Nepal’s Total Revenue and Receipts Reach Rs 158.7 Billion – Down 6.4% Compared to Last Year

Nepal’s total government revenue and receipts amounted to Rs 158.71 billion in the first two months of the fiscal year 2025/26, representing a 6.4% decline compared to the same period last year, according to the latest Ministry of Finance (MoF) and Nepal Rastra Bank (NRB) data. The decrease highlights ongoing fiscal challenges stemming from weaker income tax and non-tax revenue collections, despite moderate gains in indirect taxes such as VAT, customs, and excise duties.

The report shows that total tax revenue stood at Rs 157.53 billion, a 5.3% year-on-year decline, while other receipts—comprising fees, dividends, and non-tax income—fell sharply by 62.4% to Rs 1.18 billion. As a result, the combined revenue and receipts dropped from Rs 169.51 billion in FY 2024/25 to Rs 158.71 billion this year.

Breaking down the composition, Value Added Tax (VAT) remained the top contributor with Rs 52.14 billion, accounting for 32.9% of total revenue, followed by customs at Rs 35.39 billion (22.3%), income tax at Rs 33.05 billion (20.8%), and excise duty at Rs 28.95 billion (18.2%). While VAT and customs revenue increased by 3.9% and 7.5%, respectively, income tax fell by 8.5%, and non-tax revenue plummeted 66.3% to Rs 7.13 billion.

Economists note that the contraction in total revenue indicates slower economic activity, particularly in corporate sectors and state-owned enterprises. The steep decline in non-tax revenue reflects weaker dividend payments and royalty collections, while subdued income tax receipts suggest reduced profitability across industries.

Despite the drop, Nepal’s indirect tax performance continues to underpin fiscal stability, driven by consumption and import-related activities. Experts, however, warn that the country’s growing dependence on indirect taxes could limit equitable growth and long-term sustainability.

To address the shortfall, the Ministry of Finance is expected to accelerate revenue digitization, expand the tax base, and enhance compliance monitoring while revitalizing public enterprises to boost non-tax income in the upcoming quarters.