Nepal moves to regulate tax exemptions on batteries used in electric vehicles and clean tempos

Kathmandu, October 2, 2026 — The government is preparing procedures to regulate tax exemptions on deep-cycle lead-acid and lithium-ion batteries used in electric vehicles and clean tempos.

The Ministry of Forests and Environment has prepared two draft procedures covering recommendations for zero-rated value-added tax (VAT) on deep-cycle lead-acid batteries and customs duty exemptions on deep-cycle lead-acid and lithium-ion batteries.

The proposed documents are titled the “Procedure to be followed while deciding on recommendations for zero-rated VAT on deep-cycle lead-acid batteries, 2083” and the “Procedure to be followed while deciding on recommendations for customs duty exemption on deep-cycle lead-acid and lithium-ion batteries, 2083.”

The government currently provides tax exemptions on the import of such batteries through the annual budget. The proposed procedures are intended to regulate how the existing exemptions are implemented and how recommendations are issued.

The exemption currently covers batteries used in electric rickshaws and clean tempos. The ministry has proposed the procedures to make the recommendation process more systematic and reduce the possibility of misuse of the tax incentive.

The ministry has also published the drafts and invited suggestions from stakeholders within one week.

According to the drafts, the main objective is to make the recommendation process through the Department of Environment simple, transparent and systematic.

The proposed procedures introduce additional documentation requirements for manufacturers seeking tax exemptions on batteries.

Domestic battery manufacturers seeking a recommendation for zero-rated VAT would have to submit an application to the Department of Environment in the prescribed format. The application would need to include the industry registration and renewal certificate, the previous fiscal year’s tax clearance certificate or its extension document, and the PAN or VAT registration certificate.