KATHMANDU, July 17: The government has introduced new taxes and fees on seven categories of goods and services from today, the first day of the new fiscal year. The measures expand the tax net to cover education, healthcare, electricity, gold and silver, ridesharing services, casinos, and luxury hotels and resorts.
While the government says the move is aimed at boosting revenue, consumers are expected to bear higher costs as several essential services become more expensive. Analysts say middle-class households are likely to be hit hardest, particularly by taxes on education, healthcare and electricity.
1. 3% tax on private school fees
Private schools will now have to levy a 3 percent tax on tuition and other fees charged to students.
If schools pass the full cost on to parents, a student paying Rs 10,000 in monthly tuition would pay an additional Rs 300.
2. Private healthcare becomes expensive
A 3 percent tax has also been imposed on treatment at private hospitals and healthcare institutions.
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For example, a patient with a hospital bill of Rs 100,000 will now pay an additional Rs 3,000 in tax. Critics say the move will further increase the cost of healthcare.
3. Additional 0.5% tax on gold and silver
The government has increased the tax on purchases of gold, silver and jewellery by 0.5 percent.
The higher levy is expected to raise costs for consumers buying precious metals for weddings, festivals or investment, while traders anticipate some impact on demand.
4. Casino royalty doubled
Annual royalty payable by casino operators has been doubled from Rs 15 million to Rs 30 million.
Although the increase mainly affects casino operators, part of the additional cost could eventually be passed on through higher service charges.
5. 5% VAT on electricity use above 50 units
Households and businesses consuming more than 50 units of electricity per month will now pay a 5 percent Value Added Tax on electricity charges beyond that threshold.
The measure is expected to affect most urban households, businesses and industries, while low-consumption households using 50 units or less will remain exempt.
6. 5% Service Charge on Ride Sharing
Ride-sharing companies will now be subject to a 5 percent service charge.
The added cost could result in higher fares for passengers or lower earnings for drivers, depending on how companies choose to absorb or pass on the tax.
7. Luxury Hotels, Resorts and Imported Liquor Cost More
A 2 percent additional charge has been imposed on five-star hotels, luxury resorts and imported alcoholic beverages.
The increase is expected to affect higher-income consumers, foreign tourists and the hospitality industry, which says the measure will raise operating costs.
Who will be affected?
The new tax measures will have the greatest impact on parents with children in private schools, patients seeking treatment at private hospitals, households consuming more than 50 units of electricity a month and users of ride-sharing services.
Consumers purchasing gold and silver, staying at luxury hotels and resorts or buying imported liquor will also face higher costs. While casino operators will directly bear the higher royalty, part of the increased expense could eventually be reflected in prices charged to customers.
