Article 60: Distribution of sources of revenue

1) The Federation, State, and Local levels may impose taxes on matters falling within their respective jurisdiction and collect revenue from these sources. Provided that provisions relating to the imposition of taxes and collection of revenue on matters that fall within the Concurrent List and on matters that are not included in the List of any level shall be as determined by the Government of Nepal.

2) The Government of Nepal shall make provisions for the equitable distribution of the collected revenue to the Federation, State, and Local level.

3) The amount of fiscal transfer receivable by the State and Local level shall be as recommended by the National Natural Resources and Fiscal Commission.

4) The Government of Nepal shall, based on the need for expenditure and revenue capacity, distribute fiscal equalization grants to the State and local levels.

5) Each State shall, in accordance with the State law, distribute fiscal equalization grants out of the grants received from the Government of Nepal and revenues collected from its sources, based on the need for expenditure and revenue capacity of its subordinate Local level.

6) Provisions relating to the distribution of conditional grants, complementary grants, or special grants for other purposes to be provided by the Government of Nepal from the Federal Consolidated Fund shall be as provided for in the Federal law.

7) Distribution of revenues between the Federal, State, and Local levels shall be made in a balanced and transparent manner.

8) A Federal Act on the distribution of revenues shall be made having regard to the national policies, national requirements, autonomy of the State and Local levels, services to be rendered by the State and the Local level to the people and financial powers granted to them, capacity to collect revenues, potentiality and use of revenues, assistance to be made in development works, reduction of regional imbalances, poverty and inequality, end of deprivation, and assistance to be made in the performance of contingent works and fulfilment of temporary needs.