Topic hub · Tax
Tax in Nepal: assessments, VAT, TDS and planning
Nepal's tax system is self-assessed, deadline-driven and enforced by the Inland Revenue Department. This hub gathers our guides for business owners and our technical analysis for professionals, from a first IRD notice to VAT refunds, TDS and transfer pricing.
Start here if you are a business owner
Read the guides first: they explain what a notice or deadline means, what to prepare and what it usually costs to ignore it.
Technical analysis for professionals
The technical articles go to section level: how assessments are built, how review and the Revenue Tribunal work, and where common positions fail.
Keep the calendar and calculators close
Most penalties come from a missed date or a wrong rate, so the tax calendar and the calculators sit beside every guide.
Guides for business owners
Plain language: what it means, what to do and what to prepare.
- For business owners · 11 Nov 2026Hospitals and Clinics in Nepal: Finance, Tax and Controls That Protect MarginA hospital has many revenue streams, many people paid on commission and heavy inventory. Leakage in billing, doctor payments and pharmacy stock is where margin disappears.
- For business owners · 9 Nov 2026Running a Manpower Agency in Nepal: Licence, Deposits, Accounts and TaxA foreign employment agency is a regulated business: a licence, a security deposit, client money and worker complaints. The accounts have to separate the agency's income from money held for others.
- For business owners · 9 Nov 2026Cooperatives in Nepal: Tax, Accounts and Governance That Keep Members' Money SafeSavings and credit cooperatives hold members' deposits. Rising scrutiny of governance, tax and lending quality means the books must be able to answer questions from members, regulators and the tax office.
- For business owners · 8 Nov 2026Running an Online Business in Nepal: E-Commerce Registration, VAT and TaxSelling online in Nepal now needs registration under the E-Commerce Act as well as the usual company, PAN and VAT steps. The accounts side, from cash-on-delivery to returns, is where most online sellers lose money.
- For business owners · 7 Nov 2026Waiving Tax Penalties and Interest in Nepal: The 2083 Amnesty and Section 117 FeesLate returns attract a fee and interest at 15% a year on unpaid tax. The Finance Act 2083 opened a waiver window to the end of Poush 2083. Who can use it and what to prepare.
- For business owners · 6 Nov 2026Stock Found Short at a Surprise Inspection: Why the Court Called It Unbilled SalesAn inspector counted a Biratnagar clothing trader's stock without notice, compared it with the books, and treated a gap of NPR 78,49,302.56 as sales made without invoices. The Supreme Court upheld the VAT and a penalty equal to it. Here is how the count worked, why the Court rejected a NPR 5,000 penalty argument, and what a trader should have in hand before the knock on the door.
- For business owners · 6 Nov 2026Staff Meals and Entertainment Spending: Why the Court Would Not Let VAT Follow the ExpenseA hotel's staff meals and its entertainment spending were hit with a VAT assessment and a penalty. The Supreme Court sided with the hotel, but on narrower ground than a headline suggests: the assessment did not state its legal basis, and an expense is not a sale. Here is what the Court decided, what it deliberately left open, and how to prepare a file on mixed-use costs.
- For business owners · 6 Nov 2026The Invoice Is Not the Proof: What the Supreme Court Required Before a VAT Credit StoodA Nepali supermarket chain held invoices, ledgers and filed returns, and still lost a VAT assessment of NPR 22,79,08,198. The Supreme Court held that the buyer must prove the purchase and the payment behind every credit it claims. Here is what the Court required, what it left open, and how to build a purchase file that survives the question.
- For business owners · 6 Nov 2026You Paid by Cheque and the Supplier's Bank Statement Shows the Deposit. The Court Still Disallowed the VAT CreditA Kathmandu firm paid its cement supplier by cheque and produced the supplier's bank statement. The Supreme Court still upheld the disallowance of its VAT credit, on the same day and before the same bench as the Bhatbhateni case. Here is what the Court said a bank statement has to do before it counts, and how to build an invoice file that meets it.
- For business owners · 6 Nov 2026Four Years to Assess VAT: How the Supreme Court Counted the Last DayThe VAT Act gives the tax officer four years to assess a return, after which the return is deemed accepted. A food manufacturer argued that an assessment made exactly four years after it filed was out of time. The Supreme Court disagreed. Here is how the Court counted the years, what that means for old VAT periods, and how to keep a limitation register that is actually right.
- For business owners · 6 Nov 2026SSF and Labour Compliance for Employers in Nepal: Contributions, Gratuity and the Labour AuditEmployers must enrol staff in the Social Security Fund, deposit contributions monthly, accrue gratuity and keep the records an annual labour audit will test. Gaps are cheap to fix early and expensive later.
- For business owners · 6 Nov 2026A Tax Tribunal Decision Set Aside Because the Member's Appointment Notice Came Too LateA flour mill lost before the Revenue Tribunal in Biratnagar. The Supreme Court never reached the tax question. It set the decision aside because the notice appointing one of the three-person bench was published after the decision was given. Here is the sequence of dates, what the Court accepted and rejected, and what a taxpayer should check about any tribunal that hears its appeal.
- For business owners · 6 Nov 2026Undistributed Bonus and Last Year's Tax Credit: A Split Decision for an InsurerAn insurer set aside a bonus for its staff, distributed most of it, and could not distribute the rest in the time the Bonus Act allows. The tax office added the rest back to income. The Supreme Court reversed that, but upheld the refusal of a separate claim to adjust earlier years' advance tax. Here is what each half of the decision means for a company that provides for bonus, and why the printed figures need a careful read.
- For business owners · 6 Nov 2026Fitting Out a Rented Branch: Which Depreciation Class Applies? A Supreme Court AnswerA bank spent money fitting out premises it did not own and claimed depreciation over the lease. The tax office pushed the same assets into a different class and allowed a fraction of the claim. The Supreme Court sided with the bank, and the reasoning rests on the IRD's own directive. Here is what the decision says, what it does not say, and how a company with rented premises should keep its records.
- For business owners · 6 Nov 2026Damaged and Returned Goods: Why a Sales Write-Off Needs a Paper TrailA noodle manufacturer reduced its sales by NPR 1,26,16,853 for goods it said were returned or damaged. The tax office added the amount back to profit. The Supreme Court reversed the Revenue Tribunal and upheld the office, because the proof the law asks for was missing. The same judgment also shows what pre-operation interest the company could still deduct.
- For business owners · 6 Nov 2026Bills Without Buyers' Proof: How a Company Lost Two Income Tax Years on Purchase InvoicesA company claimed large purchase expenses on invoices from suppliers it could not trace, paid by cheques it could not link to the sellers, and kept no stock book. The Supreme Court upheld assessments that more than doubled, then tripled, its taxable income. Here is what the judgments say about burden of proof, and what records would have changed the answer.
- For business owners · 4 Nov 2026Capital Gains Tax on Shares in Nepal: What the Finance Bill, 2083 Reportedly ChangesMedia reports on the Finance Bill, 2083 point to higher capital gains tax on share sales in Nepal, 10% within one year and 7.5% after, up from 7.5% and 5%. The Bill's enactment was not confirmed at the time of writing. Here is what to do with a reported rate change before it is law.
- For business owners · 2 Nov 2026Import Freight Carries VAT. Export Freight Does Not. The Split Happens at the Customs Point.A forwarder raises one door-to-door freight invoice and prices import and export the same way. The VAT on Freight Services Directive, 2080 does not treat them alike: import freight is taxed only from Nepal's customs point to the importer's premises, and export freight from the exporter's premises to the customs point is not taxed. Here is how the invoice should be drawn, what the directive leaves open, and why one Act-level exemption still needs checking.
- For business owners · 31 Oct 2026You Leased Out Your Truck. Does the VAT Registration Test Still Reach You?An owner who stops driving a truck and leases it out instead is still tested for VAT registration on the rent received, under section 3(4) of the VAT on Freight Services Directive, 2080. But Schedule 1 Group 9 of the VAT Act 2052 separately exempts 'rent of carrier', and whether that exemption reaches a leased goods vehicle is not settled in the text we hold. Here is what the directive requires, what the Act may already give back, and why this needs a specific check before you register or stop registering anything.
- For business owners · 29 Oct 2026You Let the Upper Floors. The Officer Calls It a Guest House. Who Has to Prove It?Rent from a building or land is exempt from VAT under Group 12 of Schedule 1 to the VAT Act 2052. The only exception is a hotel, guest house or apartment service run as a commercial entity. A Supreme Court joint bench has held that the tax officer, not the landlord, must prove the letting is that kind of service. Here is what the rule says, what the decisions do not decide, and what to keep on file.
- For business owners · 28 Oct 2026E-Billing and CBMS in Nepal: Who Must Connect and What It ChangesThe IRD is moving all invoicing onto its Central Billing Monitoring System. The mandate is phased by turnover and sector, and software that cannot connect is a risk for any business.
- For business owners · 27 Oct 2026Hiring Trucks From Unregistered Transporters: the VAT Is Still Yours to PayWhen a Nepali business hires a truck or freight service from a transporter who is not registered in VAT, the tax does not disappear. The VAT on Freight Services Directive, 2080 moves it onto the business receiving the service, which must self-assess it on the prescribed form and file within 25 days of the month end. Here is how the rule works, when it bites, and how the credit is recovered.
- For business owners · 27 Oct 2026Corporate Income Tax Rates in Nepal for FY 2083/84, by SectorMost Nepali companies pay a flat 25%. Banks, insurers, telecom, tobacco and alcohol pay 30%, and some industries and exports have lower rates or exemptions. Which one applies to you decides the budget.
- For business owners · 23 Oct 2026Filing Your Income Tax Return in Nepal: Which Form (D-01, D-02 or D-03) and by WhenNepal uses three main return forms. Which one you file depends on how you earn, your turnover and the entity. The deadline and any estimated instalments follow from that.
- For business owners · 21 Oct 2026Tax Clearance Certificate in Nepal: Who Needs One and How to Get ItBanks, the Registrar, the foreign investment office and tender committees ask for tax clearance. The certificate is only available when your filings and payments match the IRD's records.
- For business owners · 19 Oct 2026Mergers and Acquisitions in Nepal: The Process, Approvals and TaxHow a merger or acquisition works in Nepal: share deal versus asset deal, the Companies Act 2063 special resolution, regulator approvals, and the Section 57 and capital gains tax points to price in.
- For business owners · 19 Oct 2026What Accounting, Tax and Advisory Work Costs in Nepal, and Why Quotes DifferTwo quotes for the same job in Kathmandu can differ several times over. The price follows a handful of things you can see in advance: volume, condition of the books, filings, deadlines and risk.
- For business owners · 18 Oct 2026Selling a Family Business in Nepal: Valuation, Tax and SuccessionHow a Nepali family owner should prepare to sell or hand over a private company: getting a defensible valuation, the 10% and 15% capital gains withholding on unlisted shares, the Section 57 change-in-control trap, and how inheritance is treated.
- For business owners · 17 Oct 2026Tax on Freelancer, Upwork, Fiverr and YouTube Income in NepalA resident individual exporting IT services and paid in foreign currency through a bank can pay a 5% final tax. Income outside that definition, including much creator income, follows the ordinary slabs.
- For business owners · 15 Oct 2026Income Tax Slabs for Individuals in Nepal, FY 2083/84FY 2083/84 replaced the separate single and married slabs with one structure and cut the top rate from 39% to 29%. The bands, the deductions and a worked example.
- For business owners · 6 Oct 2026Received an IRD Notice? What the First 14 Days DecideA notice from the Inland Revenue Department is a process with deadlines, not a verdict. How you spend the first 14 days decides whether you keep your options.
- For business owners · 27 Sept 2026VAT Return Filing in Nepal: Monthly Deadline, Steps and 7 Mistakes That Trigger IRD PenaltiesHow monthly VAT filing in Nepal works: the 25-day deadline, step-by-step filing on the IRD portal, a worked NPR example, a checklist and 7 mistakes that trigger penalties.
- For business owners · 23 Sept 2026Transfer Pricing, Explained Plainly: What It Is, Where It Goes Wrong, and What Nepal ExpectsA plain-language guide to transfer pricing: the arm's length idea, the five methods, how profit shifting actually happens, and what Nepal's Section 33 and 2081 directive mean for groups with cross-border dealings.
- For business owners · 5 Sept 2026Your Company Received a Tax Notice: What Should You Do First?What a tax notice from the Inland Revenue Department actually means under the Income Tax Act, 2058, the legal timelines that govern it, and the exact sequence a business should follow in the first days after receiving one.
- For business owners · 2 Sept 2026Tax Health Check: 15 Things Every Business Should ReviewA structured, practitioner-level checklist covering VAT, TDS, income tax and documentation, built to catch the issues that turn into assessments and notices long before the Inland Revenue Department finds them first.
- For business owners · 25 Aug 2026VAT Registration in Nepal: Threshold, Documents and Steps (FY 2083/84)Must you register for VAT in Nepal? The FY 2083/84 threshold (NPR 50 lakh goods, 30 lakh services), the documents needed and 7 free steps to register.
- For business owners · 31 Jul 2026How Can a Business Legally Improve Its Tax Position?The specific, lawful levers available to a Nepalese business to manage its tax position, precisely where the line between planning and evasion sits under the Income Tax Act, 2058, and why treating tax planning as a one-time exercise instead of an annual discipline leaves real, legal savings unclaimed.
Technical analysis for professionals
Section-level analysis, procedures and edge cases.
- For professionals · 10 Nov 2026Real Estate and Land Development in Nepal: Capital Gains, Business Income and Project AccountsSelling a plot as an owner and selling plots as a business are taxed differently. For developers, the cash cycle, advance receipts and project costing decide whether a profitable project survives.
- For professionals · 5 Nov 2026The Nepal–India Tax Treaty and Nepal's Other Double Tax Agreements: Withholding Rates and How to ClaimA double tax agreement can reduce the tax withheld on dividends, interest and royalties paid across the border. Relief is not automatic: you must show residence, beneficial ownership and the right treaty article.
- For professionals · 3 Nov 2026Repatriating Dividends and Capital from Nepal: The Steps for Foreign InvestorsFITTA 2075 gives foreign investors the right to repatriate dividends, sale proceeds and loan repayments. In practice, the money moves only when the file is complete: approvals, tax and the banking trail.
- For professionals · 25 Oct 2026Depreciation Rates in Nepal for Income Tax: The Blocks and How They WorkNepal's income tax depreciates assets by pool, not one by one. The block you choose sets the rate, and the wrong block changes the tax for years.
- For professionals · 14 Oct 2026Construction Contractors in Nepal: Contract Accounting, Retention Money and TDSHow a Nepali construction or contracting business should recognise revenue on long-running jobs, treat the retention money a client holds back, and handle the 1.5% withholding tax under Section 89 of the Income Tax Act, 2058.
- For professionals · 13 Oct 2026Schools and Colleges in Nepal: The Finance, Tax and Governance TrapsRunning a school or college in Nepal comes with a specific set of financial and legal obligations that most owners underestimate: VAT that cannot be recovered, TDS deadlines that carry interest for late deposits, governance structures that mix family control with public accountability, and income tax rules that require IRD recognition rather than assumed exemption.
- For professionals · 11 Oct 2026IT Exporters in Nepal: Foreign-Currency Earnings, Tax Incentives and ReportingSoftware and IT service exporters in Nepal earn in dollars and spend in rupees. How to handle foreign-currency receipts, NRB facilities, VAT and tax incentives, and reporting.
- For professionals · 10 Oct 2026Running a Hotel or Resort in Nepal: Seasonal Cash Flow, VAT and NFRSHotels and tourism businesses in Nepal earn in bursts and pay all year. How to plan seasonal cash flow, handle VAT on room and food bills, and report under NFRS.
- For professionals · 9 Oct 2026Hydropower Finance in Nepal: Project Funding, PPA Economics and TaxHow a Nepali hydropower project is actually paid for: the debt and equity stack, what the NEA power purchase agreement does to revenue, the two-tier royalty under the Electricity Act, 2049, the income tax holiday, and the numbers lenders test before they sign.
- For professionals · 8 Oct 2026Advance Tax Instalments: How to Calculate Them Without OverpayingThe three statutory instalment deadlines under Section 94 of the Income Tax Act, 2058, how the 40-70-100% schedule actually works against an estimate, and the estimation habits that keep a business from either overpaying cash it needs or underpaying into interest.
- For professionals · 7 Oct 2026TDS on Payments to Foreign Vendors in Nepal: What to Withhold and WhenWhen a Nepali business pays an overseas consultant, software provider or licensor, the payer may have to withhold tax before the money leaves the country. This guide explains the withholding rule under Section 88 of the Income Tax Act, 2058, the checks to run before each payment, and the mistakes that turn a routine invoice into a tax demand.
- For professionals · 6 Oct 2026Your VAT Refund Is Stuck: A Step-by-Step Release GuideA stuck VAT refund is almost always a file problem: mismatched invoices, unreconciled returns or an unanswered query. The release follows a sequence you control.
- For professionals · 6 Oct 2026Fixing Nepal's Tax Dispute System: Backlog, Deposits and SettlementsA policy reading of Nepal's tax appeal system: the reported backlog at the Revenue Tribunal and the Department, the deposit rule, the settlement controversy, and reform options that would make disputes faster and fairer.
- For professionals · 5 Oct 2026Appealing an IRD Assessment in Nepal: Administrative Review and the Revenue TribunalHow to challenge an Inland Revenue Department assessment in Nepal: the review and appeal stages, the deadlines and deposits in the Income Tax Act, how to build the evidence, and what tends to win.
- For professionals · 3 Oct 2026Section 57 and Nepal's Deal Climate: When Anti-Abuse Tax Law Meets Investment PolicySection 57 of the Income Tax Act stops companies trading in tax losses, but it also reaches genuine investment. A policy reading of what the rule is for, where its design strains, what the Ncell dispute and recent court and circular developments show, and how it could be reformed.
- For professionals · 2 Oct 2026Dividends, Bonus Shares and Retained Earnings in Nepal: A Shareholder's GuideWhat a company can do with its profit, how cash dividends, bonus shares and retained earnings differ, how Nepal taxes each, and how to read a distribution announcement beyond the headline percentage.
- For professionals · 30 Sept 2026How the IRD Selects Companies for Tax Audit in NepalHow companies end up in an Inland Revenue Department audit in Nepal, the difference between the kinds of notice, the records patterns that draw attention, and the year-round habits that keep a company ready whenever a notice arrives.
- For professionals · 20 Sept 2026We Borrowed to Buy Shares in a Sister Company. Is the Interest Deductible?Is interest on a loan used to buy shares deductible in Nepal? The Supreme Court said yes under Section 14(1) in the Yak & Yeti case. What to document.
- For professionals · 22 Aug 2026Tax Evasion, Tax Avoidance and Tax Planning in Nepal: Where the Lines Actually SitEvasion, avoidance and planning carry very different penalties in Nepal. A four-question test to tell them apart and the signals IRD assessors look for.
- For professionals · 16 Aug 2026Reclassification, Not Restructuring: Where Nepali Companies Overpay Income Tax by Using the Wrong HeadingFiled under the wrong income heading? One Nepal review cut a company's tax by about NPR 50 lakh with no change to the deal. See the 5-step check.
- For professionals · 15 Aug 2026Defending a Large IRD Assessment in Nepal: How the Argument Is Actually BuiltHow a large IRD assessment is actually defended: how the assessment is unbundled, how the reply to IRD becomes the record for the appeal, and what the written argument needs before counsel presents it.
- For professionals · 17 Jul 2026TDS in Nepal for FY 2083/84: The Rates, and the Mistakes That Cost MoneyEvery TDS rate a Nepali business needs for FY 2083/84, with the section reference for each, the deposit deadline, and the errors that trigger an assessment.
- For professionals · 2 Jul 2026Transfer Pricing in Nepal: A Compliance Guide for Multinational GroupsSection 33 of the Income Tax Act and the IRD's Transfer Pricing Directives, 2081: who is an associated person, how comparability and the arm's length range work, what documentation and certification are expected, and how a dispute proceeds.
How we can help
- IRD assessment defenceNotices, assessments and appeals
- VAT and tax filingReturns, TDS and income tax, filed on time
- Tax consultant in KathmanduPlanning and compliance for companies
Tools and references
- Tax deadline calendarEvery IRD due date for the year
- TDS calculatorRates by type of payment
- VAT calculatorAdd or remove VAT
- Salary tax calculatorTax slab by slab