Urja Khabar
KATHMANDU; The Nepal Electricity Authority (NEA) has announced that the Value Added Tax (VAT) collected from customers on electricity consumed during the last billing cycle (mid-June to mid-July) will be adjusted in the following month's electricity bill.
In a public notice issued on Monday, the NEA said that any VAT paid by customers for electricity consumed during the final month of Fiscal Year 2025/26 will be reconciled in the billing cycle covering mid-August to mid-September.
The clarification follows confusion surrounding the implementation of the new VAT provision introduced through the Finance Act 2026, which amended the Value Added Tax Act, 1996. Under the revised law, the government has imposed a 5 percent VAT on electricity supplied to household consumers and a 13 percent VAT on electricity supplied to industrial consumers.
After the new fiscal year's budget announcement, the NEA had included VAT in electricity bills issued for consumption during the period from mid-June to mid-July. However, the Inland Revenue Department (IRD) later clarified through a public notice that the new VAT provision would not apply retrospectively to electricity consumed during the final month of FY 2025/26. The tax is applicable only to electricity consumed from the beginning of the new fiscal year.
Following the IRD's clarification, the NEA has assured customers that the VAT amount collected on last month's electricity bills will be automatically adjusted in their subsequent bills, and consumers will not need to submit any separate application to claim the refund.
