Budget 2018: Which sector is getting what and how much are you going to be taxed?

Finance Minister Yubaraj Khatiwada unveiled Nepal’s first federal budget yesterday. Budget 2018 is targeting a growth of 8 percent, which some are saying overambitious, while some very achievable. The budget is only 2.82 percent bigger than last year, and a high source of income is attributed towards foreign grants (253.02 billion).

Below are the key highlights of Budget 2018:


Key points:

  1. High priority has been given to the energy sector and the government has announced that the 750 MW West Seti Hydropower Project will be built with domestic resources.
  2. Tourism sector entrepreneurs are dismayed because budget does not go along with government’s ambitious plans to draw 2 million tourists.
  3. Many important pledges of the Nepal’s newly formed ruling party, Nepal Communist Party not drawn – for example, how they are going to double agricultural output in 5 years, how are they going to eradicate the need for foreign employment, to double per-capita income of citizens or how they are going to possess bank accounts.
  4. Excise duty of two-wheelers above 150 cc and four wheelers above 1000 cc to be increased.
  5. Loans of upto Rs 700,000 at 5% interest for youths for entrepreneurship projects against academic certificates as collateral.

An important aspect of the new budget is the introduction of a new progressive income tax rate. The budget has changed the structure of income tax slab from 15 percent and 25 percent to 10, 20 and 30 percent.

An individual earning up to NRS 3,50,000 will have to pay 1% income tax, 10% for the next 1,00,000, 20% for the next 2,00,000 and 30% if up to 20,00,000 and 50% above 20,00,000.

A married couple’s 1% threshold will be NRS4,00,000 and a similar scheme – 10% for the 1,00,000, 20% for the next 2,00,000 and 30% if up to 20,00,000 and 50% above 20,00,000.




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