Nepal Unveils Rs 2.12 Trillion Budget, Raises excise duties on Alcohol, Tobacco and Junk Food

Kathmandu-The government has unveiled a Rs 2,124.34 billion budget for the fiscal year 2026/27, introducing significant changes to excise duty rates through the Financial Bill 2083.Presenting the budget in Parliament, Finance Minister Dr. Swarnim Wagle announced that excise duties on 360 different items have been abolished. However, taxes on alcohol, tobacco products, junk food, soft drinks, energy drinks, and several processed food items have been increased.

Under the revised tax structure, the excise duty on jaggery and molasses has been increased from Rs 138 to Rs 140 per quintal, while duty on sugarcane by-products has risen from Rs 110 to Rs 115 per quintal.Excise duty on products such as chewing gum, cocoa powder, chocolate, and other cocoa-based items has been reduced from Rs 15 to Rs 12 per kilogram. In contrast, excise duty on pasta products, including spaghetti and macaroni, has increased from Rs 20 to Rs 35 per kilogram.The government has also raised taxes on bakery and confectionery products, including bread, biscuits, cakes, cookies, pastries, waffles, and wafers.Excise duty on popular snack foods such as Kurkure, chips, cheese balls, and similar packaged snacks has increased sharply from Rs 20 to Rs 75 per kilogram. Similarly, the duty on potato chips has been raised from Rs 18 to Rs 30 per kilogram.

Fruit juices, including orange, pineapple, grape, apple, tomato, and mango juice, will now attract an excise duty of Rs 14 per litre, up from Rs 13.50 per litre.The excise duty on tobacco-free pan masala has increased from Rs 875 to Rs 1,150 per kilogram, while flavored tobacco-free betel nut products will now be taxed at Rs 500 per kilogram, up from Rs 375.Non-alcoholic beer has seen one of the sharpest increases, with excise duty doubling from Rs 45 to Rs 90 per litre. Excise duty on energy drinks has more than doubled, rising from Rs 52 to Rs 120 per litre. Likewise, soft drinks will now attract Rs 60 per litre in excise duty, compared to the previous Rs 25.

Alcoholic beverages have also been subjected to higher taxes. Excise duty on beer containing up to 5 percent alcohol has increased from Rs 240 to Rs 255 per litre. Wine containing between 12 and 17 percent alcohol will now be taxed at Rs 490 per litre, up from Rs 460, while wine containing more than 17 percent alcohol will face an excise duty of Rs 570 per litre, up from Rs 535.Country beer (Chhyang) will now attract Rs 50 per litre in excise duty, compared to Rs 48 previously. However, excise duty on products such as champagne, sherry, mead, perry, and cider has been reduced from Rs 516 to Rs 490 per litre.

The government has also increased taxes on tobacco products. Excise duty on cigars and cigarillos has risen from Rs 31 to Rs 35 per stick. Duties on both filtered and non-filtered cigarettes have also been increased, with taxes on filtered cigarettes of up to 70 mm length rising from Rs 1,792 to Rs 1,845 per thousand sticks.The government said the revised tax measures are aimed at enhancing revenue collection while discouraging the consumption of products considered harmful to public health.