Introduction: A Budget for Transformation
The Government of Nepal has presented the budget for the fiscal year 2083/84 (2026/27), outlining a comprehensive vision for economic transformation, good governance, and inclusive development. With a total outlay of Rs 21.24 trillion, the budget focuses on tax reforms, infrastructure expansion, energy development, and social security. For homeowners, aspiring builders, and the Nepali diaspora, this budget carries significant implications for housing, construction costs, and investment opportunities.
Key Tax Reforms for Individuals and Businesses
The budget introduces bold tax reforms aimed at boosting disposable income and stimulating economic activity. The personal income tax exemption limit has been doubled to Rs 10 lakh, and the maximum personal income tax rate has been reduced by 10 percentage points. This means higher take-home pay for salaried individuals and professionals. For businesses, the budget simplifies customs duties by reducing 273 types of raw material tariffs and consolidating 11 tariff slabs into 7. Excise duties on 360 items have been abolished, reducing costs for manufacturers and consumers alike.
Housing and Real Estate: What It Means for Homeowners
For those planning to build or buy a home, the budget introduces several beneficial measures. The government has proposed tax relief on housing insurance premiums, allowing up to Rs 50,000 deduction from taxable income. Additionally, the budget encourages the development of residential projects under the National Housing Company Limited, with the first phase starting in Mechinagar, Jhapa. For Non-Resident Nepalis (NRNs), the budget allows foreign investors to lease up to 25% of residential units in apartment buildings for long-term stays, opening new avenues for investment in Nepal’s real estate sector.
NBC Building Code and Monsoon Considerations
While the budget does not directly address the Nepal National Building Code (NBC), it emphasizes disaster-resilient infrastructure and post-earthquake reconstruction. Homeowners are advised to ensure their designs comply with NBC 105 for earthquake safety, especially given the budget’s focus on rebuilding in Jajarkot and Rukum West. The allocation of Rs 3.17 billion for landslide clearance and climate-resilient structures highlights the importance of monsoon-proof construction.
Infrastructure and Connectivity
The budget allocates substantial resources for road, bridge, and railway projects. Key highlights include the completion of the Nagdhunga tunnel by next year, four-laning of the East-West Highway within five years, and expansion of the Kathmandu-Tarai Fast Track. These projects will improve access to construction materials and reduce transportation costs for homeowners in remote areas. For urban dwellers, the ‘Vision Kathmandu 2040’ plan includes integrated infrastructure development, underground utilities, and electric public buses, enhancing the livability of the capital.
Energy and Green Initiatives
Nepal’s energy sector is set for a major boost with the addition of 1,040 MW of hydropower and solar capacity, bringing total installed capacity to 5,535 MW. The budget also introduces a pilot green hydrogen plant in Hetauda and battery storage in Kathmandu. For homeowners, this means more reliable electricity supply and potential savings on power bills. The budget also promotes electric vehicles (EVs) with a new duty structure based on vehicle price and a clean infrastructure investment fee, making EVs more affordable.
Agriculture and Rural Development
To support rural homeowners and farmers, the budget allocates Rs 46.92 billion for agriculture and livestock. It introduces a pilot program providing up to 40% incentive grants for agricultural investments up to Rs 2 crore. Irrigation coverage will expand to 64% of arable land, and lift irrigation projects in hilly areas will benefit terraced farming communities. These measures can help reduce construction costs for rural homes by promoting local materials and self-sufficiency.
Social Security and Welfare
The budget doubles the nutrition allowance for Dalit children to Rs 1,000 per month and continues support for 25 districts with high poverty. Health insurance coverage is targeted to reach 90% of Nepalis within three years, easing healthcare costs for families. For government employees, salaries have been increased by 21% with a new pay scale effective from Shrawan 2083, indirectly boosting demand for housing.
Frequently Asked Questions
What is the personal income tax exemption limit for FY 2083/84?
The exemption limit has been doubled to Rs 10 lakh per individual, and the maximum tax rate has been reduced by 10 percentage points.
How does the budget affect housing and real estate?
The budget provides tax deductions for housing insurance premiums, promotes residential projects under the National Housing Company, and allows NRNs to lease up to 25% of apartment units for long-term stays.
Are there any benefits for NRNs in this budget?
Yes, NRNs can invest in the secondary securities market, participate in real estate leasing, and benefit from simplified foreign investment repatriation procedures.
What infrastructure projects are prioritized?
Key projects include the Nagdhunga tunnel, East-West Highway four-laning, Kathmandu-Tarai Fast Track, and expansion of airports in Pokhara, Gautam Buddha, and Bharatpur.
How will the budget impact construction costs?
Reduced customs duties on raw materials, abolition of excise on 360 items, and simplified tax structure are expected to lower input costs for construction.
Sources
- (0:00) – Budget speech introduction
- (5:17) – Tax reforms: exemption limit doubled
- (9:02) – Customs duty simplification
- (21:09) – Infrastructure projects
- (30:42) – Housing and real estate provisions
- (39:00) – Energy sector targets
- (45:00) – Agriculture and irrigation
- (51:00) – Social security measures
For personalized consultation on how the budget affects your home construction plans, contact AS Design today. Our experts can help you navigate the new tax policies and design a home that meets your needs and budget.
