PM Shah defends 5% VAT on electricity over 50 units as minimal

Kathmandu— Prime Minister Balendra Shah has stated that imposing a 5% VAT on electricity consumption exceeding 50 units is not a significant amount.

Finance Minister Swarnim Waglé, while presenting the budget in Parliament on Friday, had announced that from the upcoming fiscal year, a 5% VAT would be applied to those consuming more than 50 units of electricity. Amidst ongoing opposition to this VAT imposition, Prime Minister Shah addressed Parliament on Sunday, asserting that the VAT is not excessive.

Responding to a question from RPP Chief Whip Khusbu Oli, he said, “The 5% VAT on consumption above 50 units, as proposed by the Finance Minister, is not a large sum. It amounts to 5 rupees on every 100 rupees.”

He explained that the revenue from this 5% VAT would be used to enhance electrical transformers, substations, and wiring, which are necessary steps to transition into the electrical era.

Shah mentioned that Nepal is currently not in a position to enter the electrical era. He warned that if the entire country were to switch to induction cooking immediately, electrical substations would be overwhelmed. “We are not yet in a position to enter the electrical era. If everyone were to start cooking with induction stoves right now, transformers would blow, and substations would be overwhelmed,” he stated.