Kathmandu. The government has decided to remove the Value Added Tax (VAT) imposed on electricity tariff from the budget for the current fiscal year. According to sources, the next cabinet meeting will decide to remove the VAT.

Prime Minister Balendra Shah of the Ministry of Energy has already been positive. The Minister of Energy, Water Resources and Irrigation and the Finance Minister discussed the removal of VAT on Sunday. The Finance Minister was reluctant in the discussion and finally agreed in principle to remove VAT.

The Electricity Regulatory Commission has already submitted a report to the Ministry of Finance with an option to remove VAT. Sources claim that the Ministry of Finance will present a proposal to remove VAT in the next cabinet meeting and the meeting is preparing to approve the proposal.

In the current fiscal year’s budget, Finance Minister Wagle had proposed to levy VAT of 5 percent for domestic consumers and 13 percent for industrial and other non-domestic consumers.

Household customers are paying 5 percent VAT if they consume more than 50 units of electricity per month and other customers are paying 13 percent VAT. This provision of the budget will be removed within two months of its implementation.

The Energy Minister had been demanding that the price should be reduced to increase consumption. The Ministry of Energy also reminded that the Energy Consumption Strategy 2083 has already been implemented. The strategy includes reducing the price and increasing the consumption of electricity wasted during the rainy season.

Experts claim that the two-thirds government has been removing and reducing the tax in a hurry in less than three months.