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09 Mar, 2022

Excise Duty Amendments Fiscal Year 2078-79

Excise duty is a form of tax imposed on goods for their production, licensing and sale. Excise duty is levied on the goods manufactured domestically in the country. The Excise Act in Nepal was revised in 2002 broadening its scope, under which the government is now authorised to impose excise on the service sector as well as on selected imports of goods.

Imposition of Excise  Duty : 

-On domestic production of goods. 

-On import of goods   

-On services covered by the schedule forming the part of the excise duty act,2058                                                                                

Time of levying Excise Duty : 

-In case of Issue of Goods under Physical Control System: Excise duty shall be imposed at the moment of issue after production from the enterprises for the purpose of sales.

-In case of Issue of Goods & Services under Self-Removal System( with control) :   Excise duty shall be imposed at the time of issuance of invoice. 

-In case of Issue of Goods & Services under Self-Removal System( without control) - Excise duty shall be imposed at 25th of the next month.

-In case of Import of Goods: The custom office shall set  excise duty at the custom entry point at the time of import.

Responsibility of collection of Excise Duty 

-In case of Manufacturer: The manufacturer is responsible for collecting excise duty on goods and services that are subject to excise duty.

-In case of Import of Goods: In this case, the custom offices from where the goods are imported are responsible for collecting excise duty. 

Exemption of Excise Duty: 

-On items exported

-On goods sold to Duty-Free Shops ( Except Cigarette/ Alcohol)

-On sale of cigarettes/ alcohol by Bonded warehouse to diplomats/duty facility.

Excise Duty Return: 

Submission of Excise should be within 25 days from the respective month end for both Physical Control/ Self Control.

Input Credit of Excise: 

-Excise Duty paid at the custom point on auxiliary raw materials, packing materials, spare parts, and duty-free raw materials are not eligible for claim as input credit.

-However, excise duty paid on raw materials is eligible as input excise and can be adjusted with excise payable on the sale of excisable goods.

Refund of Excise Duty:

-In case any industry exports excisable goods, they shall get a refund of excise duty paid on raw materials consumed for production of such exported quantity. 

-The claim for refund should be lodged within 1 year from the due date of filing. At least 15% value addition should be made in case of export of tobacco, liquors & Pan Masala.

Major highlights from Finance Ordinance 2021/22 relating to Excise: 

-To encourage the use of electric vehicles, excise duty on electric vehicles is exempted. Whereas, it has been reduced from 60% to 40% on Hybrid Vehicles.

-25% of the Excise amount deposited during administrative review shall be considered while computing deposit amount during application to Revenue Tribunal.

-Excise duty rate in Alcoholic and Non Alcoholic Beverages has been increased.

-Excise duty rate in Tobacco and Tobacco Products has been increased.

**To be continued in Excise Duty Amendments under Downloads.