Govt announces recovery package for businesses hit by Bhotekoshi floods

Kathmandu, September 3

The government has announced a business recovery package for businesses affected by the Bhotekoshi floods, offering customs duty waivers, tax relief and other concessions to help them resume operations.

A Cabinet meeting held on Thursday approved the package proposed by the Ministry of Finance.

Under the decision, businesses whose commercial vehicles or transport equipment were destroyed beyond repair or swept away by the flood can cancel their registration and re-import similar vehicles or transport equipment without paying customs duties and other charges at the customs point.

The same provision will apply to plants, machinery, equipment and other tools that were destroyed beyond repair by the flood.

Individuals or entities whose machinery and equipment were destroyed will be allowed to import replacement items of the same nature, up to the quantity that was destroyed, with a full waiver of customs duties.

The government has also introduced a provision for goods that had already cleared customs but were destroyed before reaching their destination due to the August 26 flood.

If the importer brings in goods of the same nature through any customs office within six months, the amount equivalent to the customs duty previously paid will be adjusted against the new import.

The package also provides businesses affected by the flood with additional time to file tax returns and pay taxes.

Taxpayers in the affected areas who are required to submit returns and pay taxes under the Value Added Tax Act, Income Tax Act, Excise Duty Act and the Financial Act during September and October will now be allowed to do so until November 11.

The government has also decided to simplify the process for adjusting VAT paid on commercial property damaged by the flood.

Businesses will be allowed to claim the full value of commercial property that was completely destroyed by the flood as a one-time expense for tax purposes.

For depreciable assets that suffered partial damage, repair and improvement expenses will not be subject to the usual limit under Section 16(2) of the Income Tax Act when determining taxable income for the 2026/27 fiscal year.

Individuals directly affected by the flood who file estimated income statements will also receive a full exemption from income tax for the 2025/26 fiscal year, according to the Finance Ministry.

The government has further decided to amend relevant laws, rules and guidelines so that contributions made by companies from their corporate social responsibility funds to the Prime Minister’s Disaster Relief Fund during the 2026/27 fiscal year can also be counted as CSR expenditure.

The Cabinet has also asked provincial and local governments to provide relief to directly affected people by offering concessions for a certain period on property taxes, business taxes, building permit fees and other local charges on damaged businesses and property.

The Finance Ministry said the package announced on Thursday is only the initial phase of support for flood-affected businesses. Additional measures are being prepared and will be announced later.

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