- main forms
- 3
- after year end to file
- 3 months
- advance tax instalments
- 40-70-100%
Which form
| Form | Who it suits | Notes |
|---|---|---|
| D-01 | Individuals and small businesses under the simplified flat-rate regime | Reported turnover limit around NPR 30 lakh; no separate instalments |
| D-02 | Small and mid-sized taxpayers within the next band | Tax by the rules of the form; instalments may apply |
| D-03 | Companies, partnerships and taxpayers outside D-01 and D-02 | Full return with accounts and tax computation |
Thresholds and eligibility change with each Finance Act, so confirm them against the IRD's form instructions before you choose. A salary-only individual with no other income is usually covered by tax withheld at source, but still reports where the rules require.
Deadlines and instalments
Annual return: within three months of the end of the income year, which is the end of Ashoj. The IRD has often extended this, commonly to the end of Poush. Do not assume an extension.
Estimated return and advance tax: estimated tax is paid in three cumulative instalments, 40% by the end of Poush, 70% by the end of Chaitra and 100% by the end of Ashad. Use our advance tax calculator and read how to calculate the instalments.
TDS and VAT returns run monthly and have their own dates; see the tax calendar.
What you need to file
Your PAN and portal login, and a registered mobile number and email.
Income records: sales, other income, TDS certificates and bank statements.
Expenses with evidence: invoices that meet VAT and PAN rules.
Financial statements, for D-03 filers, prepared on the right standard; see NFRS applicability.
Tax credits: advance tax paid, TDS deducted, carried-forward losses.
Depreciation schedule by block; use the depreciation calculator.
What late filing costs
A late return attracts a fee, and interest of 15% a year on tax unpaid. Amnesty windows have waived these in some years; see the 2083 amnesty. Filing a return that you know is wrong carries a different and heavier penalty.
Mistakes we see
Filing the wrong form because last year's was different.
Claiming expenses without bills in the taxpayer's name and PAN.
Ignoring the estimate and paying no advance tax.
Not filing a nil return after business stops.
Letting a return stand when TDS credits don't match the IRD's records.
We prepare and file returns, check the credits against the IRD's data and keep the working papers. See tax services. If you receive a query, read what to do in the first 14 days.
A filing calendar for a typical year
The dates below follow the Nepali fiscal year, which runs from Shrawan to Ashad. Check the IRD notices for any extensions.
| Time | What happens |
|---|---|
| Shrawan to Ashoj | New year begins. Prior-year accounts are closed and the previous year's return is prepared. |
| End of Ashoj | Standard due date for the annual return, three months after year end. Extensions have been announced in some years, so do not rely on one. |
| End of Poush | First advance tax instalment of 40% of estimated tax, with the estimated return. |
| End of Chaitra | Cumulative 70% of estimated tax. |
| End of Ashad | Cumulative 100% of estimated tax, and the year ends. |
| Monthly | TDS and VAT returns, SSF deposits and payroll filings. |
Putting these into a calendar with named owners removes most late-filing penalties. See the tax calendar for the full list of dates.
A worked example: choosing the form
Three taxpayers, three decisions. The thresholds are reported by advisers and change; check the IRD's current instructions.
Rita, a consultant with NPR 18 lakh turnover. She is an individual with business income below the reported D-01 ceiling and no employees. If the simplified regime is open to her, D-01 reduces paperwork and removes instalments. She should check whether the simplified tax cost is lower than ordinary treatment on actual profit. If her costs are high, the ordinary route may be cheaper.
Dev, a trader with NPR 80 lakh turnover. He is above the simplified thresholds and files D-02 or D-03, depending on his type and the form's rules. He keeps books, claims expenses with proper bills, pays advance tax and files an estimated return.
A private limited company with NPR 6 crore turnover. It files D-03, with audited accounts, depreciation by block, transfer pricing disclosures if it has related-party transactions and a tax computation that reconciles accounting profit to taxable profit.
The form follows the taxpayer, not preference. Filing the wrong form invites a query and, in some cases, a penalty.
Preparing the return in eight steps
Close the books for the year with bank reconciliations, stock count and accruals.
Reconcile sales to VAT returns and the e-billing system, if you are connected; see e-billing and CBMS.
Reconcile TDS credits to the IRD's record of tax deducted on your behalf.
Compute depreciation by block; see depreciation rates.
Identify disallowed expenses: items without valid bills, personal costs, fines and penalties.
Compute the tax at the right rate for your entity; see corporate tax rates or individual slabs.
Apply credits and instalments already paid.
File, pay and keep the acknowledgement and the working papers for at least the retention period.
Questions people ask
What if I miss the deadline? File as soon as possible. A fee and interest of 15% a year on unpaid tax apply. An extension or an amnesty may change the position; see the 2083 amnesty.
Can I amend a return after filing? Yes, within the time and conditions the Act sets. Amend when you find an error, rather than waiting for the IRD to find it.
Do I need an auditor's report with the return? Companies and some other entities must have their accounts audited by a registered auditor and attach the report. Individuals under simplified regimes generally do not.
Do I file a return if I only have salary? In many cases tax withheld by the employer settles the liability, but you may still need to report if you have other income or choose to file. Check the rules for your situation.
What if I had a loss? File the return. Losses can be carried forward within the limits of the Act, but only if the return is filed and the loss is documented.
What if my TDS credits don't match the IRD's records? Ask the deductor to deposit and file correctly, and keep proof. Claiming credits that the IRD cannot see leads to a query.
We prepare and file returns, reconcile the credits, and defend the position if a query arrives. See tax services and what to do in the first 14 days after an IRD notice. Form thresholds change with each Finance Act, so confirm them before you file.
Supporting documents by taxpayer type
The return is only as strong as the records behind it. What to keep depends on who you are.
Salaried individuals with other income. Salary certificates and TDS certificates from the employer, bank interest certificates, rental agreements and receipts, and any investment statements. Keep proof of retirement contributions and insurance premiums that you claim.
Sole proprietors and professionals. Sales records or fee notes, expense bills in your name and PAN, bank statements for the business, TDS certificates from clients and proof of advance tax paid. A simple ledger kept monthly is far better than a reconstruction at year end.
Partnerships. The partnership deed, the partners' capital and profit-sharing records, the firm's accounts and each partner's share of profit.
Companies. Audited financial statements, the auditor's report, a tax computation, a depreciation schedule, TDS reconciliations, related-party disclosures and minutes that support major transactions. Where the company has foreign shareholders or loans, the approvals and remittance records.
Non-profits and cooperatives. Their position depends on the type, and they still need accounts, tax deductions on payments and returns in the form prescribed. See NGO finance and cooperatives.
Five problems that attract IRD queries
The IRD selects returns for review using data and risk indicators; see how the IRD selects companies for audit. These patterns commonly lead to queries:
Profit margin far below peers. A trading business reporting a margin much lower than similar businesses will be asked to explain.
Large expenses with weak support. Round-sum entries, related-party charges and cash payments invite scrutiny; see bogus bills and the burden of proof.
Persistent losses with continued operations. The IRD asks how a loss-making business survives.
Mismatch between VAT returns and income tax returns. Sales in the VAT return and sales in the income statement should reconcile.
Credits claimed that the IRD cannot see. TDS claimed without matching deposits, or advance tax claimed that was not paid.
A short reconciliation memo, attached to your working papers and ready to produce, answers most of these in a day.
What to do after you file
Filing is not the end of the process.
Keep the acknowledgement and a full copy of what you filed, with all schedules.
Pay any balance by the due date. A return showing tax payable but not paid carries interest.
Watch the portal for notices and respond within the time stated. See what to do in the first 14 days.
Retain the records for the period the law requires, and longer if an assessment is possible.
Plan next year's advance tax from the actual result, not from the old estimate.
Prepare for clearance: a filed and paid return is the foundation of the tax clearance certificate.
How fees and interest build up if you file late
Suppose a business owes NPR 10 lakh in tax for a year and files six months late. Interest at 15% a year on NPR 10 lakh for six months is NPR 75,000, plus the late-filing fee. If the filing is delayed by two years, the interest alone is NPR 3 lakh. The numbers are simple, and the cost grows steadily with each month. If the late return also shows a lower tax than you originally owed, interest still runs from the original due date on tax that was unpaid. Where an amnesty applies, such as the window described in our note on the 2083 amnesty, the fees and interest can be waived on conditions, so check before you pay.
Choosing between self-filing and help
A salaried person with one employer and no other income can often manage alone, using the employer's certificates and the portal. A person with a business, rental income, several sources or foreign income should consider help: not for the typing, but for the decisions about what to claim, which form to use and how to document it. A company needs an accountant and an auditor by law. Whichever route you take, the owner remains responsible for the content of the return.
We prepare and file returns for individuals, sole proprietors and companies, reconcile the credits and keep the working papers. See tax services and VAT and tax filing. Form thresholds and deadlines change, so confirm them on the IRD site before you file.
