KATHMANDU: The Nepal Electricity Authority (NEA) has formally sought a legal interpretation from the Inland Revenue Department to determine whether value-added tax (VAT) should apply to electricity consumed in the month of Asar (mid-June to mid-July) but billed in Shrawan (mid-July to mid-August).

The request follows growing public complaints after consumers were charged VAT on electricity consumed before the new tax provision came into effect.

Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha directed the NEA to immediately clarify the legal and practical issues surrounding the tax, stressing that its implementation should not impose an unfair financial burden on consumers.

The NEA has also sought the department’s opinion on whether VAT should be levied on the minimum demand charge.

Consumer concerns escalated after electricity bills issued during the first week of Shrawan included VAT on power consumed in Asar. Under the Finance Act, 2083 (2026/27), VAT on electricity consumption came into effect from Shrawan 1, raising questions over whether the tax should apply retrospectively to electricity used before that date.

According to the NEA, any adjustments to consumers’ bills will be made based on the Inland Revenue Department’s official interpretation. The authority said the clarification is expected to resolve the confusion and address consumer grievances.