The Authority's Acting Executive Director Dirghayu Kumar Shrestha says, ”We have issued VAT-inclusive bills in the month of Shrawan. The bill for the consumption in Ashad has been issued in Shrawan. In this way, when the bill is issued in Shrawan, we consider it as the bill for Shrawan itself. This is not only for electricity, but the same applies to telecommunications as well.”
We use Google Cloud Translation Services. Google requires we provide the following disclaimer relating to use of this service:
This service may contain translations powered by Google. Google disclaims all warranties related to the translations, expressed or implied, including any warranties of accuracy, reliability, and any implied warranties of merchantability, fitness for a particular purpose, and noninfringement.
The Nepal Electricity Authority has sought an opinion from the Inland Revenue Department after facing criticism for sending electricity bills for consumption in Asar with Value Added Tax (VAT) included when the bills were dispatched in Shrawan. The department has stated that it is preparing to send its response today regarding the inclusion of VAT in electricity and the resulting confusion raised by the Authority.
The Authority had written to the department seeking a clear legal interpretation on whether VAT should be applied to bills issued in Shrawan for electricity consumed in Asar. The letter also requested the department’s position on whether VAT should be applied to the minimum demand charge. According to the Authority, necessary price adjustments will be made in next month’s bills based on the official opinion received from the department.
According to the Finance Act, 2083, VAT is to be applied to electricity from Shrawan 1. However, the inclusion of VAT in bills for electricity consumed in Asar has drawn public complaints, which even the Minister for Energy, Water Resources and Irrigation, Biraj Bhakta Shrestha, has taken note of.
The Authority wrote to the department seeking clarification on whether VAT would be applicable if a consumer’s bill for electricity consumed from Asar 1 to 32, 2083, was issued on Shrawan 1, 2083. Director Prakash Paudel of the department said that preparations are underway to send a response addressing the confusion raised by the Authority today (Monday).
Acting Executive Director of the Authority, Dirghayu Kumar Shrestha, said that VAT has been applied to electricity tariffs issued after 6 Shrawan. “We have issued bills in Shrawan for consumption in Asar,” he said. “When bills are issued in Shrawan, we treat them as Shrawan bills. This is not only for electricity, but also applies to telecommunications.”
He also said that the Authority sought an opinion after facing criticism on social media and in the media. “Bills are issued according to meter readings. Where readings have already been taken, bills including VAT have been issued. In some places, readings are yet to be done,” he said. “We bill for 12 months only, not more than that.” He claimed that VAT was applied in compliance with government directives. He further stated that if the government decides not to apply VAT to electricity consumed in Asar, adjustments will be made in the next month’s bill.
Kantipur had previously reported that, following the government’s imposition of VAT on electricity, 2.6 million household customers would fall under its scope. According to the Authority, there are more than 2.6 million household customers who consume more than 50 units of electricity, as confirmed by Authority spokesperson Rajan Dhakal. “There are 1,998,000 customers who consume up to 20 units, 421,000 who consume 21 to 30 units, and 615,000 who consume 31 to 50 units,” Dhakal said. “There are 1,075,000 customers who consume 51 to 100 units, 1,089,000 who consume 101 to 250 units, and 442,000 who consume more than 250 units.”
Stakeholders have also said that VAT should not be imposed in the name of investing in infrastructure. They also point out that the Authority already collects fees under various headings, including maintenance. On the other hand, stakeholders say that, with the exemption for up to 50 units, some consumers may prefer to stay within that limit, but VAT will only increase their costs.
In the House of Representatives meeting on 5 Asar, Finance Minister Swarnim Wagle had said that a study was underway to impose the tax only on those consuming more than 100 or 150 units. “Currently, those consuming up to 50 units are exempt. A study is underway to impose the tax only on those consuming more than 100 or 150 units,” he told Parliament. “We will move in that direction before imposing the tax from Shrawan.” However, the provision in the Finance Act published in the Nepal Gazette and the VAT Collection Directive for Electricity Services, 2083, issued by the department, remains unchanged, with an exemption for up to 50 units and VAT applicable only above that.
