Supreme Court Halts Implementation of VAT on Air Tickets

The Supreme Court of Nepal issued an interlocutory order on Sunday, directing the government to refrain from implementing the value-added tax (VAT) on air tickets. The order came in response to a writ petition filed by the Nepal Association of Tours and Travels Agent (NATTA).

Justice Anil Kumar Singha, a single bench at the Supreme Court, issued the interlocutory order and summoned representatives from the government for further discussion on the matter.

The writ petition, filed by NATTA on July 17, sought a mandamus with certiorari against the government’s decision to impose VAT on air tickets. The imposition of VAT on air tickets was announced by Finance Minister Dr. Prakash Sharan Mahat during the budget presentation for the current fiscal year.

Tourism entrepreneurs expressed their concerns regarding the impact of VAT on air tickets, emphasizing that it would not be favorable for their businesses. They argued that the additional tax burden would adversely affect the tourism industry, affecting both travel companies and passengers alike.

With the issuance of the interlocutory order by the Supreme Court, the implementation of VAT on air tickets has been temporarily halted pending further discussions and a comprehensive examination of the matter.

This decision is expected to provide a significant relief to the travel and tourism sector, enabling them to continue their operations without the immediate burden of VAT on air tickets until a final verdict is reached. The government will now have to engage in discussions with the concerned parties, including NATTA, to address the concerns raised and find a mutually acceptable resolution to the issue.