Nepal’s new budget is honestly looking like very big reset moment,especially for middle class people who were feeling tax pressure for long time . Finance Minister Swarnim Wagle has announced budget of NPR 2.124 trillion for fiscal year 2026-27,and many parts of it feel directly aimed at giving some breathing space.
And biggest talking point is income tax relief only. During his presentation to Parliament,Wagle said income tax exemption threshold for individuals has now been raised to NPR 1 million,up from previous NPR 500,000 . That is not small change ah,especially for salaried people and families trying to manage daily costs.
Maximum personal income tax rate has also been cut from 39% to 29% . This part feels similar to recent steps taken by Indian government,where middle class relief became major political and economic message. Nepal also seems to be moving in same direction now.
Few things standing out clearly in this budget:
- Income tax exemption threshold raised from NPR 500,000 to NPR 1 million.
- Maximum personal income tax rate reduced from 39% to 29%.
- Customs duties on 273 types of raw materials will be reduced .
But this budget is not only about tax relief. Wagle also talked about simplifying tax structure and making sure raw materials are taxed less than finished products. Customs duties on 273 types of raw materials being reduced can help domestic industries,at least on paper.
On foreign investment side,government is planning to amend Foreign Investment and Technology Transfer Act. Main idea is to remove minimum investment threshold for foreign entities,which could make Nepal more attractive for outside investors. Procedures for foreign investment are also expected to be digitized,and One Stop Service Centre will be strengthened.
And tbh,the tech part is quite interesting. Nepal wants to position itself as IT hub by developing IT parks and expanding high-speed internet infrastructure . Wagle also pointed to Nepal’s clean hydropower resources as something that can support high-value AI computing services .
There is also plan for AI hub with Sovereign AI Compute Centre. For country like Nepal,this sounds ambitious but also logical in one way,because clean hydropower plus AI computing can become strong combination if execution is serious.
Budget also talks about supporting small and medium enterprises and building startup ecosystem. But as always,real question is implementation. Tax cuts sound good,AI hub sounds exciting,foreign investment reforms sound promising… but whether all this reaches ordinary people and businesses properly is still big open question…
