 is worth acting on early.

If you use digital payments or ride-sharing apps

Expect to see a new 5% VAT line on ride-sharing bookings and on electricity bills once monthly usage crosses 50 units — but also a 10% instant refund incentive when you pay digitally, which is designed to offset some of that cost while nudging more transactions into the formal economy.

Frequently Asked Questions

What is the total size of Nepal's Budget FY 2026-27?

NPR 2,124.34 billion — the largest budget in Nepal's history, up 25.2% from the revised estimate of FY 2082/83.

Who presented the Finance Bill 2083?

Finance Minister Dr. Swarnim Wagle presented it on 29 May 2026 on behalf of the Balendra Shah-led government.

When does the Finance Bill 2083 take effect?

Some provisions applied immediately from 29 May 2026; most tax measures take effect from Shrawan 1, 2083 (16 July 2026), once the bill is passed by Parliament, authenticated by the President, and published in the Nepal Gazette.

What is the new income tax exemption limit in Nepal?

NPR 1,000,000 (1 million), doubled from the previous NPR 500,000 threshold.

Has VAT increased in Nepal under this budget?

The standard VAT rate stays at a maximum of 13%, but the government can now set lower rates for specific goods via gazette notice, alongside new targeted 5% VAT charges on ride-sharing and high electricity consumption.

Final Word

Nepal's Budget and Finance Bill 2083/84 combine an ambitious spending plan with the most significant personal tax overhaul in over a decade. Whether the government can actually collect enough revenue to fund it all — without leaning too heavily on borrowing — will be the real test through the year. For now, the practical takeaway is straightforward: check where you fall on the new income tax slabs, review your VAT exposure if you run a digital or electricity-heavy business, and keep an eye on the final Finance Act 2083 text once it's published in the Nepal Gazette, since exact slab boundaries are still being confirmed through IRD circulars.

Disclaimer: This article is for general informational purposes only and does not constitute tax, legal, or financial advice. Figures are based on the budget speech and Finance Bill 2083 as tabled; some slab and rate details may be revised before final enactment. Please consult the Inland Revenue Department or a licensed tax professional for guidance specific to your situation.