Kathmandu, June 1 -- The government has imposed a 5 percent Value Added Tax (VAT) on electricity, effective from the upcoming fiscal year, with officials estimating annual revenue of around Rs5.5 billion. Finance Minister Swarnim Wagle said the tax will apply to electricity consumption above 50 units and is intended to finance major infrastructure expansion in Nepal's energy sector.

Speaking at a press conference on Sunday, Wagle said the measure is part of a broader effort to mobilise resources for upgrading and expanding generation, transmission and distribution infrastructure as electricity demand continues to rise across the country.

The decision has sparked concern among consumers, economists and former energy officials, who warn t...