A peek into the Federal Budget 2020/21: MAJOR HIGHLIGHTS!!

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Image Source: The Kathmandu Post

Amid all the turbulence going on due to Covid-19 pandemic, the Government of Nepal released its much-awaited Federal Budget for FY 2020/2021 (2077/ 78) on May 28, 2020. There are a lot of provisions to support and promote entrepreneurship and local businesses, however there are definitely rooms for improvements.

Here we present to you a list of  some major highlights from the Federal Budget 2020/2021.

  • An amount of Rs. 50 Arab allocated for  providing credit to Small, Medium and Cottage industries and corona affected the tourism sector  at a rate of 5%. 
  • Provision of Refinancing loan of  Rs. 1 Kharab at 5% subsidy rate for Covid affected agriculture, SME and Cottage industries and manufacturing industries has been initiated.
  • Establishment of Rs.50 Crore fund to provide seed capital to startups and  entrepreneurs  with  innovative ideas  at 2% interest rate from BFIs.
  • Migrants interested in self agriculture can now establish business via Land Bank for which Rs. 50 crores has been allocated.
  • Farmers can now pay premiums for agricultural crop insurance after the production of crops minimizing the risk  involved to some extent and  encouraging  youths to engage in the agriculture sector.
  • Initiation of  “One Province One Tourist  Spot”  to promote the tourism industry that has been hit the hardest by Covid-19 pandemic.
  • Company registration and dissolution to be made easier along with establishment of women entrepreneurship 
  • National Payment gateway to be established which has been a major concern for majority of startups.
  • 20% tax exemption on the income of the tourism entrepreneurs involved in businesses related to air services, transportation, hotel, travel and trekking sector.
  • 75% exemption to the entrepreneurs doing business up to Rs 2 million, 50% to those doing business from Rs 2 million to Rs 5 million and 25% to those doing business from Rs 5 million to Rs 10 million.
  • Income tax exemption period extended by 3 years to 10  years for micro-enterprises run by women entrepreneurs.

These are some of the major highlights noted in the Federal Budget for FY 2020/21 that promotes entrepreneurship and SMEs.

Any additions and feedback on these highlights are highly welcomed.

All these highlights are based on The Federal Budget 2020/ 2021