Nepal follows India, cuts taxes on petroleum products to ease consumer burden

Kathmandu, April 7 The new government in Nepal on Tuesday decided to provide partial tax exemptions on petroleum products in a move to ease the financial burden on consumers, mirroring a similar decision by the Indian government.

A Cabinet meeting held on Tuesday approved a 50 per cent exemption on customs duties and infrastructure tax imposed on petrol, diesel, and kerosene, Minister for Federal Affairs and General Administration Pratibha Rawal told journalists. “The decision will be published in the Nepal Gazette,” she said.

Currently, petrol carries a customs duty of NPR 25.23 per litre, while diesel is taxed at NPR 12.02 per litre. In addition, an infrastructure tax of NPR 10 per litre is levied on both fuels. Besides these two taxes, the government also imposes additional levies, including Value-Added Tax (VAT), road maintenance tax, price stabilization fund charges, pollution tax, and green tax.

Amid the ongoing tensions involving the United States, Israel, and Iran, oil supply has been disrupted at the Strait of Hormuz, located between Iran and Oman, through which around 20 per cent of the world's oil supply passes.

As a result, oil prices have surged in the international market. This has also led to increases in transportation and insurance costs, contributing to rising prices of goods that depend on transportation. Asian countries have been particularly affected by the disruption, as they rely heavily on oil imports from the Gulf region.

Nepal does not directly import petroleum products from the Gulf or other regions but relies entirely on India for refined fuel. However, India itself is facing challenges in fuel imports. In late March, the Indian government reduced excise duties on petrol and diesel by INR 10 per litre each, bringing them down to INR 3 per litre for petrol and zero for diesel.

In the last fiscal year, Nepal imported petroleum products worth NPR 288 billion, with fuel remaining the country’s largest import item.

--IANS

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