This paper examines the government’s new proposal to amend Forest Act 1993 that seeks to redefine community rights and reassert government control in the management of community forests. We analyse the content of the amendment proposal as well as the reasons given for enacting such changes. Drawing on the experience of community forestry in Nepal, as well as widely accepted principles of community based natural resource management, we assess the assumptions behind the proposed amendment and also predict potential consequences of the changes. We conclude that the proposed changes curtail rights given to the community under community forestry, reduce the autonomy of local communities and in due course negatively affect the incentive to conserve and manage community forests. The proposed increase in roles of the forest officials in community forest management will expand bureaucratic control over community processes, and cultivates upward accountability in forest management groups. The proposal takes the wrong assumption that increased techno-bureaucratic control will fix the emerging cases of over-harvesting of timber in community forests. Overall, the proposed changes are against the action verified lessons from Nepal and abroad that localised control and management of natural resources is more effective and efficient than government control. The proposal however does raise some important points that need to be considered – such as tax, timber marketing and the like, which requires more informed analysis and stakeholder debate before formulating such a legal amendment proposal. Based on good practices from Nepal and beyond, we have also proposed alternatives to address emerging challenges and move towards more democratic and fair governance of forest in Nepal.