Kathmandu. After the adverse impact on revenue collection, the government is going to change the tax rate on electric vehicles.
It is planned to increase the tax rate by around 10 to 15 percent as the import of electric vehicles will increase but that of petroleum will decrease.
It has been discussed that the customs duty will be 10 to 15 percent. In this too, the government is preparing to increase the tax rate by making EVs with a capacity of 50 kW to 100 kW the main concern,” an employee of Artha told Bizmandu.
Three options were discussed regarding taxation in EV.
First, on the basis of the price of the vehicle, second, on the basis of the length of the vehicle, and third, on the basis of the motor power, the slab of 50 to 100 kW was discussed.
As some certain brands will be affected in these options and there will be a problem of low billing, a middle way option has been sought. According to that employee, there is a plan to increase the tax rate on the kilowatt slab by 10 to 15 percent.
Currently EVs are taxed per kilowatt. Including customs duty, excise duty, value added tax and road tax, the total is from 30.52 percent to 203 percent. In this, 30.52 percent tax is levied on EVs with 0 to 50 kW motors, 50.09 percent for 50 to 100 kW motors, 70.86 percent for 100 to 200 kW motors, 140.86 percent for 200 to 300 kW motors and 203 percent for 300 kW motors and above.
Sources claim that the government is preparing to lower the customs duty on commercial EVs to 1 percent. In the current fiscal year, the government had increased the customs duty from 9 percent to 10 percent on commercial EVs that were charging 1 percent customs duty.
Pressure to increase beyond 15 percent
The government is not in a position to increase the tax on EVs more than 15 percent. Because before the budget, the businessmen have already introduced twice as many EVs as usual. Businessmen have imported 1450 EVs in Baisakh alone. In March, the number was around 650.
Similarly, up to May 12, about 1,600 units of EVs have entered through Tatopani and Rasuwa.
According to Finance Ministry sources, there is pressure on the government not to increase taxes too much. Controversies may arise regarding vehicles imported ahead of a much higher budget.
An increase of up to 15 percent will not make much difference in the price of the vehicle
Looking at the trend of the international market, the government expects that increasing the tax up to 10 percent will not have any significant impact. It seems that the price of EV will decrease by around 10 to 20 percent as the cost of batteries in the international market has come down.
According to Australia’s News.com, a week after receiving the car, the customer found out that the price had dropped by $5,000.
In which, when that customer bought the vehicle, the price of Tesla Model Y real wheel drive vehicle was 60 thousand 900 dollars. But then a week after he bought the car, the price dropped to $55,900. The Model Y real-wheel-drive vehicle reached an all-time high of $72,300 in June 2022.
The price dropped to $69,300 in May 2023. In one year, the price has become cheaper by $13,400. Even on the basis of this decrease, the increase in general revenue will not have much effect. Also, due to the increasing competition in EV vehicles, the businessmen are in the strategy of selling by reducing the profit.
Even last year, the increase in the tax rate did not make much difference in the price of EVs. The businessmen increased the price from 1 lakh to 2 lakh. They have been asking for a stable tax policy as they have invested more than a billion in the EV eco system with charging infrastructure.
