Kathmandu. KATHMANDU: Nepal Electricity Authority (NEA) has clarified that the price added tax (VAT) will not be levied on electricity consumed until the end of the last fiscal year. According to the notice of the Inland Revenue Department and the Large Taxpayers Office, the amount of VAT that has already been paid will be adjusted in the bill for the coming month of August by maintaining the advance payment.

NEA has stated through the notice that necessary arrangements have been made to adjust the amount already paid by the customer in the bill for the coming month.

There was confusion whether the NEA would attract tax or not when the billing of electricity consumed in June was released in the month of July.

The NRA had written to the Inland Revenue Department and Large Taxpayers Office on July 24 asking them to clarify the issue. The Finance Act, 2083 BS provides for the implementation of VAT on electricity. Issuing a notice on Monday, the Inland Revenue Office (IRO) had clarified that VAT will not be levied on billing for electricity consumption or consumption till mid-July.

The department has said that VAT will be attracted even on minimum charge or ‘demand’ charge for electricity consumption from July 1. According to the Value Added Tax Act, VAT will be levied at 5 percent for the end consumer and 13 percent for others. The department has clarified that the VAT will be attracted as per the rules on the consumption after July 1 as the fee charged by the NEA is a part of the electricity service.

The authority had sent the bill to the consumers by adding the VAT amount to the bill till mid-July. Consumers complained when the bill was sent. Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha took the initiative to resolve the problem.