Budget 2026/27: High-level advisory committee to be formed to assess multi-rate VAT

KATHMANDU: The government plans to form a high‑level advisory committee to assess the feasibility of introducing a multi‑rate system in value‑added tax (VAT). Finance Minister Dr Swarnim Wagle announced this while presenting the budget for fiscal year 2026/27 at a joint sitting of the Federal Parliament.

Dr Wagle said the committee will evaluate the applicability of a multi‑rate VAT and submit recommendations to the government. He said the budget includes major tax reforms aimed at shifting tax administration from a punitive body to a partner in development.

To create a more taxpayer‑friendly environment, the minister announced a special discount and concession scheme to resolve long‑standing tax disputes. He said that in cases pending before the courts or other judicial bodies involving the government or the taxpayer, if an additional 1% is added to the specified tax amount and submitted within the designated timeframe, the case will be dismissed and all fees, fines, additional penalties, late fees and interest will be waived.

Referring to administrative restructuring, Dr Wagle said the number of federal ministries will be reduced from 22 to 18, and the resources saved from cutting ministries, departments, offices and positions will be used to improve administrative efficiency. Under the reorganisation, 31 agencies will be dissolved, six agencies will be merged, six agencies will be relocated, and 18 agencies will be restructured.

The minister said the government is committed to making the bureaucracy more efficient and accountable and will continue to enhance benefits for civil, military, police and teaching services in a dignified manner. He estimated the move will save Rs 20 billion.

Dr Wagle added that the budget prioritises control of general expenditure as a key focus. To encourage private investment in large and reservoir‑based projects, the government will permit promoters to sell up to 40% of their shares to the general public in the first year, provided the promoter ensures 100% of the investment in such projects.