The finance minister gave this answer about the tax imposed on electricity.

Provision has been made to levy value added tax (VAT) on electricity through the budget of the next financial year 2083/84. Customers who consume more than fifty units of electricity will be charged five percent VAT. Finance Minister Dr. Swarnim Wagle clarified the justification of this system and claimed that its impact on common citizens will be minimal and it will help greatly in building the country's energy infrastructure. Speaking at the post-budget interaction program held at the Ministry of Finance, Finance Minister Wagle said that the provision of free electricity for 20 to 30 units and no tax for up to 50 units will not affect low-income consumers. He explained that the burden of this tax will be very low even for consumers who use more than 50 units.

According to him, about 1.2 million households consuming electricity from 51 to 150 units will be charged an additional charge of only Rs. 24 per month. Similarly, it is estimated that around 2 to 2.5 lakh households who consume 151 to 250 units and use facilities like air conditioner (AC) and electric vehicle (EV) fast chargers will have an additional burden of only 25 to 100 rupees per month. Finance Minister Wagle said that since the first 50 units are free, the ratio of actual tax will be only three percent when consuming 150 units and even if it reaches 250/300 units, this ratio will remain only 4.2 percent. Thus, the full burden of five percent will not fall on any consumer, he contends.

Speaking about the government's allocation of 85 billion 54 million rupees for the construction of production, transmission and distribution lines for the development of the energy sector, Dr. Wagle emphasized the importance of internal resources to raise this investment. He warned that the current distribution system is weak and without improving it, there is a risk of accidents due to the increase in the use of induction stoves and electric vehicles, as the transformers and wires will not be able to withstand the load. In such a situation, one option is to levy VAT on electricity to raise the necessary budget for infrastructure upgrades, he said.

He pointed out the need to focus on improving the distribution system in the next three/four years. He is of the opinion that as the economy becomes more sophisticated, even a large sector like energy should be brought under the scope of taxation and all Nepalis should invest and adopt it. He informed that if this load is higher in the future, the tariff rate can be adjusted through the Electricity Regulatory Commission or the Nepali people can be compensated from the dividends of the government-owned hydropower projects.