Kathmandu, September 16
The federal government transferred Rs 71.12 billion each to provincial and local governments through revenue sharing in the last fiscal year 2025/26.
According to the annual report of the National Natural Resources and Fiscal Commission, the federal government deposited Rs 474.15 billion collected from value-added tax (VAT) and excise duty on domestic production into the Federal Divisible Fund during the fiscal year 2025/26.
Under the revenue-sharing arrangement, 70 percent of the amount remains with the federal government, while 15 percent each is allocated to provincial and local governments.
The commission recommends how much each province and local government should receive based on factors including population and demographic indicators, geographical area, human development index, expenditure needs, revenue collection efforts, infrastructure development and special circumstances.
The commission submitted its annual report to President Ram Chandra Paudel on Wednesday.
Provinces fall short of vehicle tax targets
The report also shows that most provinces failed to meet their targets for vehicle tax collection in the last fiscal year.
Koshi Province had set a target of collecting Rs 3.06 billion in vehicle tax but collected only Rs 2.66 billion, or 86.96 percent of the target.
Madhesh Province had set a target of Rs 5 billion but collected Rs 4.14 billion, or 83.33 percent.
Bagmati Province collected Rs 13.16 billion against a target of Rs 13.75 billion.
Gandaki Province collected Rs 2 billion against a target of Rs 2.30 billion, while Lumbini collected Rs 3.36 billion against a target of Rs 4.83 billion.
Karnali was the only province to exceed its vehicle tax collection target, collecting Rs 275 million against a target of Rs 240 million.
Sudurpaschim collected Rs 726.3 million against a target of Rs 929.4 million.
According to the commission, provincial governments are required to distribute the vehicle tax revenue they collect among local governments within their respective provinces on a monthly basis.
The commission said Madhes and Karnali failed to distribute such revenue regularly during the last fiscal year.
It also found that none of the provinces complied with the requirement to distribute the collected vehicle tax within the same fiscal year and settle the accounts accordingly.
