Finance Bill 2083

With the formulation of Annual Budget  for fiscal year 2083/84 drafted by Honorary Finance Minister , Mr. Swarnim Wagle, finance bill 2083 has been enacted which has revised existing income tax act, rules, VAT Act & rules, Excise Act & rules.

Public Notice Regarding the Applicability of Value Added Tax (VAT) on Diamonds

The Department's attention has been drawn to confusion and misunderstanding among the general public, consumers, and some businesspersons regarding whether diamonds are exempt from VAT. This confusion has arisen because the amendment made by the Finance Bill, 2083 (2026/27) to Schedule 1 of the Value Added Tax Act, 2052 (1996) includes, under Group 11 – Other Goods and Services, subsection (A) Goods, the phrase:

"71.02 Diamonds, whether or not worked, but not mounted or set."

According to the VAT Act, 2052, VAT exemption applies only to those goods and services that fall under the specific sub-headings (eight-digit codes) included within the listed headings (four-digit codes) in Schedule 1.

Since no specific sub-heading (eight-digit code) has been included under Heading 71.02 (Diamonds, whether or not worked, but not mounted or set), merely mentioning the heading does not grant VAT exemption.

Therefore, to avoid any misunderstanding, all concerned parties are hereby informed that diamonds are subject to Value Added Tax (VAT) and are not VAT-exempt.

Approved Forms for the Implementation of Tax Exemptions and Concessions Granted by the Finance Bill, 2083

Approved Forms from IRD