The Rs 30 billion tax bill behind Nepal's internet price hike

A friend in Lalitpur forwarded me his internet bill last week with one line: "What is this maintenance thing?" The package price was split down the middle. Half was labelled internet service. The other half was labelled support and maintenance, and the 10% telecom service charge sat only on the first half.

That split is now a Rs 30 arba problem. The Supreme Court has ruled that the tax office was right to charge the ISPs on the whole bill. WorldLink's CEO says prices will rise at least 50% because of it. The arithmetic of the tax itself says something much smaller, and the gap between those two numbers is the whole story.

How a bill became half "maintenance"

Your internet bill carries two taxes. VAT is 13%. TSC is 10% of the charge for telephone, internet and mobile service, collected by the provider and passed to the government. The FY 2082/83 tax summary from Baker Tilly Nepal lists the carve-out that made this case: TSC does not apply to the repair and maintenance portion of a fixed bandwidth charge, up to 50%.

The 50% ceiling comes from the Telecommunications Regulations, 2054 (Ninth Amendment). ISPs read it as a default. According to Nepal Press, a Rs 1,000 package showed Rs 500 as internet and Rs 500 as maintenance. Tax auditors found that actual maintenance spending ran to only about 5% of annual revenue.

The state-owned operator did it differently:

The same report puts the revenue at stake at more than Rs 200 crore a year. DishHome alone was assessed Rs 62.02 crore in TSC plus Rs 4.83 crore in VAT for FY 2077/78 to 2081/82.

What the Supreme Court actually decided

The Large Taxpayers Office assessed the ISPs for the unpaid TSC, plus additional charges and penalties, for FY 2075/76 through 2081/82. Four companies went to court: Dish Media Network (DishHome), Classic Tech, Subisu Cablenet and Vianet. On Asoj 6, 2083 the Supreme Court dismissed their writ, clearing the way for collection. Nepal Press puts the assessed total at "झण्डै ३० अर्ब रूपैयाँ", nearly Rs 30 arba. Other outlets only say "billions", so treat the exact figure as one outlet's number.

The ISPs had reason to expect a different result. Six months earlier, on 22 March 2026, the Office of the Attorney General said that leaving the maintenance fee out of TSC, up to 50% under Rule 15(j), was appropriate under existing policy and the Finance Act. The court went the other way. WorldLink was not among the four petitioners, but its CEO has spoken for the industry since the verdict.

The arithmetic: what full TSC adds to a bill

This is where the headline number and the tax law part ways. Here is the TSC on a Rs 1,000 pre-tax package under each split. These are my calculations at the 10% rate, before VAT:

Even in the worst case, where TSC lands on every rupee, the tax adds Rs 50 per Rs 1,000. That is a 5% price increase, not 50%.

A second check points the same way. Rs 200 crore a year in lost revenue, spread across the 31.52 lakh fixed broadband connections in NTA's Asar 2083 data, comes to about Rs 635 a connection a year, or roughly Rs 53 a month. My division, using the reported numbers. It lines up with the table.

So where does "50 to 100%" come from?

From the past, not the future. WorldLink CEO Keshav Nepal told Online Khabar that fixed broadband prices would rise at least 50% and could reach 100%, depending on how flexible the government is. His argument: the TSC was collected from customers and paid to the government, so ISPs cannot absorb it. The ISPs now face seven fiscal years of assessed tax plus penalties.

Here is what Rs 30 arba looks like per connection. This is rough arithmetic only, since the assessment's split between companies has not been published:

The four-company figure uses NTA's subscriber counts: DishHome 3.74 lakh, Vianet 3.73 lakh, Classic Tech 2.92 lakh and Subisu 2.68 lakh. At about Rs 905 to Rs 951 a month for a 50 Mbps entry plan today, Rs 22,950 is roughly two years of internet. Recovering that from customers in any reasonable time frame would take a hike far larger than the 5% the tax change itself justifies.

On a WorldLink entry plan at Rs 950, a 50% rise would make it Rs 1,425, and a 100% rise Rs 1,900 (simple multiplication on the current price).

Who gets to decide

The Nepal Telecommunications Authority, and it has said so. After the verdict, NTA warned against misreading the ruling and said any tariff change needs approval under Section 42 of the Telecommunications Act, 2053, Nepal Press reported. In October its spokesperson Meen Prasad Aryal repeated that no provider can raise charges arbitrarily.

NTA has used this language before. In May 2023, when several ISPs quietly raised base prices, it warned that ISPs agreeing among themselves to raise fees would breach both Section 42 and the Competition Promotion and Market Protection Act, 2063.

The two sides of the argument, as reported:

• ISPAN (the ISP association) president Sudhir Parajuli says the accumulated dues are too heavy a burden to pay at once without recovering them from consumers.
• Consumer rights activist Jyoti Baniya calls billing today's subscribers for past commercial obligations unfortunate and against consumer rights. Another activist, Bheshraj Luitel, has filed complaints with the government and NTA asking that back-taxes, real maintenance costs and current approved tariffs be assessed separately before any change.

What this means for your bill this month

Nothing has changed because of the court case yet. The change that did happen on Asoj 19 is different: ISPs stopped selling plans below 50 Mbps. That is covered in the companion post on what changed in your WiFi bill.

Three things are worth doing now:

1. Read your bill's split. If half of it says maintenance, you are on the structure this case was about. Check the next bill to see whether the split changes.
2. Ask for a proper VAT bill. ISPAN's own October statement told customers to ask for one. A VAT bill is also an entry in Nepal's bill lottery.
3. Compare any new price against the NTA-approved tariff. ISPAN has told members to publish their approved tariffs on their websites. A price above the approved tariff is a complaint, not a fact of life.

Internet is now as fixed a household cost as electricity, so it belongs next to the NEA tariff in the fixed-cost part of your budget, and it is exactly the kind of bill that drifts upward unnoticed, as in the hidden subscriptions audit.

What you actually need to know

The court case is about tax ISPs should have paid since 2075, assessed at nearly Rs 30 arba. Applying the 10% TSC to the full bill from now on adds about 5% to the price. The 50 to 100% hike being talked about is a proposal to make today's customers pay for the back-dues, and NTA has said nothing moves without its approval.

The number to watch is the next NTA-approved tariff. Until it exists, a 50% hike is a threat, not a price.

Questions, corrections, or a bill that already changed? Write to parjanya57@gmail.com.

This post is part of the Nepal Money Basics guide — the earn-more-and-reconcile-the-tax section.