NADA demands tax review on EVs

Finance Minister Janardan Sharma presenting budget for the Fiscal Year 2079-80 had mentioned the use of renewable electricity as an alternative to petroleum products, but the government has increased the customs and excise duties on electric vehicles of above 100 kW motor power. That is to understand that the use of electric vehicles has rather been discouraged while the experts and users were expecting further relaxation than the tax rule provided by the budget of FY 2078-79. Taking this as unfriendly steps of the government towards promotion of electric vehicles, Nepal Automobiles Dealers Association (NADA) has demanded the government to reconsider to make arrangements as per the earlier policy for electric vehicles up to 200 kW motor power.

Furthermore, the government has exorbitantly increased the customs duty on motorcycles above 200cc through the budget for the upcoming fiscal year. With the added customs and excise duties, there will be a steep hike in the prices of motorcycles above 200cc. Hence, NADA wants the government to reconsider this decision as well.

NADA had called media to support its move to pressurise the federal government to reconsider the genuine demand.

It is to recall that the budget of FY 2073-74 had provisioned to promote electric vehicles in Nepal. So as tax rule made comfortable. The rule was continued for a few years. Suddenly, the budget of FY 2076-77 overturned the tax rule and made almost similar to the fossil fuel vehicles. That was amended after 4 months of effect, which could not give any good way out. The budget was again made EV friendly by the budget of 2078-79. Thus the momentum of EV promotion took well.

The electric vehicles imported are mainly focused to private and institutional uses while electric vehicles for public transportation have not been a focus agenda at governmental and private sectors.

The buses and minibuses run by electricity are costly even in the international market. The tax policy and financial policy are not supportive to transport entrepreneurs. The entrepreneurs look for little profit by operating EVs for public transportation. That can be possible if the government waive taxes on import of such vehicles and subsidise the bank loans.

Lately, the Government has announced symbolic relaxation in tax on importing of electric vehicles to be used for public transportation. Accordingly to the amendment 50% lowered on Road Development Tax (RDT) and EVs for goods transportation installed with power to push motor (excluding of three wheeled vehicles) will have to pay 2.5% on the cost of the vehicle which was 5% before. The latest relaxation will not make any significant difference in the initial cost of electric bus and mini bus but this action should be taken as symbolic to expect the Government more to do in near future.