Kathmandu, June 19: Kathmandu Metropolitan City (KMC) has unveiled a budget of Rs. 25.88 billion for the upcoming fiscal year 2026/27, with a strong focus on infrastructure development, waste management, education reform, good governance, employment generation, and heritage conservation.
Acting Mayor of Kathmandu Metropolitan City Sunita Dangol presented the budget at the 19th session of the Municipal Assembly on Thursday. The proposed budget amounts to Rs. 25.88 billion, including Rs. 25.13 billion to be backed through the municipal consolidated fund and Rs. 750 million from other external liabilities.
The metropolitan city estimates that Rs. 25.13 billion will be deposited into the consolidated fund during the upcoming fiscal year. Of the total amount, Rs. 20.18 billion is expected to come from the KMC’s internal revenue and bank balance, while Rs. 4.93 billion will be received as conditional grants, fiscal equalisation grants, and revenue-sharing transfers from the federal and provincial governments. An additional Rs. 10 million is expected to be mobilised through public participation.
Sector-wise, the budget allocates Rs. 15.31 billion (61 per cent) for infrastructure development, making it the largest area of expenditure. The social development sector has been allocated Rs. 2.42 billion (9.6 per cent), while Rs. 2.13 billion (8.5 per cent) has been earmarked for good governance and interrelated sectors. The KMC has allocated budget of Rs. 4.71 billion (18.8 per cent) for office operation and administrative sector while Rs. 541.8 million (2.1 per cent) has been proposed for economic development.
For the upcoming fiscal year, the KMC has allocated Rs. 1.22 billion for environmental management, Rs. 1.71 billion for education, Rs. 2.53 billion for heritage conservation, Rs. 490 million for social development, Rs. 5.41 billion for infrastructure development, Rs. 430 million for the promotion of greenery, Rs. 410 million for information technology, Rs. 700 million for health services, and Rs. 360 million for disaster management. Acting Mayor Dangol said that the metropolitan city has given high priority to infrastructure projects across its jurisdiction in the coming fiscal year.
The budget also prioritises reducing pollution, improving public transportation, and conserving historical, religious, and archaeological heritage sites within the metropolitan area. The KMC has allocated budget to implement an alternative bag campaign aimed at making Kathmandu free of plastic bags.
A youth-focused self-employment programme will be launched in the upcoming fiscal year, for which Rs. 100 million has been allocated. Under the multi-year plan for the construction of the Metropolitan Hospital, Rs. 40 million has been allocated for the first year of the project. An allocation of Rs. 10 million has been made for pneumonia vaccination for senior citizens, while additional budget has been earmarked to implement special programmes for the diagnosis of serious illnesses such as cancer.
Tax reform plans
The KMC has introduced several tax incentives and reforms to expand the tax base and encourage voluntary tax compliance. Taxpayers who are currently outside the tax net will receive a 10 per cent discount if they register and pay their taxes by mid-October 2026.
Similarly, taxpayers who clear their outstanding tax dues by mid-October 2026 will receive a full waiver of penalties. The budget also provides tax relief for residential property owners. Rental income from residential properties earning less than Rs. 240,000 annually will continue to be taxed at 5 per cent. For residential properties generating annual rental income of more than Rs. 240,000, the rental tax rate has been reduced from 10 per cent to 7 per cent. #nepal
