Govt announces waivers on customs duty, loan interest and taxes for flood-hit businesses

 Cabinet approves business recovery package

 

Kathmandu, Sept. 3

The government has announced a business recovery package, for the businesses and industries affected by the Bhotekoshi flood, with a full custom duty waiver for the import replacements of the plants or equipment that were destroyed beyond repair.

Such waiver will be applied for the machines and equipment of the same type and up to the quantity destroyed.

As per the full text of the package endorsed by the Cabinet on Thursday, owners of commercial vehicles and means of transport damaged beyond repair or lost in the floods will be allowed to cancel their registration and re-import similar vehicles without paying customs duties.

Similarly, importers whose goods were destroyed by the August 26 floods before reaching their destination will be allowed to adjust the customs duties they had already paid. The facility will apply if replacement goods of the same type are imported through any customs office within six months, read the text shared by the Ministry of Finance (MoF). The Department of Customs will make arrangements to implement these provisions.

Likewise, the government has announced measures to speed up insurance claim assessments and settlements for businesses and individuals affected by the floods.

Under the package, the National Insurance Authority (NIA) is directed to make arrangements to deploy surveyors through a simplified procedure to expedite the assessment of flood-related insurance claims.

"Insured individuals and businesses will also be eligible for advance payments of up to 50 per cent of their claims based on preliminary assessment reports. Reinsurers will similarly be required to provide insurers with advance payments of up to 50 per cent," according to the package.

Likewise, insurers have also been directed to promptly introduce a simplified procedure for settling flood-related insurance claims to make the process faster and more efficient.

 

Loan and interest relief

The government has announced a series of loan and interest relief measures for borrowers affected by the Bhotekoshi floods, aimed at supporting business recovery and ensuring continuity of economic activities. These measures will be arranged and implemented by the Nepal Rastra Bank (NRB).

As per the package, Banks and Financial Institutions (BFIs) can restructure or reschedule the loan or extend the repayment period for principal and interest for the borrowers whose goods being imported through the Rasuwagadhi Customs had been damaged.

However, this facility will be provided on the basis of the nature of the business and goods, the extent of damage and insurance claims, among other factors.

Similarly, flood-affected borrowers will also be eligible for a one-off restructuring or rescheduling of loans taken from the BFIs, along with an extension of the repayment period for principal and interest.

"Banks will also provide loans to businesses seeking to replace commercial vehicles, transport equipment, machinery or other equipment damaged by the floods. Such loans will be available at the bank's base rate plus the prescribed minimum premium," said the government while also pledging to review the applicable loan-to-value ratio of such lending.

For one year, flood-affected borrowers will be charged the lower of either the bank's base rate plus a 0.5 percentage-point premium or the rate resulting from adding the existing premium to the bank's base rate.

The central bank will also allow banks to provide additional loans, at borrowers' request, to support the recovery of industries and businesses or protect employment. Such loans may be paid directly into the account of the relevant third party.

 

Tax waivers for businesses

Meanwhile, the government also announced a range of tax relief measures for taxpayers affected by the Bhotekoshi floods, including an extension of tax filing and payment deadlines and simplified procedures for claiming VAT on damaged business assets.

The Inland Revenue Department (IRD) is directed to extend the deadline for the submission of VAT, income tax, and excise duty for flood-affected businesses and individuals until November 11.

It will also simplify the procedure for adjusting VAT claims on business assets damaged by the floods.

Likewise, businesses will be allowed to deduct the value of assets completely destroyed by the floods as a lump-sum expense for tax purposes while for partially damaged depreciable assets, the limit on deductions for repair and improvement costs will not apply when calculating taxable income for FY 2025/26.

Individuals directly affected by the floods will get full exemption from income tax for this year. The government said that it will further request provincial and local governments to provide concessions for a specified period on property tax, business tax, building plan approval fees and other local charges related to flood-damaged businesses and property.

In addition, contributions made by business institutions to the Prime Minister’s Disaster Relief Fund (PMDRF) in fiscal year 2026/27 from the funds set aside for Corporate Social Responsibility (CSR) will be recognised as CSR expenditure.

The relevant authorities have been directed to amend the applicable laws, regulations and guidelines to facilitate this arrangement.

Published in The Rising Nepal on 4 September 2026.