Government misses first-quarter revenue targets amid economic slowdown

KATHMANDU, Oct 28: The government fell short of its first-quarter revenue collection targets from both domestic and external sources in the current fiscal year (FY) 2025/26.

According to records with the Financial Comptroller General Office (FCGO) and the Ministry of Finance (MoF), revenue mobilization through both the Inland Revenue Department (IRD) and the Department of Customs (DoC) remained below target during the period between mid-July and mid-October.

Data from the MoF show that the IRD collected only 81.41 percent of its targeted revenue by mid-October. Against a target of Rs 142 billion, the actual collection amounted to Rs 115.79 billion. The government has set an annual target of Rs 737 billion in domestic revenue for FY 2025/26.

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Customs revenue also underperformed, reaching Rs 118.52 billion against the target of Rs 143.76 billion, achieving 82.45 percent of the goal. The shortfall amounted to Rs 25.24 billion. However, customs revenue this year increased by 9.72 percent compared to the same period last fiscal year. The government aims to collect Rs 588.25 billion under this heading in the current FY.

In terms of income tax, the government managed to collect Rs 46.90 billion out of the target of Rs 71.22 billion, reflecting an achievement rate of 65.85 percent. Non-tax revenue also performed poorly, meeting only 41.45 percent of its quarterly target.

Overall, the government achieved 77.46 percent of its total revenue collection plan for the review period. It also received foreign grants worth just over Rs 2 billion against the planned Rs 53.44 billion for the year.

Officials at the MoF attributed the weak performance to the prolonged economic slowdown. They said the situation was further aggravated during the review period by the Gen Z movement and floods of October 3–4, which disrupted trade and economic activities.

In FY 2024/25, the government had collected Rs 1.178 trillion in revenue against a target of Rs 1.419 trillion, achieving 83.07 percent of the annual goal.