Madhesh Province has started charging annual tax on electric vehicles based on price, not motor output, after bringing the change into force through the Economic Act 2083. The province has aligned its EV tax rules with the federal government’s recent pricing-based policy, and the new slabs apply immediately.
What changes for EV buyers
Under the earlier system, EV tax was linked to motor power in kW. Now, the yearly tax will depend on the vehicle’s declared value.
For imported EVs, that value will be taken from the customs-assessed amount plus all applicable duties. For EVs sold in Nepal, the VAT invoice value including VAT will be used.
New annual tax slabs
- Private electric two-wheelers: vehicles priced up to Rs 2.5 lakh will pay Rs 2,000 a year. - Electric bikes, scooters and mopeds priced between Rs 2.5 lakh and Rs 3 lakh will pay Rs 3,000. - Those priced above Rs 3.5 lakh will be taxed at Rs 5,000 a year. - Private electric four-wheelers will now fall in a wider band of Rs 11,000 to Rs 40,000 a year. - EVs priced up to Rs 30 lakh will pay Rs 11,000. - Vehicles priced between Rs 30 lakh and Rs 50 lakh will pay Rs 15,000. - EVs priced from Rs 50 lakh to Rs 1 crore will pay Rs 25,000. - EVs priced above Rs 1 crore will pay Rs 40,000. - Electric auto-rickshaws and e-rickshaws will be charged Rs 3,000 per year.
Public and commercial electric vehicles will get a 50 percent discount on the tax rate applied to private vehicles.
National Context
The federal government has also published the annual vehicle tax rates for FY 2083/84, effective from the start of the fiscal year. According to the new national rates, traditional fuel vehicles will continue to be taxed based on engine capacity (cc) and motor power (kW), with rates ranging from Rs 6,500 to Rs 17,500. For electric vehicles, the tax is set between Rs 4,000 and Rs 9,500 based on capacity.
Why this matters
Madhesh is now the only province using a value-based annual EV tax, while other provinces still calculate EV tax mainly from motor power in kW. For Nepali buyers, this means the annual cost of owning an EV in Madhesh will now track the purchase price more closely than the size of the motor. This alignment with federal policies may encourage other provinces to consider similar shifts, potentially standardizing EV taxation across Nepal.
Writes on vehicle pricing, taxation and the Nepali auto market from ongoing tracking of distributor price lists. Editorial policy.
