Goods and Services subject to Zero Rate

1. Goods exported from Nepal: If it is proved that goods are supplied as follows:

(a) Exported outside Nepal, or

(b) Goods in store in the international flight whose destination is outside Nepal, or

(c) Goods kept for retail sale or supply or consumption in international flight whose destination is outside Nepal.

2. Services to be supplied to persons outside Nepal:

(a) A supply of services by a person residing in Nepal to a person outside Nepal, who has no business transaction, business representative or legally recognized agent in Nepal.

(b) A supply of goods or services by a person who is residing and is registered in Nepal to a person who is residing outside Nepal.

3. Goods or services imported by a person or mission enjoying diplomatic facility and a person serving in a diplomatic mission enjoying tariff facility, on the recommendation of the Ministry of Foreign Affairs, Government of Nepal.

4. If any previous treaty or agreement provides for the sales tax exemption on imports, and local purchase is made from the registered taxpayers, on the recommendation of the concerned project, the facility of zero rate shall be provided on such supplies, so long as such treaty or agreement is in effect.

5. Raw materials to be sold to and goods manufactured by any industries established pursuant to the laws in force and operated in the special economic zone.

6. ………Deleted by Financial Act 2077(2020).

7. If the battery used in the equipment and mechanism generating energy from solar power is produced by any domestic industry and is to be supplied by that industry, the facility of zero rate shall be provided to that industry on that transaction on the recommendation of Alternative Energy Promotion Center and in accordance with the procedures specified by the Department.

8. If any machinery, equipment, tools and their spare parts, machines, penstock pipes or iron sheets used for manufacturing the goods thereof as required for hydro power projects are produced by any domestic industry and are to be supplied by that industry, the facility of zero rate shall be provided to that industry on that transaction, on the recommendation of the Alternative Energy Promotion Centre, in the case of a project that is operated with the approval of that Centre, and on the recommendation of the Department of Electricity Development, in the case of projects other than those operated with the approval of the Alternative Energy Promotion Centre and in accordance with the procedures specified by the Department.

9. If carving, painting, handicrafts, and similar other handicrafts produced by a cottage and small-scale industry within Nepal are exported through a licensed export trading house of Nepal, the value added tax paid on the raw materials used in the manufacture of such goods shall be refunded after fulfilling the procedures specified by the Inland Revenue Department.

10. The value added tax paid on the import or local purchase of scooters used by persons with disabilities shall, if such scooters are registered in their name in the Office of Transport Management, be refunded on the recommendation of the Women, Children and Social Welfare or the Chief District Officer of the concerned district, from the concerned Customs Office in case of the value added tax paid on import and from the Inland Revenue Department in case of value added tax paid on local purchase. If such goods are sold to any persons other than the persons with disabilities, the refunded value added tax shall be recovered.

11. If any machinery, equipment and construction materials as provided in the approved master list and required for the operation of the project in Nepal as per the bilateral or multilateral agreement upon obtaining the tax exempt approval from Ministry of Finance, Government of Nepal, is manufactured in domestic industry and is supplied to concerned project directly or through the contractor of such project from such domestic industry, the facility of zero rate shall be made available as prescribed by the Department.