Budget 2078/79 shakes the Nepali automobile industry

With Finance Minister Janardan Sharma presenting the budget for the fiscal year 2079/80, the Nepali automobile industry will once again see price hikes for all types of automobiles. The budget for the following year seeks to promote the establishment of vehicle manufacturing and assembling industries, while the cost for imported automobiles will increase.

Here are the budget’s major highlights related to the automobile industry. 

For vehicle manufacturing and assembling industries:

In order to promote four-wheel vehicle manufacturing and assembly industries in Nepal, the government has announced that it will provide a waiver of 50% on excise duty and 25% on customs for parts and raw materials imported by these industries. Similarly, electric two- or three- wheeler (rickshaw, motorcycle, and scooter) assembly industries will be charged only 1% customs on parts for assembly.

Moreover, 40% of income tax will be exempt from the earnings of electric vehicle assembly industries for five years.

Excise duty for cars above 1500 cc

The government has revised the excise duty for four-wheelers with engines of 1500 cc or above for the year 2079/80, while the duty for vehicles with engines smaller than 1500 cc remains unchanged.

The excise duty on cars with displacements of 1500 cc to 2000 cc has been raised by 5% to 75%. Similarly, vehicles in the 2000-2500cc and 2500-3000cc segments will be subject to excise duty of 85% and 95%, respectively. Moreover, an excise duty of 105% will be levied on vehicles having more than 3000cc engine capacity.

Revised duties on two-wheelers

The government has announced that it will impose new duty charges on all two-wheelers. The excise duty for two-wheelers in the 125-200cc range has been reduced by 10% to 40%, while the customs duty remains unchanged, at 30%. Apart from this, the duty on higher value motorcycles has been raised by up to 50%.

The excise and customs duty for the 201-250cc segment bikes have been raised by 20% and 10%, respectively. Similarly, 251-500cc bikes will be charged an additional 10% excise duty and 40% customs tax. Moreover, the excise duty for bikes with a capacity of 501 cc or more remains the same, at 100%, while their customs duty has been raised by 50%. 

Two-wheeler range (cc)Excise dutyCustoms duty
125 – 200 40% (less by 10%)30% (unchanged)
201 – 250 80% (raised by 20%)40% (raised by 10%)
251 – 50090% (raised by 10%)70% (raised by 40%)
501 or more100% (unchanged)80% (raised by 50%)

Additional excise and customs duty on EVs 

In the previous year, all types of EVs had their excise duty waived, and the customs tax charged was between 10-40%, depending on motor capacity. However, the year 2079/80 will see additional excise and customs duty imposed on EVs. 

The government has stated that electric vehicles with a capacity of 100-200 kW motor power will be subject to a 30% excise and customs duty, and those with 201-300 kW and 300 kW or more will be charged 45% and 60%, respectively.

On the brighter side, EVs with a capacity of up to 100 kW motor power will be exempt from excise and customs duties.

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