Kathmandu, June 1 -- The government has imposed Value Added Tax (VAT) of 5 percent and 13 percent on electricity consumption from the upcoming fiscal year, a move that appears at odds with its own policy of promoting greater domestic electricity use.

Director of the Inland Revenue Department, Shiva Sharma, said that, in principle, a 5 percent VAT would be levied on household consumers, while a 13 percent VAT would apply to others. However, he did not elaborate on which sectors or categories would fall under the latter group.

The government has claimed that the move to impose VAT on electricity is part of a broader effort to mobilise resources for upgrading and expanding generation, transmission and distribution infrastructure as electri...