Economic and Policy Measures in Response to COVID-19


The Government of Nepal ("GON"), vide an Order dated March 23, 2020 enforced a countrywide lockdown from March 24, 2020 to contain the possible outspread of Coronavirus ("COVID-19") in Nepal. The lockdown has been extended most recently for the seventh time which shall be in force till June 14, 2020. The GON has also suspended all cross-border movements and international flights to Nepal till June 30, 2020.

While the GON eased the lockdown conditions by allowing some relaxation in economic activities such as agriculture and livestock services, health services, publication and transport services, development projects, public services such as banks and financial institutions ("BFIs"), insurance companies, securities business, cooperatives and industrial productions at a limited capacity, however, rest of other commercial activities remain suspended.

Amid the widespread cessation of economic activities due to the ongoing lockdown in the country and the global economic impact triggered by the pandemic, Nepal's growth in Fiscal Year 2076/77 (2019/20) decreased to 2.3 percent from 7.1 percent in Fiscal Year 2075/76(2018/19). This Briefing summarizes key economic and policy responses and other reliefs announced by the GON as of June 4, 2020 including policies proposed in the federal budget for Fiscal Year 2077/78 (2020/21).

Tax Measures

Extension of Deadline

The Inland Revenue Department, as per the decision of the GON dated April 26, 2020, made decision to extend the date to file tax returns and to deposit taxes under the provision of Income Tax Act 2058 (2002) ("ITA"), Value Added Tax Act 2052 ((996) ("VAT Act"), Excise Duty Act 2058 ("2002") ("Excise Act") and Customs Act 2064 (2007) ("Customs Act"), till June 21, 2020, details of which are as follows:

  • monthly VAT returns for the month of Falgun (February 13 - March 12, 2020), Chaitra (March 13 - April 12, 2020) and Baishakh (April 13 - May 13, 2020), bimonthly VAT returns of Magh (Jaunary 15 - February 12, 2020) - Falgun and Chaitra - Baishakh; and quarterly VAT returns of Mangshir - Falgun(November 17, 2019 - March 12, 2020) and the date of submission of VAT.
  • VAT refund application expiring during the lockdown period.
  • excise returns for the month of FalgunChaitra and Baishakh.
  • withholding tax returns and related TDS deposit for the month of FalgunChaitra and Baishakh.
  • educational service fees, telecommunication services fees for the month of FalgunChaitra and Baishakh.

Further, the due date to deposit the second installment of advance tax and to file the revised estimated tax returns for the month of Chaitra has been extended till June 29, 2020.

Tax Exemption

The GON has granted tax exemption, namely..........


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