Chapter 1 · Part 1 — The Budget in Numbers
The Budget in Numbers
Where every rupee of the FY 2083/84 budget comes from and goes — and why the tax changes look the way they do.
1 of 14 · 15 min
Before any tax rate makes sense, you need to see the machine it feeds. This Part is the arithmetic of Nepal's national budget for FY 2083/84 — where every rupee comes from, where it goes, and why the tax changes in Parts 2–12 look the way they do.
The headline: Rs 2,124.34 billion
The budget for FY 2083/84 was presented on 29 May 2026 (Jestha 2083) and took effect from Shrawan 1, 2083 (≈16 July 2026).
╔═══════════════════════════════════════════════════════════════════╗ ║ TOTAL BUDGET FY 2083/84 Rs 2,124.34 billion ║ ╚═══════════════════════════════════════════════════════════════════╝
Where it goes — allocation
┌──────────────────────────────────────────────────────────────────────┐
│ RECURRENT EXPENDITURE Rs 1,270.58 bn 59.80% │
│ ████████████████████████████████████████████████████████ │
│ Salaries, pensions, social security, grants, interest, │
│ operating costs — the cost of the state existing. │
├──────────────────────────────────────────────────────────────────────┤
│ CAPITAL EXPENDITURE Rs 431.10 bn 20.30% │
│ ███████████████████ │
│ Roads, bridges, irrigation, buildings, transmission lines — │
│ the part that builds something that lasts. │
├──────────────────────────────────────────────────────────────────────┤
│ FINANCING PROVISION Rs 422.64 bn 19.90% │
│ ██████████████████ │
│ Principal repayment on loans, share investment, on-lending. │
└──────────────────────────────────────────────────────────────────────┘
─────────────────
Rs 2,124.34 bn 100.00%The ratio that matters.
Capital expenditure 431.10
Capital share = ────────────────────────────── = ────────── = 20.3%
Total budget 2,124.34
Recurrent expenditure 1,270.58
Recurrent share = ──────────────────────────── = ────────── = 59.8%
Total budget 2,124.34Where it comes from — financing
┌──────────────────────────────────────────────────────────────────────┐
│ REVENUE Rs 1,405.31 bn 66.20% │
│ ██████████████████████████████████████████████████████████████ │
│ Tax and non-tax receipts. Parts 2-10 of this course are about │
│ this line. │
├──────────────────────────────────────────────────────────────────────┤
│ DOMESTIC LOAN Rs 410.00 bn 19.30% │
│ ██████████████████ │
│ Government borrowing inside Nepal — treasury bills and │
│ development bonds, largely bought by banks. │
├──────────────────────────────────────────────────────────────────────┤
│ FOREIGN LOAN Rs 247.28 bn 11.60% │
│ ███████████ │
├──────────────────────────────────────────────────────────────────────┤
│ FOREIGN GRANT Rs 61.74 bn 2.90% │
│ ███ │
└──────────────────────────────────────────────────────────────────────┘
─────────────────
Rs 2,124.34 bn 100.00%The deficit
Total budget Rs 2,124.34 bn
Less: Revenue Rs 1,405.31 bn
Less: Foreign grant Rs 61.74 bn
───────────────
BUDGET DEFICIT Rs 657.29 bn
Financed by:
Domestic loan Rs 410.00 bn
Foreign loan Rs 247.28 bn
───────────────
Rs 657.29 bn OK
Deficit as % of budget = 657.29 ÷ 2,124.34 = 30.9%Transfers to provinces and local governments
Nepal is a federal state, so a large share of the budget never passes through federal ministries at all.
┌──────────────────────────────────────────────────────────────────┐ │ TRANSFER TYPE PROVINCES LOCAL LEVELS │ ├──────────────────────────────────────────────────────────────────┤ │ Equalization grants Rs 61.50 bn Rs 90.20 bn │ │ Supplementary grants Rs 4.60 bn Rs 8.93 bn │ │ Special grants Rs 3.82 bn Rs 9.40 bn │ │ Conditional grants Rs 39.72 bn Rs 206.08 bn │ ├──────────────────────────────────────────────────────────────────┤ │ Revenue sharing (approx.) Rs 175 bn │ ├──────────────────────────────────────────────────────────────────┤ │ TOTAL mobilised to sub-national levels Rs 600 bn+ │ └──────────────────────────────────────────────────────────────────┘ Equalization grants follow the National Natural Resources and Fiscal Commission's recommendation.
The macroeconomic assumptions
Every budget rests on forecasts. If they miss, the revenue misses, and the capital budget is cut.
| Indicator | FY 2083/84 target / position |
|---|---|
| **Economic growth** | 7% (up from 3.5% the previous year) |
| **Inflation** | Within 6% |
| **Balance of payments** | Surplus of Rs 731.16 billion |
| **Foreign exchange reserves** | USD 23.55 billion (as at 13 April 2026 / Chaitra end 2082) |
| **Imports** | +13.8% |
| **Exports** | +18.5% |
| **Remittance inflows** | +39.1% |
| **BFI loans** | +5.7% (previous year 7.1%) |
| **BFI deposits** | +8.5% |
The six objectives — and how to read them as tax policy
The budget states six objectives. Each one maps directly onto measures you will meet later in this course.
┌──────────────────────────────────────────────────────────────────────┐ │ 1. Growth of 7%, inflation within 6% │ │ → the reason for tax cuts rather than tax rises on income │ │ │ │ 2. A simple, fair, production-oriented tax system with a reduced │ │ burden on individuals and businesses │ │ → Part 2: exemption threshold doubled, top rate cut 39% → 29% │ │ → Part 10: customs tiers cut from 11 to 7 │ │ │ │ 3. Restore private-sector confidence; encourage investment, │ │ innovation, entrepreneurship, productive jobs │ │ → Part 5: startup relief, share-issue costs now deductible │ │ │ │ 4. Economical, efficient, results-driven public spending through │ │ administrative restructuring │ │ → 22 ministries reduced to 18; 31 entities abolished │ │ │ │ 5. Better service delivery through technology and digital public │ │ infrastructure │ │ → Part 8: e-invoicing, CBMS; Part 11: faceless assessment │ │ │ │ 6. Develop energy, agriculture, forestry, industry, tourism, IT │ │ and human capital │ │ → Parts 4 and 9: sectoral exemptions and excise discounts │ └──────────────────────────────────────────────────────────────────────┘
The revenue policy: five stated aims
The revenue policy for the year sets out what the tax administration is trying to become.
- 1Connect all financial transactions digitally and support a formal economy.
- 2Build an automated, tech-enabled, ethical and motivated tax administration.
- 3Increase revenue through voluntary compliance rather than enforcement alone.
- 4Mobilise non-tax revenue on cost-recovery and ability-to-pay principles.
- 5Make the system business-friendly with clear laws and efficient administration.
The nine structural tax reforms
These are the headline reforms announced. Each is developed in a later Part.
| # | Reform | Covered in |
|---|---|---|
| 1 | **Digital revenue administration** — paperless, faceless, contactless; automated filing, payment and refunds | Part 11 |
| 2 | **E-invoicing and monitoring** — businesses with transactions above Rs 100 million must connect to the Central Billing Monitoring System; smaller businesses encouraged to accept electronic payments | Parts 8, 11 |
| 3 | **Tax audit period cut from 4 years to 3**, with an AI-based e-assessment system for risk-based investigation | Part 11 |
| 4 | **Income tax adjustments** — exemption threshold doubled to Rs 1 million; top personal rate cut by 10 percentage points to 29% | Part 2 |
| 5 | **Customs duty cuts** on 273 industrial raw materials, kept at least one slab below finished goods; tiers streamlined from 11 to 7 | Part 10 |
| 6 | **Excise and green taxes** — excise abolished on 360 items; infrastructure tax, road maintenance fee and other customs-point charges consolidated into a green tax; digital excise stamps and track-and-trace | Parts 9, 10 |
| 7 | **VAT incentives** — 10% VAT benefit on digital payments, automated refunds, invoice-culture lottery schemes | Part 8 |
| 8 | **Multiple VAT rates** — 0%, 5%, 13% and any further rate by Gazette; a high-level committee to review relevance | Part 8 |
| 9 | **Taxpayer amnesty** — settle disputes pending before courts by paying assessed tax plus 1%; fees, penalties and interest waived | Part 12 |
Plus two that change who collects what:
- Local and provincial taxes — local governments may no longer levy multiple taxes (transfer duties, scrap charges) on goods in transit. Taxpayers must use permanent account numbers for local taxes.
- Education and health levy — a 3% minimum equalization fee on private education and health services, to fund infrastructure in remote areas.
Reforms that change the capital market
These sit outside tax law but change the environment for anyone investing on NEPSE, so they belong in any serious reading of this budget.
┌──────────────────────────────────────────────────────────────────────┐ │ CAPITAL MARKET │ │ • Restructure the Nepal Stock Exchange (NEPSE) │ │ • Introduce INTRADAY TRADING │ │ • Introduce SHORT SELLING │ │ • Introduce DERIVATIVES │ │ • Permit listed Nepali companies to issue Global Depository │ │ Receipts (GDRs) internationally │ │ • Enable Non-Resident Nepali (NRN) participation in the │ │ secondary securities market │ │ • Introduce hedging services from FY 2083/84 │ ├──────────────────────────────────────────────────────────────────────┤ │ STATE DIVESTMENT — public share issues for │ │ • Rastriya Bima Company Ltd │ │ • Bishal Bazar Company Ltd │ │ • Nepal Telecom (federal government retains 66%; remaining │ │ shares sold by Poush end to fund tech-hub development) │ ├──────────────────────────────────────────────────────────────────────┤ │ FINANCIAL SECTOR │ │ • NRB to establish and supervise a fintech marketplace │ │ • Personal credit scoring; peer-to-peer lending under regulation │ │ • National Asset Management Company by Poush end, to manage │ │ rising non-performing loans and non-banking assets │ └──────────────────────────────────────────────────────────────────────┘
How the tax system is organised
Before Part 2, fix the architecture in your mind. Nepal levies tax at three levels of government and through five main instruments.
┌─────────────────────────────┐
│ GOVERNMENT OF NEPAL │
│ (Federal) │
└──────────────┬──────────────┘
│
┌──────────────┬───────────────┼───────────────┬──────────────┐
▼ ▼ ▼ ▼ ▼
┌─────────┐ ┌────────────┐ ┌────────────┐ ┌───────────┐ ┌──────────┐
│ INCOME │ │ VAT │ │ EXCISE │ │ CUSTOMS │ │ NON-TAX │
│ TAX │ │ │ │ DUTY │ │ DUTY │ │ REVENUE │
│ │ │ │ │ │ │ │ │ │
│ Income │ │ Value │ │ Excise │ │ Customs │ │ Fees, │
│ Tax Act │ │ Added Tax │ │ Duty Act │ │ Act 2064 │ │ charges, │
│ 2058 │ │ Act 2052 │ │ 2058 │ │ │ │ royalty, │
│ │ │ │ │ │ │ │ │ dividend │
│ Part 2-7│ │ Part 8 │ │ Part 9 │ │ Part 10 │ │ │
│ 11-12 │ │ │ │ │ │ │ │ │
└─────────┘ └────────────┘ └────────────┘ └───────────┘ └──────────┘
│ │ │ │
└──────────────┴───────┬───────┴───────────────┘
▼
┌────────────────────────────────────┐
│ INLAND REVENUE DEPARTMENT (IRD) │
│ administers income tax, VAT and │
│ excise through Inland Revenue │
│ Offices (IRO) and Large Taxpayer │
│ Office (LTO) │
│ │
│ DEPARTMENT OF CUSTOMS administers │
│ customs duty at the border │
└────────────────────────────────────┘
PROVINCIAL AND LOCAL LEVELS levy their own taxes and fees —
property tax, business registration, vehicle tax, service
charges — under the Constitution's schedules.The annual mechanism.
FINANCE MINISTER presents the Budget Statement (Jestha)
│
▼
FINANCE BILL introduced with the rates and amendments
│
▼
PARLIAMENT passes it → FINANCE ACT 2083
│
▼
Takes effect from SHRAWAN 1, 2083 (≈16 July 2026)
unless a provision states otherwise
│
▼
IRD issues DIRECTIVES, CIRCULARS and PROCEDURES
! Under the amended Section 75 (income tax) and the VAT Act,
IRD interpretations in PUBLIC CIRCULARS are now FINAL
unless a court rules otherwise. See Part 11.The Nepali fiscal year — and why every date in this course looks odd
┌──────────────────────────────────────────────────────────────────────┐ │ NEPALI FISCAL YEAR (Bikram Sambat) │ │ │ │ SHRAWAN 1 ──────────────────────────────────────► ASAR END │ │ ≈ mid-July ≈ mid-July │ │ │ │ FY 2083/84 = Shrawan 1, 2083 → Asar end, 2084 │ │ ≈ 16 July 2026 → mid-July 2027 │ ├──────────────────────────────────────────────────────────────────────┤ │ THE TWELVE MONTHS, with approximate Gregorian starts │ │ │ │ 1 Shrawan ≈ mid-Jul 7 Magh ≈ mid-Jan │ │ 2 Bhadra ≈ mid-Aug 8 Falgun ≈ mid-Feb │ │ 3 Ashwin ≈ mid-Sep 9 Chaitra ≈ mid-Mar │ │ 4 Kartik ≈ mid-Oct 10 Baisakh ≈ mid-Apr │ │ 5 Mangsir ≈ mid-Nov 11 Jestha ≈ mid-May │ │ 6 Poush ≈ mid-Dec 12 Asar ≈ mid-Jun │ └──────────────────────────────────────────────────────────────────────┘
What changed this year, in one page
╔═══════════════════════════════════════════════════════════════════════╗ ║ THE DIRECTION OF FY 2083/84 TAX POLICY ║ ╠═══════════════════════════════════════════════════════════════════════╣ ║ ║ ║ ▼ TAX ON INCOME WENT DOWN ║ ║ • Exemption threshold doubled to Rs 1,000,000 ║ ║ • Top personal rate cut from 39% to 29% ║ ║ • Separate individual/couple slabs abolished — one schedule ║ ║ • Customs tiers cut from 11 to 7; duty cut on 273 raw materials ║ ║ • Excise abolished on 360 items ║ ║ ║ ║ ▲ TAX ON CAPITAL GAINS WENT UP ║ ║ • Listed shares ≤365 days: 7.5% → 10% ║ ║ • Listed shares >365 days: 5% → 7.5% ║ ║ • Land and building <5 yrs: 7.5% → 10% ║ ║ • Land and building ≥5 yrs: 5% → 7.5% ║ ║ • And CGT on shares is now a FINAL TAX ║ ║ ║ ║ ↔ THE BASE WIDENED ║ ║ • Multi-rate VAT: 0%, 5%, 13% and more by Gazette ║ ║ • 5% VAT on ride-hailing transport and high-use electricity ║ ║ • Cash transaction disallowance threshold Rs 50,000 → Rs 25,000 ║ ║ • E-invoicing and CBMS integration above Rs 100 million ║ ║ • Transfer pricing regime with safe harbour and APAs ║ ║ ║ ║ ⏱ ADMINISTRATION TIGHTENED AND LOOSENED AT ONCE ║ ║ • Audit window 4 years → 3 years (taxpayer-friendly) ║ ║ • Refund claim window 2 years → 5 years (taxpayer-friendly) ║ ║ • IRD circulars now final unless a court rules (department- ║ ║ friendly) ║ ║ • New penalties up to Rs 500,000 for tampering software ║ ║ ║ ║ AND A LARGE AMNESTY ║ ║ • Most windows close at POUSH END 2083 (≈ mid-January 2027) ║ ║ • Typically: pay the tax plus 1%, and interest, penalties and ║ ║ fees are waived ║ ╚═══════════════════════════════════════════════════════════════════════╝
The strategic reading. The government cut headline income tax to stimulate activity and restore confidence, then recovered revenue from capital gains, a wider VAT base, and an amnesty that converts old arrears into immediate cash. Whether that nets out positive depends on the 7% growth assumption holding.
For a NEPSE investor specifically, the year is unambiguous: income tax down, capital gains tax up. Part 3 works through exactly what that costs.
Part 1 — Revision table
| Item | Figure | Why it matters |
|---|---|---|
| Total budget | Rs 2,124.34 bn | The machine every tax feeds |
| Recurrent expenditure | Rs 1,270.58 bn (59.8%) | Committed; cannot be switched off |
| Capital expenditure | Rs 431.10 bn (20.3%) | Discretionary; first to be cut |
| Financing provision | Rs 422.64 bn (19.9%) | Debt repayment and investment |
| Revenue | Rs 1,405.31 bn (66.2%) | Parts 2–10 are about this line |
| Budget deficit | Rs 657.29 bn | **31% of spending is borrowed** |
| Transfers to sub-national | Rs 600 bn+ | 28% of the budget |
| Growth target | 7% | The assumption the revenue rests on |
| Inflation target | Within 6% | — |
| FX reserves | USD 23.55 bn | External position is strong |
| Remittance growth | +39.1% | Strength earned abroad, not produced at home |
| Effective from | Shrawan 1, 2083 (≈16 July 2026) | Every rate in this course |
| Verify against | IRD + Finance Act 2083 | **Always** |
Saved in this browser only — there is no account to create. Clearing your browser data clears your progress.