VAT registration in Nepal: a step-by-step guide

VAT registration in Nepal is triggered by turnover, not by choice. If your annual taxable turnover crosses the registration threshold, you are required to register with the Inland Revenue Department and start charging VAT on taxable supplies.

The registration process itself is now largely digital. You apply through the IRD's online system with your PAN details, business documentation, and supporting identity records. The key to a smooth application is getting the business description and expected turnover figures right the first time.

After registration, three obligations begin immediately: charge VAT at the applicable rate on taxable supplies, issue tax invoices in the prescribed format, and maintain records that reconcile to your VAT returns. Most first-time penalties come from invoice format errors, not from missing tax.

Returns are filed electronically — usually monthly — and VAT collected must be remitted by the deadline. Input VAT on business purchases can be offset, which is why many businesses register voluntarily even below the threshold to recover input tax on capital expenditure.

A practical note: keep your PAN and VAT registrations aligned with your actual business activity. If you add a new line of business, check whether it changes your VAT position before you start trading under the new activity.

The rules change periodically — thresholds and rates included. We maintain a current VAT rate chart and registration guide that we update as the IRD publishes changes.