Budget for upcoming FY supports IT sector: CAN Federation
KATHMANDU: Federation of Computer Association Nepal (CAN Federation) has stated that the government's budget for upcoming fiscal year 2025/26 is positive for the IT/ICT sector.
Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel announced a budget of Rs 1,964.11 billion for upcoming fiscal year 2025/26 at a joint session of the Federal Parliament on May 29.
CAN Federation expressed gratitude for the budget, stating that it addressed most of the 25-point suggestions previously submitted to the government. The Federation reacted positively, highlighting that the provisions for granting information technology (IT) the status of an industry, tax concessions, incentives for service exports, loans at concessional interest rates and tax exemptions for startups, and arrangements for infrastructure development are commendable.
CAN Federation President Sunaina Ghimire Pandey said, "For the first time, the budget has clearly identified the IT sector as an industry. This was our long-standing demand. Flexibility in tax policy, startup incentives and promotion of service exports have made us optimistic. Now, effective implementation is essential."
President Ghimire informed that CAN Federation is preparing to provide a detailed response once it becomes clear how the government will implement the provisions proposed in the budget through the Finance Act.
The budget includes provisions to treat IT-based industries similarly to special industries. Clause 386 of the budget provides for income tax and electricity tariff exemptions for IT-based industries, similar to special industries. Ghimire stated that this indicates formal recognition of the IT sector as an industry.
Similarly, Ghimire expressed the expectation that provisions such as imposing only 5% final income tax on the income of individuals exporting IT services abroad, addressing the demands of private sector and the announcement of five-year tax exemption for startup companies will encourage development and innovation in this sector.
The budget also includes significant programmes in the area of infrastructure development. CAN Federation believes that announcements such as the formulation of the second edition of the Digital Nepal Framework, the construction of an IT park in Kathmandu, upgrading of integrated data management centres, cloud infrastructure development, and establishment of data centres in the mid-hill region will lay the foundation for a digital economy.
Likewise, the budget also includes announcements prioritising improvements in 4G service quality and 5G expansion, collaboration with private sector in AI and machine learning research, use of indigenous software in government bodies, and strengthening of AI and cybersecurity. CAN Federation has been consistently advocating for these issues.
CAN Federation welcomed all these provisions and stated that the primary challenge now is implementation. "The announcements are good, but these announcements must clearly reflect in policies, programmes and budget expenditures," said CAN Federation General Secretary Chandra Bilas Bhurtel. "We are ready to collaborate with the government to make procedures and implementation mechanisms effective."
General Secretary Bhurtel expressed confidence that if the plans put forth by the government are effectively implemented, this sector will contribute significantly to the national economy through job creation and increased service exports.
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