KATHMANDU: The government has clarified that the newly introduced Value Added Tax (VAT) on electricity services will strictly apply only to energy consumed from July 1, 2026, onward.

Issuing a public notice on Monday, the Inland Revenue Department (IRD) addressed widespread consumer complaints after the Nepal Electricity Authority (NEA) mistakenly included VAT charges on bills generated in July for power consumed during the preceding month of June.

The department confirmed that electricity consumed up to July 16, 2026 remains tax-exempt under Schedule-1 of the VAT Act, 1995, even if the invoice was issued in July or later.

The IRD further clarified that VAT will apply solely to post-July 17 consumption, extending to the NEA’s approved minimum charges and demand fees, and urged all stakeholders to avoid any further confusion over the implementation timeline.