Finance Minister Clarifies Tax Relief and Private School Tax Policy

Finance Minister Dr. Swarnim Wagle has clarified the government's policy on private school taxation and personal tax relief while responding to questions raised in the House of Representatives on Friday.

He stated that the education tax does not apply to community schools. Currently, a 3 percent tax has been imposed on private schools. However, parents can claim a tax deduction of up to Rs. 25,000 per year for expenses incurred on their children's education in private schools.

According to the minister, Nepali citizens earning up to Rs. 1 million annually are exempt from income tax. He described this as a “revolutionary step” that has provided significant savings to millions of taxpayers.

Wagle further explained that the tax deduction on private school expenses is aimed at supporting middle- and upper-middle-income families. Under the provision, taxpayers can deduct either Rs. 25,000 or 25 percent of their education expenses, whichever amount is lower.

He argued that while some individuals may pay a small additional amount in tax, the overall benefits and exemptions provided are much larger. The minister said these measures were introduced after careful consideration and are intended to promote the long-term formalization of the economy and improve the country's tax system.

According to Wagle, the government's broader goal is to strengthen economic transparency and create a more organized and sustainable tax structure in the years ahead.