5% VAT Comes Into Effect on Pathao, inDrive, Yango, and Other Ride-Sharing Services

 

Kathmandu. A 5 percent Value Added Tax (VAT) has come into effect on ride-sharing services from Friday under the provisions of the Economic Act, 2026.

The new tax applies to ride-sharing and delivery services operated through digital platforms such as Pathao, inDrive, Yango, and other similar service providers.

The Inland Revenue Department (IRD) has directed ride-sharing platforms to begin collecting the VAT from users starting Friday. According to the department's notice, the platforms must charge an additional 5 percent VAT on fares collected for transportation and delivery services.

The collected VAT, along with transaction details, must be deposited with the concerned Inland Revenue Office by the 25th day of the month following the end of each tax period, in accordance with the department's instructions.

The department clarified that individual riders and drivers are not required to register separately for VAT. However, they must have a Permanent Account Number (PAN).

The government had announced in the budget for the fiscal year 2026/27 that ride-sharing services would be brought under the VAT system. With the implementation of the relevant provisions of the Economic Act, the tax has now officially come into force.

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