The authority was criticized for including VAT in Ashar itself, even though, according to the provision made in the new budget by the government, it is to be implemented from Shrawan 1.
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The Inland Revenue Department has issued a public notice to clarify the confusion regarding the value-added tax (VAT) applicable to electricity services consumed in the month of Ashadh 2083.
According to the department, the Finance Act, 2083, by amending the Value Added Tax Act, 2052, has stipulated that providers of electricity services must charge 5 percent VAT to final consumers and 13 percent VAT to other consumers.
The department’s notice states that even if the bill for electricity consumed up to Ashadh 32, 2083 is received on or after Shrawan 1, 2083, VAT will not be levied on consumption prior to Shrawan 1, as electricity is included as an essential commodity under Schedule-1, Group 2 of the Finance Act, 2083.
However, the department has clarified that VAT will also be levied on the minimum charge or demand charge for electricity consumed from Shrawan 1 onwards.
The Nepal Electricity Authority had included VAT in the bills sent to customers for electricity consumed in Ashadh. Following this, the Authority was criticized for including VAT in Ashadh bills, even though the new provision in the budget was to take effect from Shrawan 1. The Authority then sought an opinion from the department on this matter. To clarify this, the department issued a statement on Monday.
