KATHMANDU: The government has proposed raising the maximum development tax on land benefiting from road construction and expansion from 20% to 25%, alongside tighter rules on roadside land use, construction and businesses.

The proposed Public Roads Bill, drafted by the Ministry of Physical Infrastructure and Transport, allows the government to levy a one-time development tax of up to 25% of the compensation-based land value in areas benefiting from road projects.

Under the existing law, land within 125 metres of a road centreline is subject to a 20% development tax, while land between 125 and 150 metres is taxed at 10%. The new bill would give the government greater flexibility to determine taxable areas and rates through the Nepal Gazette.

Landowners who fail to pay within the prescribed period could face restrictions on activities and even transactions involving their land. The bill also proposes recovering unpaid tax as government arrears.

The legislation would widen road rights-of-way and impose stricter controls on construction. It proposes a 50-metre corridor on either side of the centreline for expressways and 25 metres for national and provincial highways. Permanent structures within designated road limits would generally be prohibited.

Roadside businesses-including petrol stations, gas filling stations, EV charging stations, hotels, restaurants, garages, industries and mines-would require approval from the relevant road office. Unauthorized access roads, utility installations and excavation within road limits would also be prohibited.

The bill proposes utility corridors along expressways and national highways for electricity, water, sewerage and telecommunications infrastructure, with service fees payable to the relevant road authority.

Penalties would also rise sharply. Unauthorized permanent structures could attract fines of up to Rs 500,000, while unauthorized utility installations could result in fines of up to Rs 1 million. Other offences, including damaging roads or bridges and cutting roadside trees, would also carry substantially higher penalties.

The bill further proposes restrictions on overloaded vehicles, roadside obstructions, livestock, and activities that disrupt traffic or safety on expressways and national highways. Urban and residential road projects would also be required to incorporate pedestrian-and bicycle-friendly infrastructure.