The study aims to overview the Implementation of fiscal federalism in Nepal. Since fiscal federalism is new in Nepal, this study focuses on analyzing Nepal’s fiscal federalism model and intergovernmental fiscal transfers. The study explores the challenges and solutions for Nepal's successful adoption of fiscal federalism, focusing on optimizing sustainable development, and governance, and facilitating accurate policy decisions. It explores the model's features, including division of fiscal responsibilities, intergovernmental fiscal transfers, and potential challenges such as capacity constraints, coordination issues, revenue mobilization difficulties, and intergovernmental conflicts. The study proposes solutions to address these challenges, such as strengthening institutional capacity, improving intergovernmental coordination, and promoting transparency and accountability in fiscal management and national government expenditures. It also evaluates the model's impact on poverty reduction, infrastructure development, social service delivery, and environmental sustainability, and explores opportunities to align fiscal decentralization with broader development goals. The study also evaluates the availability, quality, and accessibility of fiscal and economic data in Nepal, and explores opportunities to strengthen the evidence-based policy-making process. By closely examining the connections between grant categories and spending by the central government, this study illuminates the complex relationship that influences Nepal's fiscal policy.