Govt collects Rs 665 billion in revenue by Mid-February; Income tax and non-tax receipts decline

KATHMANDU: The Government of Nepal has collected Rs 665.02 billion in revenue during the first seven months of the current fiscal year 2082/83 (mid-July 2025 to mid-February 2026), registering a modest year-on-year growth of 3.45 percent, according to official data.

Figures released by the Ministry of Finance’s Revenue Management Information System show that revenue mobilization has improved compared to the same period last fiscal year, although key segments such as income tax and non-tax revenue have recorded declines.

Customs and Inland Revenue Drive Growth

Department-wise, the Department of Customs reported the strongest institutional growth, collecting Rs 278.42 billion — an 8.04 percent increase compared to the corresponding period last year. The rise indicates improved import activity and tighter customs enforcement amid gradual economic recovery.

Similarly, the Inland Revenue Department mobilized Rs 320.88 billion, marking a 4.21 percent growth year-on-year. The department’s performance reflects improved domestic tax compliance and expanded monitoring mechanisms.

Among major tax headings, excise duty recorded the most notable expansion. As of Magh 29 (mid-February), excise revenue stood at Rs 105.43 billion, up 10.88 percent from the previous year. The growth suggests stronger collections from industries such as alcohol, tobacco, and other excisable goods.

Value Added Tax (VAT) collection also showed steady improvement. VAT revenue rose 7.58 percent to Rs196.44 billion during the review period, indicating stable consumption patterns and improved tax administration.

Income Tax and Non-Tax Revenue Under Pressure

Despite overall revenue growth, income tax collection contracted marginally. Income tax revenue declined by 0.81 percent to Rs 158.66 billion compared to the same period last year. The drop signals slower corporate profitability and subdued business expansion in certain sectors.

The sharpest fall was recorded in non-tax revenue. Collections from non-tax sources fell by 14.89 percent year-on-year to Rs 65.71 billion. Non-tax revenue includes dividends from state-owned enterprises, administrative fees, royalties, and other government income streams. The significant contraction suggests weaker performance of public enterprises and lower extraordinary receipts compared to last year.

Target Achievement Status

The government has set an ambitious annual revenue target of trillion for the current fiscal year. As of Magh 29, total revenue mobilization stands at 44.93 percent of the annual target.

On a monthly basis, revenue performance remains below expectations. The collection achieved during Magh accounts for only 85.55 percent of the monthly target set for the period, indicating continued pressure on fiscal performance.

Fiscal Outlook

While customs, excise, and VAT collections show encouraging momentum, the decline in income tax and non-tax revenue raises concerns about the sustainability of overall revenue growth.

Fiscal experts note that achieving the annual target will require stronger economic activity, improved compliance, and enhanced capital expenditure to stimulate growth during the remaining five months of the fiscal year.

With nearly half the fiscal year remaining, the government faces mounting pressure to accelerate revenue mobilization to maintain fiscal discipline, manage budget deficits, and sustain public expenditure commitments.