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Exemptions in VAT, a summary

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Chartered Nepal,

Last Updated: 2023-03-05

 



Summary of Exempted goods and services-



Basic Agricultural Products

Flowers and vegetables, including frozen vegetables, Fruits, Coffee(roasted, decaffeinated or not), tea (Flavored or not), Ginger, Saffron, turmeric other spices. Maize, potato, Tomato, onion, cabbage, cauliflower, carrot, turnip, cucumber, Sweet Potatoes, barley, wheat, Rice (Husked, brown, basmati, broken, puffed, beaten),buckwheat, millet, Corn flour, oats, soyabean, Nuts (Shelled or not), Sugarcane, apple, watermelon, grapes, papaya, litchi, pomegranate etc.

Fruits vegetables supplied by Hotels, cafeterias are not exempted.



Basic needs

Salt, Petroleum, Kerosene, electricity



Live animals and animal products

Animal meat, Fish, Mutton, chicken, Cheese and curd, eggs, Milk and Cream etc. Not exempted if supplied by hotels



Agricultural Inputs-

Fertilizers, Ammonium Sulphate, Ammonium Nitrate, Sodium Nitrate, Potassium chloride, Potassium Sulphate, Insecticides, Fungicides, Packing materials (Carton, boxes etc.), Crates for eggs



Medicine, Medical and Similar health Services

Oxygen, Kits and vaccines, Homeopathic, Scooters made for person with disability, Carriages, Health Services, sacks and bags of polymer imported by Nepal Red cross for keeping blood. packing materials and labels for medicines. Research equipment, plastic cases for saline water.



Education

Research related activities carried out in school and universities, Business or professional trainings run by organizations fully owned by GON, Education services provided by school and universities and hotels and canteens operated by them only for that purpose.



Books, Newspaper and Printed Materials

Newspaper, Dictionary, Printed books, Encyclopedias, Calendars, patro. Printing and publication of newspaper (Service) (Copies are taxable).



Artistic and Carving services

Paintings, handicrafts, Carvings, and other handicrafts and related services, Entrance fee to museum, library, zoo



Passenger and Goods Transportation.

Air, public transportation, services provided by mechanical bridge, Cargo services for export



Personal or professional services

artists, sportspersons, writers, designers, translators, interpreters institutionally or personally. Supplying of human resources to foreign countries.



Other Goods or Services

Bull Dozers, Excavators, Ambulances



  • Cold Storage Facilities
  • Postal Services operated by GON (services of transfer of letters, money, postal packages and incidental services)
  • Services provided by local level, state level and GON (Goods supplied are Vatable)
  • Financial Services/Life Insurance/medical insurance/other insurances
  • Clearing house services/Money Transfer
  • Capital Market Business/Securities business/Merchant Banking
  • Commodities future market/commodity agent business
  • Parts and Auxiliary goods under heading 87.08 used in electric rickshaw imported to manufacture such rickshaws.
  • Goods under prescribed headings/Lithium Ion Battery used for generation of electricity from solar power and operating from solar power as well as using for solar heat energy production.
  • Spare parts imported by Jute industries on the recommendation of DOI
  • Woolen Carpet and woolen carpet weaving, dying, washing, knitting.
  • Woolen yarn to be used in hand knitting sweater (except artificial and acrylic) within the country.
  • Goods received in donation for natural calamities or philanthropic purpose, as approved by the Ministry of Finance, Government of Nepal.
  • Goods that do not attract customs duty and are imported for personal purpose under the Luggage and Baggage Order facility.
  • Import of construction equipment, machinery tools and other equipment for hydro-power projects - recommendation of Investment board - recommendation of Alternative energy promotion center - if project is being operated under approval of the aforementioned boards and on the recommendation of Department of Electricity Development in case of other projects.
  • Transfer of vehicle by diplomatic mission, donor agency or project with full or partial tariff facility to governmental project in the name of such project - shall no be older than 10 years since the first year of its manufacturing - imported under diplomatic facility/full or partial exemption - convert to government number plate - as per approved annual plan of the project - upon completion of the project
  • Diplomatic body, project, person and other body (governmental as well as nongovernmental organization) intends to scrap vehicle and cancel registration - older than 15 years - cannot be reused - approval of MOF
  • Transfer of motor vehicle imported for personal purpose under VAT exemption to spouse on the death of the person.(
  • VAT on Import of a bus - only to 1 bus with the capacity of 30 seats or more - by a community educational institution for the purpose of transporting the students, recommendation of Ministry of Education, science and technology - shall not be transferred for 10 years - if transferred VAT levied as per prevailing laws.
  • Machine purchased by the industries re-processing the batteries for such re-processing.
  • Industries producing plastic bags shift to production of paper, jute bags or other environment friendly bags - VAT exempted on purchase of machines
  • Purchase, sale and rental of buildings and land (except the services provided by hotel, guesthouse and apartments, and by entities carrying on business similar to hotel, guest house).
  • Activities relating to facilities provided to carry out bets or gambling, and lottery.











Income Tax

Published By

Chartered Nepal

Category : Income Tax

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