Finance Minister’s secretariat denies meeting on electricity VAT removal

The Secretariat of Finance Minister Dr Swarnim Wagle has clarified that the minister did not hold a meeting or discussion on Sunday evening or last week regarding the withdrawal of value-added tax (VAT) on electricity, contrary to reports circulating in the media.

The clarification came after reports claimed that Finance Minister Wagle and Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha had reached an in-principle agreement to remove VAT on electricity.

Issuing the clarification, Wagle’s Chief Personal Secretary, Nabin Dhungana, said the Finance Minister’s Secretariat had taken note of publicity linking Wagle’s name to an alleged agreement to restore the VAT exemption on electricity.

“The Finance Minister did not hold any meeting or discussion on the issue on Sunday evening or last week, as has been reported,” the statement said.

The Secretariat, however, clarified that discussions and studies are underway through the relevant government agencies regarding VAT on electricity, in line with the position expressed by Wagle during meetings of both the House of Representatives and the National Assembly.

According to the Secretariat, the ongoing process is aimed at facilitating further discussion on the issue and exploring measures to provide relief to electricity consumers.

The clarification comes amid reports that the government was preparing to withdraw the VAT imposed on electricity after widespread criticism from consumers, businesses and opposition parties.

Under the fiscal year 2026/27 budget, the government introduced VAT on domestic electricity consumption, which took effect on July 17. 

The government, on the other hand, previously defended the tax, arguing that the revenue would support the expansion of energy infrastructure. However, the electricity VAT has faced criticism from consumer groups and industry bodies, particularly over its potential impact on household consumers and the government’s policy of promoting electricity use as an alternative to liquefied petroleum gas (LPG).

The Energy Ministry has reportedly provided the Finance Ministry with data on electricity consumption and the potential impact of the VAT. According to ministry figures, around 2.3 million households consume more than 50 units of electricity per month, while approximately 1.5 million consume between 100 and 150 units and around 1.1 million consume more than 150 units.

The latest clarification indicates that while the issue of electricity VAT is under discussion and study within the government, claims that Finance Minister Wagle has already agreed to its removal should not be treated as confirmed.