Excise duty on smartphones decreases by 50% and Samsung was the first one to react

Mobile phones are usually expensive in Nepal. It can clearly be noticed when the international price and the price of the same device in Nepal are compared. The main reason for that was the inclusion of 13% VAT on every mobile phone imported to Nepal. The government further imposed an additional 5% excise duty last year. So the importers had to pay quite a lot of taxes to the government. Since those tax amounts are levied on the selling price of smartphones, it was enough to create a steep increase in the price. But in the recent Annual Budget Speech for fiscal year 2076/77, Finance Minister Dr. Yubaraj Khatiwada announced to decrease the excise duty by 50%. That means for all the upcoming phones imported to Nepal, the importers/NDs have to pay just 2.5% excise duty. The VAT, however, still remains at 13%. As soon as the government announced that, Samsung abruptly stepped up and slashed the prices of its various mobile devices.

The Scenario

Previously, the government was levying only 13% VAT on every mobile device that supported cellular connectivity and wireless telecommunication. And at the end of the year, the government used to offer a 40% rebate at the end of the fiscal year. So the importers or the National Distributors (NDs) have to pay a net of 7.8% on the taxes. But last year, the Finance Minister Khatiwada announced to stop providing 40% rebate. And declared to further impose an excise duty of 5%. That makes a grand total of 18.65% on the taxes. A sudden rise from 7.8% to 18.65% on the tax created quite a surge in the price. So the importers and NDs were obliged to raise the prices on mobile phones.

Due to such a steep increase in price, most of the users were attracted to the gray market, which offers the same product for a lesser price. And that could be the reason why the smartphone import through the authorized channels decreased by 50% in the fiscal year 2075/76. So to lure customers into buying through the authorized channels and to ease the importers on the taxes, the government decide to slash the excise duty by 50% for the fiscal year 2076/77. This resulted in a reduction in the tax rates from 18.65% down to 15.83%.

The Aftermath

At a time, where the implementation of such announcements take place at a languid pace, Samsung strode up and slashed the prices on its various smartphones overnight. And Samsung was the first one to do so. Since the capable smartphones are really expensive these days, the gesture shown by Samsung to ease customers’ inconvenience (in financial terms) is really laudable. We hope, more of the smartphone brands will also follow Samsung’s footsteps and decrease the price of the mobile phones in their lineup.

And by the way, here is the revised price list of various Samsung devices before and after the price drop.