Nepal's New Fiscal Year Starts Tomorrow: 5 Big Changes You Should Know for Loksewa

A new fiscal year starts in Nepal on July 17, 2026. It brings a new budget, new tax rates, and a salary hike for government staff. Here's what's changing, explained simply.

Why This Day Matters

In Nepal, the fiscal year starts on Shrawan 1 and ends on the last day of Ashadh. This year, that start date is July 17, 2026 (Shrawan 1, 2083). Every year on this day, the new budget takes effect — new tax rules, new spending plans, new salary rates. This year's changes are bigger than usual, so let's go through them one by one, in plain language.

If you're studying for Loksewa, this is a topic you should know well. Budget and tax questions show up often in the Economics section, and interview panels sometimes ask about "the current fiscal year" directly.

1. Income Tax Just Got Simpler and Lower

This is the change most people will feel first, in their own salary.

Before this year: the first slab of income (taxed at just 1%) only covered up to Rs. 5 lakh (Rs. 500,000). After that, tax rates climbed quickly — 10%, 20%, 30%, 36%, and all the way up to 39% for the highest earners. Married people and single people were taxed on slightly different tables too.

Starting this year: the 1% slab now covers income up to Rs. 10 lakh — double what it was before. The highest tax rate has also dropped, from 39% down to 29%. And the old split between "single" and "married" tax tables is gone — everyone now uses the same table.

The new slabs, in simple terms:

• Up to Rs. 10 lakh → 1%
• Rs. 10–15 lakh → 10%
• Rs. 15–25 lakh → 20%
• Rs. 25–40 lakh → 27%
• Above Rs. 40 lakh → 29%

What this means in real money: someone earning Rs. 15 lakh a year, for example, would have paid around Rs. 2,35,000 in tax under the old system. Under the new system, that drops to roughly Rs. 60,000 — a difference of about Rs. 1,75,000. That's a big change, and it's mainly because so much more income now falls under the low 1% band.

One thing to remember: income up to Rs. 10 lakh is not completely tax-free — it's taxed at 1%, which is still a very small amount (about Rs. 833 a month on exactly Rs. 10 lakh income).

2. Government Employees Get a Salary Hike

Civil servants are getting a real pay raise this year — the first one in four years. It works like this: 10% is added to the basic salary, and then another 10% is added on top as a monthly incentive allowance. Put together, this comes to roughly a 21% increase in total pay. This takes effect from the same date — Shrawan 1, 2083.

If you're preparing for a Loksewa exam yourself, this is worth knowing in detail — we covered the full post-wise salary numbers (Kharidar, Nayab Subba, Section Officer, and more) in our government salary scale breakdown.

3. This Is the Biggest Budget in Nepal's History

The total budget for this year is Rs. 21,24.34 billion (about Rs. 2.12 trillion) — 25.2% bigger than last year's budget. Finance Minister Dr. Swarnim Wagle presented this budget on May 29, 2026, and it's built around two big goals: 7% economic growth and keeping inflation under 6%.

This connects directly to the monetary policy figures we explained in our Nepal Monetary Policy 2083/84 article , since the budget (fiscal policy) and NRB's monetary policy work together to try to hit the same growth and inflation targets.

4. Some Things Get Cheaper, Some Get More Expensive

The budget isn't only about tax cuts — it also adds a few new charges:

Cheaper / simpler:

• Customs duty tiers have been reduced from 11 down to just 7 — simpler for businesses and traders.
• Excise duty has been removed completely on 360 different goods.
• If you pay digitally (through apps, cards, wallets) instead of cash, you get a 10% discount on VAT on that purchase — a push toward digital payments.

More expensive:

• A new 5% VAT now applies to electricity use above 50 units, and to ride-hailing services (apps like Pathao, InDrive, etc.)
• Private schools must now collect a 3% "education equality fee" on top of their regular fees.
• Private hospitals must collect a 3% "health equality fee" on top of service charges.
• A new "green tax" has replaced several older individual charges (like road maintenance tax), and it hits vehicle prices hard — anywhere from about 2.5% extra on a cheaper car to over 100% extra on very expensive cars.
• Gold and silver sellers must now collect a small extra fee (0.5%) from buyers.

In short: this budget gives regular salaried people a tax break, but adds some new costs on specific things like electricity, private education, private healthcare, and vehicles.

5. A New Sovereign AI Computing Center

One interesting new project: the government is setting up Nepal's first Sovereign AI Computing Center, at Syuchatar in Kathmandu. The idea is to buy a large number of AI processing chips and offer cheaper computing power to Nepali startups and entrepreneurs working on AI — a small but notable step toward supporting Nepal's tech sector.

Quick Recap Table

Change	What It Means
Tax-free-ish slab doubled	Rs. 5 lakh → Rs. 10 lakh (taxed at just 1%)
Top tax rate cut	39% → 29%
Civil servant salary	Up about 21% (10% base + 10% incentive)
Total budget size	Rs. 2.12 trillion — biggest ever, up 25.2%
Growth target	7%
Inflation target	Under 6%
New costs	Electricity (above 50 units), ride-hailing, private school/hospital fees, vehicles

What This Means If You're Preparing for Loksewa

1. Learn the exact numbers, not just the general idea. Exam questions often ask for the specific percentage or amount — like "what is the new top tax rate" or "how much did civil servant salaries increase."
2. Understand why these changes were made, not just what they are. Being able to explain that lower income tax is meant to increase people's spending power, while new charges on things like electricity and vehicles are meant to raise government revenue and support environment-related goals, shows real understanding — useful for interview answers.
3. Connect this to other topics you've studied. This budget links directly to the civil service salary changes, the monetary policy targets, and even the ongoing civil service bill discussions we covered in earlier posts — try to see these as one connected picture, not separate facts.
4. Use flashcards for the numbers. Things like "10 lakh," "29%," "21% salary hike," and "Rs. 2.12 trillion" are easy to mix up under exam pressure. Loksewa AI's Smart Flashcards can help these stick through regular short repeats instead of one long reading session.
5. Ask questions if something is unclear. If a term like "customs duty tiers" or "excise duty" doesn't make full sense, the Loksewa Guru AI chatbot can explain it in plain language, one concept at a time.
6. Keep this in your study plan. Track this alongside your other current affairs topics using Loksewa AI's study planner, since budget-related questions tend to appear across multiple sections — GK, economics, and even law/governance papers.

Final Thought

Starting tomorrow, Nepal enters a new fiscal year with a lower tax burden for most salaried people, a real pay raise for government staff, and a much bigger overall budget than before. For Loksewa aspirants, this is exactly the kind of practical, current, real-world topic that shows up again and again — in MCQs, in subjective answers, and in interviews. Take the time to understand it properly now, and it'll pay off across more than one section of your exam.

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