As the government prepares to unveil the national budget for Fiscal Year 2025/26, stakeholders have called for comprehensive tax reforms, increased development spending, and stronger policy stability to attract private investment and spur economic growth.
According to Shyam Prasad Bhandari, spokesperson for the Ministry of Finance (MoF), the final draft of the budget is being shaped with input from a range of sectors. He noted that the upcoming budget will prioritize employment generation, digital transformation, infrastructure development, and social security.
The Economic Survey 2025 is scheduled for release on May 28, with the budget announcement set for the following day. The National Planning Commission has proposed a spending ceiling of Rs 1.9 trillion, slightly up from the current year’s Rs 1.86 trillion budget.
The Revenue Advisory Committee has urged the government to implement a multi-tiered Value Added Tax (VAT) system, aligning with practices in India to curb cross-border illegal trade and improve revenue collection. Although the private sector has long demanded differentiated VAT rates to address issues such as under-invoicing, the government has expressed caution, citing challenges in tracking multiple tax rates.
The committee also recommended expanding the tax base to include items like diamonds, semi-precious stones, and certain fruits under VAT, and to introduce excise duties on services such as skincare, discos, massage parlors, and hair transplants. Additionally, it proposed new levies on private education and health services.
Business leaders have also urged the government to declare the next decade an “Investment Decade” to attract long-term private capital. Anjan Shrestha, Senior Vice-President of the Federation of Nepalese Chambers of Commerce and Industry, called for a reduction in recurrent expenditures and an increase in capital investment, along with policy consistency.
Further private sector demands include lowering income tax rates for manufacturing and high-employment sectors and advancing the second phase of economic reform initiatives.
