Himal Press 
KATHMANDU: The government has announced a package of tax exemptions, customs waivers, loan concessions and faster insurance payouts for businesses and economic activities affected by the devastating Bhotekoshi floods.
The cabinet meeting held on Thursday, based on a proposal from the Ministry of Finance, approved the first phase of relief measures to help industries, traders, business establishments and other economic activities recover from the floods that struck the Bhotekoshi River on August 26.
Customs relief
Under the package, the Department of Customs will provide full exemption from customs duties and other applicable charges on the re-import of commercial vehicles that were destroyed beyond repair or swept away by the flood.
Similarly, individuals or entities whose plants, machinery, equipment and other industrial assets were destroyed beyond repair will be allowed to import replacements of the same nature, up to the quantity of the assets destroyed, without paying customs duties.
If goods were destroyed in the August 26 flood after customs clearance, the government will credit paid duties toward future imports of the same nature made through any customs office within six months.
Tax relief
The deadline for taxpayers in flood-affected areas to submit tax returns and pay taxes for Bhadra (mid-Aug to mid-Sept) and Ashwin (mid-Sept to mid-Oct) has been extended till November 11.
Likewise, the government has said that it will simplify the process for adjusting VAT paid on goods damaged by the floods.
Businesses whose assets were destroyed will be allowed to claim the entire value of the destroyed assets as an expense for tax purposes. For partially damaged depreciable assets, restrictions on repair and improvement expenses under the Income Tax Act will not apply when calculating taxable income for fiscal year 2026/27.
Similarly, individuals directly affected by the floods who file presumptive income tax returns (D01) will receive a full exemption from income tax for fiscal year 2025/26.
The government has also asked provincial and local governments to provide relief on property tax, business tax, building permit fees and other local charges for a specified period for flood-affected individuals and businesses.
Loan restructuring
For goods imported through the Rasuwa customs point that were damaged in the flood, banks and financial institutions will be allowed to restructure or reschedule related loans and extend repayment deadlines for principal and interest, depending on the nature and extent of damage, insurance claims and other relevant factors.
Likewise, flood-affected borrowers will also be allowed a one-time loan restructuring or rescheduling, including an extension of the repayment period for principal and interest.
Businesses seeking to replace commercial vehicles, machinery or other equipment damaged in the flood will be eligible for loans to purchase replacements. The NRB will also review the applicable loan-to-value ratio for such lending.
Similarly, the applicable interest rate for flood-hit borrowers will be a premium of 0.5 percentage points added to the bank’s base rate, or the existing premium rate added to the base rate, whichever is lower. The rate will be applicable for one year.
Faster insurance payouts
According to the finance ministry, the Nepal Insurance Authority (NIA) will facilitate faster assessment and settlement of insurance claims arising from the floods.
Insurers will be allowed to deploy surveyors through a simplified process to expedite damage assessments. Based on preliminary assessment reports, insurers will be required to provide policyholders with advance payments of up to 50% of their claims. Similarly, reinsurers will be allowed to provide insurers with advance claim payments of up to 50%.
Insurance companies will also be required to formulate and implement simplified procedures for the prompt settlement of flood-related claims.
