VAT in Nepal

The VAT rate is 13%. Example through the supply chain:

Producer

sells at NPR 200, collects output tax of NPR 26, has no purchases or input tax, and pays VAT of NPR 26

Wholesaler

sells at NPR 300, collects output tax of NPR 39, bought at NPR 200 with input tax of NPR 26, and pays VAT of NPR 13

Retailer

sells at NPR 400, collects output tax of NPR 52, bought at NPR 300 with input tax of NPR 39, and pays VAT of NPR 13

The VAT paid by the consumer and received by the Government is NPR 52 in total.

A natural person, firm, company, association, organisation, partnership, cooperative, joint venture, trust or fund. It also includes government bodies, religious organisations, charities and similar bodies, and their branches, engaged in taxable transactions whether or not for profit.

on business assets such as machinery, vehicles, equipment, devices and similar.

VAT must be charged when capital or consumable goods bought for business, on which input credit has been taken, are used for household or personal purposes.

A supply of taxable goods or services within Nepal by a taxable person. Importing taxable goods and services into Nepal, and exporting them, are also taxable transactions.

• Production or purchase cost
• Transport and distribution costs borne by the seller in the course of the transaction
• Profit
• Excise, royalties and other taxes, other than VAT

Except for goods and services listed in Schedule 1 of the VAT Act, VAT applies to:

• Goods or services supplied within Nepal
• Goods or services imported into Nepal
• Goods or services exported from Nepal

Generally, where the consideration is only cash, on the price the seller charges the buyer.

The transaction value is calculated on the actual market value.

It is a tax the consumer pays for consuming goods and services. Although it may appear to raise prices, the tax applies only to the value added, so it does not increase the price.

Prices displayed at the registered person's showroom, sales counter, hotel, restaurant, bar, place of business or place of supply (tag prices, menu prices and sale prices) must include VAT. Once a price has been displayed or announced, VAT cannot be added on top of it.

• To increase revenue by widening the tax net
• To broaden the tax base and lower tax rates
• To replace various taxes on goods and services and make VAT a main revenue source
• To encourage self-assessment
• To document taxpayers' transactions
• To reduce administrative complexity
• To make legal procedures simple and transparent
• To increase the share of indirect taxes in total tax

The Inland Revenue Department and its offices.

Only on the margin between the sale price and the purchase price. For example, if a reconditioning house buys a used motorcycle for NPR 50,000 and sells it for NPR 70,000, VAT is charged on the NPR 20,000 margin.

Any natural person or entity engaged in VAT-taxable transactions. Person likewise means both natural persons and entities.

Two things: the nature of the goods or services traded, and the value of transactions. Whether the person aims to make a profit does not matter. Anyone dealing in goods or services other than those the VAT Act exempts, whose turnover in a set period exceeds the legal threshold, is a taxpayer and must register for VAT.

Value Added Tax is an indirect tax on the consumption of goods and services. It is charged on the value added at each stage of production, import and distribution of taxable goods and services, hence the name.

13%.

From FY 2083/84, ride-sharing services on registered platforms and electricity supplied to end users are taxed at a reduced 5%, and the Government may set further reduced rates by Gazette notice.

Timber from private land or community forests sold for commercial purposes attracts VAT like timber from national forests, even though no royalty applies.

Once goods or services are supplied, the tax liability arises even if the registered person does not collect it or the buyer does not pay it, so it must be treated as collected.

For VAT registration, contact the Inland Revenue Office or Taxpayer Service Office directly. Organisations authorised to issue PANs are not permitted to register taxpayers for VAT.

The Inland Revenue Department administers both VAT and income tax, and one PAN covers both. However, a business with only a PAN that wants to make VAT-taxable supplies must apply to the relevant Inland Revenue Office or Taxpayer Service Office to register for VAT.

A business whose goods or services become taxable can apply to the tax officer in the prescribed format within 30 days of becoming taxable or starting business. Any change in registration details must be reported to the tax officer within 15 days.

Any business whose goods or services become taxable can apply to the tax officer in the prescribed format within 30 days of becoming taxable or starting business. The Finance Act 2078 removed the mandatory registration provision.

Any business whose goods or services become taxable can apply to the tax officer in the prescribed format within 30 days of becoming taxable or starting business. The Finance Act 2078 removed the mandatory registration provision.

The tax officer can impose a fine of 50% of the tax involved.

Within 7 days of registration, at the place of business where everyone can see it.

A joint venture is formed for a specific work; for any other work, a separate joint venture must be formed and registered.

Attach the following to the application:

(a) Passport-size photographs: two of the proprietor for a sole proprietorship; two of each partner for a partnership or joint venture; two of the key person designated by the board for private limited, public limited and other entities.

(b) Business registration certificate: for industries, registration with the Department of Industry, the Department of Cottage and Small Industries, or the relevant authority for special industries; for companies, registration with the Office of the Company Registrar; for trading businesses, registration with the Department of Commerce or its offices; and any local body registration.

(c) For service professions such as teachers, doctors, lawyers, nurses and auditors, the certificate issued by the licensing body.

(d) For construction and contracting, the licence issued by the Ministry of Physical Infrastructure and Transport or the local level.

(e) Copies of citizenship certificates: of the proprietor; of all directors of a private limited company; of the director of a public limited company; of all partners of a partnership or joint venture; for foreigners, a copy of the passport or an ID issued by their embassy.

(f) A map identifying the place of business.

(g) The lease agreement or land ownership certificate: the land ownership certificate if in your own building, or the lease agreement with the landlord if rented.

(h) For companies, the memorandum and articles of association.

(i) The company's power of attorney.

(j) For joint ventures, the agreement between the parties and copies of the partners' PAN certificates.

From the nearest Inland Revenue Office or Taxpayer Service Office.

Any business whose goods or services become taxable can apply to the tax officer in the prescribed format within 30 days of becoming taxable or starting business.

Taxpayers whose transactions in VAT-taxable goods or services exceed the threshold.

Any business whose goods or services become taxable must apply to the tax officer in the prescribed format within 30 days of becoming taxable or starting business.

Generally on the basis of purchase or sales turnover.

For FY 2083/84, registration is compulsory where annual taxable turnover exceeds NPR 50 lakh for goods, or NPR 30 lakh for services or mixed goods and services. Voluntary registration is allowed below the threshold.

Government offices may deal only with registered persons for purchases above NPR 20,000, and for contracts or consultancy services above NPR 5 lakh a year.

• You can do business with government offices
• Registered taxpayers look for tax invoices, so business with them expands
• You can claim credit for VAT paid on purchases

Registration by a person whose VAT-taxable transactions are below the threshold, by their own choice.

The annual turnover set by law below which small businesses do not have to register.

A person must register before trading, or once turnover in the past 12 months, or expected turnover in the next 3 months, exceeds the threshold. For FY 2083/84 the threshold is NPR 50 lakh a year for goods and NPR 30 lakh for services or mixed supplies. Registration is also compulsory for importing taxable goods or services above NPR 10,000 at a time for business, for persons obtaining business loans above NPR 10 lakh a year from a bank, and for persons listed in section 10(2) of the VAT Act.

• VAT-registered taxpayers: white letters on a green background
• Taxpayers dealing in VAT-taxable goods or services below the threshold, who need not register: black letters on a yellow background
• Taxpayers dealing in VAT-exempt goods or services: red letters on a white background

When importing taxable goods worth more than NPR 10,000 at a time.

A plate identifying whether the taxpayer is VAT-registered, and whether they deal in VAT-taxable or exempt goods or services.

At the taxpayer's place of business, where everyone can see it clearly.

Not every business. Those dealing in VAT-taxable goods and services above the threshold, and persons the law requires to register, must register.

If a person required to register has not done so, the tax administration can order them to register. The order is binding. If the person believes they do not need to register, the burden of proof is on them.

It is allowed only if your son's business operates independently, in this case from a separate location.

Any number of branches can operate under one registration certificate.

Register the business with the local level where the branch will operate, then apply to the Inland Revenue Office or Taxpayer Service Office where you are registered, attaching the lease agreement for the branch premises.

Start the process to cancel the sole proprietorship's registration and register the company afresh.

Apply with documents showing the business addition from the authority where the business is registered, and you can use your existing registration number.

Under the Rules:

1. 1An organiser of a temporary exhibition, fair or similar event who is not VAT-registered must apply for registration under section 10ka of the Act to the relevant Inland Revenue Office or Taxpayer Service Office, with the organiser's recommendation.
2. 2With the application, deposit 2% of the estimated income from the event at that office.
3. 3The tax officer registers the business for VAT and issues a certificate with a registration number.
4. 4Within seven days of the event ending, file the VAT return, pay the VAT, and apply to cancel the temporary registration with the original PAN certificate, a tax clearance certificate for the temporary registration period, and the organiser's recommendation.
5. 5The tax officer examines the return and documents and cancels the temporary registration within fifteen days, informing the applicant.
6. 6The deposit can be credited against the VAT payable.
7. 7If additional tax is assessed on examination, the applicant is given three days' notice to pay. If not paid, it is recovered from the deposit, and any shortfall from the organiser.

Change the business location with the authority where the business is registered, then apply to your current office. It will collect any arrears, decide to transfer your file, send it to the Birgunj office, and inform the department.

• Compliance with the law
• Input tax credit makes you more competitive
• You can do business with government offices, which grows the business

If you cancelled only the VAT registration, apply for VAT registration again. If you also suspended your PAN, complete the full registration process while keeping your old PAN.

Contact the Pokhara Inland Revenue Office and complete the full registration process, keeping your old PAN.

Only retailers selling to final consumers, and only with approval from the relevant Inland Revenue Office.

A bill issued by a registered person that does not show the tax separately, the tax being included in the price. Each invoice needs at least three copies. The first, marked abbreviated tax invoice, goes to the buyer. The second is kept on record to provide to the tax administration on request. The third is used to enter the sales book and keep accounts. It cannot be issued for a tax-inclusive value above NPR 10,000. Input credit cannot be claimed on an abbreviated tax invoice.

though you may add other information you need in addition to what the Act and Rules require.

Prepare a separate stock transfer challan for each vehicle, record it in the books, carry the goods with the challan, and issue the invoice once the goods are sold.

If an unregistered person issues a tax invoice, collects tax, or issues any document showing tax collected, the tax collected is assessed and recovered from them, with a fine of 100% of the tax collected.

When receiving convertible foreign currency in return for a supply, show on the tax invoice the equivalent in Nepali rupees at the Nepal Rastra Bank exchange rate on the day of the transaction.

The tax officer can impose a fine of NPR 10,000 for each instance (raised from NPR 1,000 by the Finance Act 2083), for breaching the Act.

Inform the nearest Inland Revenue Office or Taxpayer Service Office.

A registered person who does not give the buyer an invoice when supplying goods or services is fined NPR 10,000 each time.

It must be clearly marked credit note or debit note and show:

• Serial number
• Date of issue
• Supplier's name, address and registration number
• Recipient's name, address and, if registered, registration number
• Number and date of the related tax invoice
• Description of the goods or services and reason for the credit or debit
• Amount credited or debited
• Tax amount credited or debited

A monthly account must also be kept.

A note issued when the value of supplied goods or services changes, goods are returned, or for any other reason the supply value needs adjusting after sale.

The software must issue tax invoices in the format prescribed by the Act. An invoice once issued must not be deletable. Any correction must be possible only through a debit or credit note. Only software listed with the Inland Revenue Department can be used.

Multiply the invoice value by the tax fraction. Tax fraction = tax rate / (tax rate + 100). At 13%, that is 13/113.

• Keep a duplicate copy of the original invoice
• Where trading with till rolls, keep a copy of the till roll and total it each day
• Keep a record of the tax-inclusive value of each transaction

Apply to the office with full details of the software you want to use, which must be listed with the Inland Revenue Department. You can issue computer invoices only after the office approves. The software must issue tax invoices in the prescribed format, must not allow an issued invoice to be deleted, and must allow corrections only through debit or credit notes.

If the businesses are clearly separate, each can start its own serial numbers from 1. For example, where one PAN covers contracting, trading and manufacturing under different names, each can issue invoices with its own series starting from 1.

Each branch starts its own serial number from 1 and keeps it in sequence. A new series starts at the beginning of each fiscal year: whatever number was reached, invoices start again from 1 in the new year.

Start from 1 and keep them in sequence. Start a new series at the beginning of each fiscal year, from 1, regardless of the number reached in the previous year.

with approval from the relevant Inland Revenue Office or Taxpayer Service Office.

but prices must be set on an arm's length basis, as between unrelated parties. Under-invoicing is not allowed.

Goods

when the buyer collects or receives the goods from the seller's premises, or when payment is received, whichever is earlier

Services

when the service is provided or payment received, whichever is earlier

Where a contract provides for payment in instalments over more than one day

when payment is made or when the contract says it is due, whichever is earlier

A bill issued by a VAT-registered person showing the tax separately. It proves the registered person's taxable transactions and helps calculate their tax liability. Each invoice needs three copies. The first, marked tax invoice, goes to the buyer. The second is kept on record to provide to the tax administration on request. The third is kept by the registered person to account for the transaction and enter the sales book.

on the basis of a certified copy of the invoice, but you must pay a fine for losing the invoice.

Credit cannot be taken until the value of the imported goods or services is established. For goods imported against a deposit, credit can be claimed only within one year of the date the value is finalised (the deposit is settled).

Even without a tax invoice, you can claim credit on the basis of the revenue voucher showing the tax deposited.

If insured, you can take credit yourself only to the extent of the compensation received from the insurer. For uninsured goods, apply to the Inland Revenue Office within 30 days of the event, with evidence, to claim credit for the tax paid. The tax officer investigates and may allow it.

The customs declaration, the cash receipt and the invoice for the goods. For services not imported through customs, the service invoice and proof of payment.

A tax invoice must have been received. However, for timber auctioned or sold from private land, private forests, community forests and national forests, for taxable goods or services sold by local bodies or the Government, and where tax was collected under section 8(2) of the Act, the taxpayer can take credit on the basis of the revenue voucher even without a tax invoice.

Apply to the tax officer in the format of Schedule 16 of the Rules to claim credit on stock held at registration, submitting the tax invoices and other evidence within 15 days of registration. Credit is allowed only after the tax officer investigates and approves the claim.

Within one year of the date of purchase.

You can return them by issuing a debit note.

Where goods are damaged or lost through fire, theft, accident, breakage or destructive activity and must be written off from stock or sold at a lower price, apply to the Inland Revenue Office within 30 days of the event, with evidence, to claim credit for the tax paid. The tax officer investigates and may allow it. If insured, you can take credit yourself to the extent of the insurance compensation.

Only tax paid on purchases or imports directly related to taxable goods or services can be credited. Where purchases or imports cannot be directly linked to taxable sales, credit is allowed in proportion to the value of taxable supplies within total sales.

If it is used for both business and personal purposes, credit is limited to 40% of the purchase price.

Automobiles that can be used for both business and personal purposes: credit on 40% of the purchase price only. Automobiles here means passenger road vehicles with three or more wheels. Full credit is allowed where supplying automobiles is the main business.

Credit is not allowed on the following, which can be used for both business and personal purposes:

• Beverages
• Alcohol or alcoholic drinks such as liquor and beer
• Entertainment expenses

Full credit is allowed where supplying these is the main business.

A VAT-registered taxpayer can claim credit on all business-related expenses incurred in the course of business, including raw materials, auxiliary raw materials, packaging, goods for resale, machinery and tools, equipment, office supplies, telephone charges, vehicles and communication systems.

A VAT-registered taxpayer deducts the tax paid on purchases (input tax) from the tax collected on sales (output tax), and pays only the balance to the Government. This deduction is called tax credit.

Taxpayers registered to file monthly must file within 25 days of the end of the tax period. Brick industries, print and electronic publishing or broadcasting houses, hotels, tourism, cinemas and transport businesses may choose to file every four months.

The statement in the format of Schedule 10 of the Act in which a registered taxpayer reports purchases and sales, filed within 25 days of the end of each tax period at the office where they are registered (Large Taxpayer Office, Medium Level Taxpayer Office, Inland Revenue Office or Taxpayer Service Office).

You can file a return for a tax period only once the return for the previous period has been filed and verified.

1. 1Open www.ird.gov.np in Mozilla Firefox and click Taxpayer Portal.
2. 2Select the VAT folder and click VAT Return Entry.
3. 3To get a submission number, enter a username, password, PAN, email address and contact number, and click Register.
4. 4With the submission number, choose the year (for example 2078) and the period: the month for monthly filers, or first, second or third for four-monthly filers. Enter all purchases, sales, VAT amounts and other details for the period, and click Save.
5. 5To edit a saved return, click VAT Return Login in the VAT folder and log in with the submission number, username and password.
6. 6Check all details. If correct, tick the declaration at the end of the form confirming the return is true and complete, and click Submit.
7. 7The Save and Submit buttons are then disabled, and only Print and Verify are enabled.
8. 8Print the return and have it verified at the relevant Inland Revenue Office, Taxpayer Service Office or Large Taxpayer Office, or verify it yourself with a self-verification username and password.

The return is not treated as filed until verified, so verify it within the deadline.

Shrawan to Kartik

by 25 Mangsir

Mangsir to Falgun

by 25 Chaitra

Chaitra to Asar

by 25 Shrawan

Normally the taxpayer files it, but an authorised representative can also do so.

You can adjust them immediately in the next tax period's return. You can also contact the relevant Inland Revenue Office or Taxpayer Service Office with an explanation; the office can carry out a partial audit and correct your return.

File within 25 days of the end of the tax period with the tax officer, at the Inland Revenue Office or Taxpayer Service Office where you are registered. Taxpayers in districts without either office can file by the 15th at the Treasury and Accounts Controller Office. Returns can also be filed online.

Only hotel and tourism businesses.

For a dissolved or wound-up legal person, the liquidator. On death, the heir or guardian.

You must file monthly, two-monthly or four-monthly according to your registration type (compulsory or voluntary).

Shrawan and Bhadra

by 25 Ashwin

Ashwin and Kartik

by 25 Mangsir

Mangsir and Poush

by 25 Magh

Magh and Falgun

by 25 Chaitra

Chaitra and Baisakh

by 25 Jestha

Jestha and Asar

by 25 Shrawan

Even one day counts as a tax period, so a return must be filed.

You must file a return at the end of every tax period, whether or not there were transactions.

Combine all branches into one return and file it at the Inland Revenue Office or Taxpayer Service Office where you are registered.

Apply to the office's collection section explaining the error, with evidence. If the PAN was wrong and that other PAN is also registered, include a declaration that the amount is not yours.

Whatever date the cheque was handed in, the date counted is the date the account was debited or the revenue deposited, so additional fees and interest apply.

provided you use the prescribed revenue heading and the code of the Inland Revenue Office where you are registered. With a username and password, you can also pay online.

Producers

33311

Imports

33312

Sellers and distributors

33313

Consultancy and contracts

33314

Tourism businesses

33315

Communication services, insurance, air travel and other services

33316

Reverse charge VAT on unregistered suppliers

33317

Within 25 days of the end of each tax period: for monthly filers, within 25 days of the end of the month; for two-monthly or four-monthly filers, within 25 days of the end of that period.

• Illness leaving the person liable to pay incapacitated: until seven days after recovery
• Observing mourning rites: until seven days after they end
• Childbirth: 35 days from delivery
• Death, insanity or disappearance of the person liable: seven days from receipt of an application by their heir or guardian made within 35 days of the event
• Roads blocked by flood, landslide, snow or similar, preventing travel to the tax office: until seven days after the road reopens
• A complete transport shutdown: until the day after it ends
• Natural disasters such as fire or earthquake: 30 days from the disaster

If the taxpayer applies showing circumstances beyond their control and the reason is found reasonable, the Director General can waive only the additional charge for late payment.

However, the date counted is the date the account is debited, not the date the cheque is handed in, so if the funds reach the account after the deadline, additional charges and interest apply.

It must be paid under the prescribed revenue heading at a designated bank.

At designated banks. Amounts below a set limit can be paid at Inland Revenue Offices and Taxpayer Service Offices. Taxpayers in districts without an Inland Revenue Office can pay at the Treasury and Accounts Controller Office by the 15th.

For a good-for-payment cheque handed in on time, the date the cheque was handed in counts, whenever the account is debited.

• A registered regular exporter whose exports exceed 40% of total monthly sales: input tax that could not be offset against output tax
• Tax that could not be offset for 4 consecutive months
• Tax paid within Nepal by diplomats of foreign states, regional or international missions and organisations, to the extent consumed, where the foreign state grants reciprocal tax exemption to Nepali diplomats, or to persons with diplomatic privileges in regional and international missions, as recognised by the Ministry of Foreign Affairs
• Tax paid by international organisations granted exemption by the Ministry of Finance
• Tax paid by the United Nations, its member bodies and specialised agencies when buying taxable goods or services in Nepal for their purposes
• Tax paid in running projects in Nepal under bilateral or multilateral agreements with exemption consent from the Ministry of Finance
• Tax collected in error
• No refund to diplomatic bodies or diplomats on purchases under NPR 10,000 at a time
• A consumer who pays for goods and services electronically under law is given an immediate rebate equal to 10% of the VAT at the point of purchase, under the department's procedure (Finance Act 2083 replaced the earlier refund)
• Foreign tourists leaving Nepal by air who take with them taxable goods bought for more than NPR 25,000: the tax paid on those goods
• On re-export of goods: the VAT deposit paid at customs, refunded by the customs office on proof of re-export
• Where goods are re-exported with advance payment received in convertible currency: the VAT paid on purchase
• Contractors or suppliers to public bodies under public procurement law, or bodies wholly or partly owned by the Government: tax deposited in their name on payment under a contract that could not be offset for 4 consecutive months, if they request a refund
• Pharmaceutical industries buying raw materials, auxiliary raw materials and packaging from domestic industries for drug production: the tax paid, refunded every four months on application

A consumer who pays for goods and services electronically under law receives an immediate rebate equal to 10% of the VAT at the time of purchase. From FY 2083/84 this replaces the earlier bank refund.

A registered taxpayer must claim refunds through the VAT return (Schedule 10).

Foreign tourists leaving Nepal by air who take with them taxable goods bought for more than NPR 25,000 are refunded the tax paid on those goods.

• The diplomat submits a claim on Schedule 17 of the Rules, with a copy of their identity card, through their diplomatic mission.
• The claim goes through the Consular Section of the Ministry of Foreign Affairs to the refund section of the Inland Revenue Department or the relevant Inland Revenue Office, and the Ministry must recommend that reciprocity exists.
• Original tax invoices and copies must accompany the claim.
• Documents can now also be submitted and refunds claimed through the online system.

Diplomats and diplomatic missions are refunded tax paid on taxable goods or services bought in the local market, except on purchases under NPR 10,000 at a time.

interest is paid at 15% a year, calculated only from 60 days after the date the refund was claimed.

Claim the refund through the VAT return (Schedule 10) and submit other documents during the tax audit.

Within three years of the date of the transaction.

An arrangement for a registered person to be repaid tax paid on purchases that could not be offset against tax they collected. Diplomats, diplomatic missions and persons or organisations with tax exemptions, who do not bear the tax burden, are also refunded tax paid or payable on goods or services they buy.

Earth excavation is a service not listed in Schedule 1 of the VAT Act, so it is taxable.

Only goods and services expressly listed in Schedule 1 of the VAT Act are exempt.

Goods and services exempted by Schedule 1 of the VAT Act, grouped as:

Group 1

basic agricultural products

Group 2

basic necessities

Group 3

animals and animal products

Group 4

agricultural inputs

Group 5

medicines, medical treatment and similar health services

Group 6

education

Group 7

books, newspapers and printed materials

Group 8

artistic and craft services

Group 9

passenger transport

Group 10

business or professional services (except auditors with offices in metropolitan, sub-metropolitan or municipal areas)

Group 11

other goods and services

Group 12

buildings and land

Group 13

betting, casinos and lotteries

See Schedule 1 of the Act for the detailed scope of each group.

A zero rate is applied to supplies of certain goods and services where policy aims to give financial incentives to their production, consumption or trade, or special benefits to a particular class, sector or community. It is mainly used to encourage exports by improving competitiveness. A zero-rated supply is a taxable supply, so input tax on purchases can be credited against tax on taxable supplies. On an exempt supply, by contrast, tax cannot be collected and input tax cannot be credited.

A zero-rated supply is a taxable supply: no tax is collected on the sale, but tax paid on purchases is refunded. On an exempt supply, tax cannot be collected and tax paid on purchases cannot be credited.

A supply on which the seller neither collects VAT nor claims credit for tax paid on related purchases. A business dealing only in exempt supplies does not need to register.

Generally goods exported from Nepal and services supplied to persons outside Nepal. The detailed list is in Schedule 2 of the VAT Act.

If such goods are re-imported and will be exported again within 3 months, customs can release them against a deposit of the VAT due on re-import. The deposit is refunded once the goods are re-exported.

From FY 2078/79, taxpayers certify their own purchase and sales books, kept in the revised formats of Schedules 8 and 9.

Apply at the office for an Audit Trail Report and reconcile it with your accounts. If you have a username and password, you can view the Audit Trail Report yourself.

• Trading accounts and records of cash receipts and payments
• Tax invoices and abbreviated tax invoices issued
• Tax invoices and abbreviated tax invoices received
• All documents relating to imports and exports
• Documents proving changes in the price of goods and services bought and sold
• All debit and credit notes and related documents
• The VAT account under Schedule 7 and the purchase and sales books under Schedules 8 and 9

As soon as it runs out, apply to have an additional new book certified.

within the period for certifying books.

A fine of NPR 10,000 under section 29(1) of the Act. Uncertified books are not official, so they may also be investigated.

All purchase payments for which an invoice is received must be entered. Expenses with no purchase bill, such as salaries and wages, are not.

By issuing a debit or credit note and entering it in the purchase and sales books.

Sales invoices as soon as issued, and purchase invoices as soon as received.

Purchase and sales books with sequential numbers must be certified for each fiscal year: monthly filers within Shrawan; two-monthly filers within Shrawan and Bhadra; and four-monthly filers from Shrawan to Kartik.

In the month the invoice is received, but not more than one year late.

Apply to the office with full details of the software you intend to use; you may keep computerised accounts only after approval. The software must keep purchase and sales books and issue tax invoices in the formats prescribed by the Act, must not allow issued invoices to be deleted, and must allow corrections only through debit or credit notes.

The tax officer can assess tax where:

• A return is not filed on time
• An incomplete or erroneous return is filed
• A false return is filed
• The officer has reason to believe tax has been understated or is incorrect
• The officer has reason to believe the supply value has been under-invoiced
• Supplies are made to group companies at under-invoiced prices
• A person required to register trades without registering
• Sales are made without issuing invoices
• An unregistered person collects tax
• Tax is not paid under section 8(2) or (3)
• The circumstances in section 17(4) exist

However, under the Finance Bill (Replacement) 2078, notwithstanding section 20(4) of the VAT Act 2052, where the Revenue Tribunal or another competent court has amended an assessment or reduced the tax, the tax officer cannot amend that assessment to that extent.

Rule 31 of the Rules provides that, notwithstanding anything in other law, an assessment order under rule 29 is properly served when sent to the taxpayer's address by telefax, telex or similar electronic means, delivered to the taxpayer or their office, or sent by registered post to their address. The order is therefore legally valid.

Within 30 days of receiving notice of the assessment decision, you can apply to the Director General of the Inland Revenue Department for administrative review. If the deadline passes, apply within 7 days of it lapsing for an extension, and the department can extend it by up to 30 days from the lapse date.

Within seven days of receiving the order.

Under section 30ka of the Act, if information shows the Director General that any action on an assessment not yet completed is irregular, the Director General can, recording clear reasons, direct the tax officer to reassess or assign the work to another officer. You can seek a remedy from the Director General under that section.

Only against the tax officer's assessment decision.

The amount must be paid in cash. If more than the required amount was already paid before applying, only the remaining balance needs to be paid.

Pay the undisputed tax, and pay one quarter of the disputed tax in cash. If more than the required amount was already paid before applying, only the balance needs to be paid.

The arrangement for applying to the Director General of the department to resolve conflicts and disputes between the tax administration and taxpayers, and to correct operational, arithmetic, technical and legal errors by the tax administration administratively. It is the first step in resolving disputes in the tax system.

A person dissatisfied with a tax officer's assessment can apply to the Director General of the Inland Revenue Department within thirty days of receiving notice of the decision.

A person dissatisfied with the department's decision on administrative review under section 32 can appeal to the Revenue Tribunal under the Revenue Tribunal Act 2031.

Imprisonment of up to three months, a fine of up to NPR 10,000, or both.

The tax officer can impose a fine of NPR 10,000 under the Act.

A fine of NPR 20,000 each time, under the Act.

A fine of NPR 2,000 each time it is not displayed, or not displayed in the prescribed place.

An additional charge of 10% a year applies on the unpaid tax, plus interest at 15% a year. The tax officer can also, with the Director General's prior approval, recover the tax by any or all of these methods:

• Deducting it from any refund due to the taxpayer
• Seizing the taxpayer's movable and immovable property
• Auctioning all or part of the taxpayer's property, at once or in stages, by sealed tender or public auction
• Having banks and other financial institutions deduct it from the taxpayer's funds
• Having the Government, a government-owned body or a local level deduct it from amounts due to the taxpayer
• Claiming amounts a third party owes the taxpayer
• Suspending the taxpayer's imports, exports and other business
• Barring the taxpayer from leaving Nepal

Section 11(3) of the Act: within 15 days of filing the deregistration return, the taxpayer must submit documents for tax audit. The tax officer must audit and, within three months, either deregister the taxpayer or inform them that registration will not be cancelled. If the officer does neither within that period, the taxpayer need not file returns for the period after it.

Rule 12 of the Rules:

(1) Where registration is to be cancelled for a reason in section 11(1), the registered person, or their heir if they are no longer living, applies to the tax officer within 30 days of the circumstance arising, stating it and attaching the Schedule 11 return and the tax due. Alternatively, where the officer is satisfied that a section 11(1) circumstance exists, the officer can require payment of outstanding tax, cancel the registration, and inform the person or heir and the department.

(2) After applying, returns must be filed until notice of deregistration is received, or for three months.

(3) The tax officer must give notice within three months of the application whether registration is cancelled.

The taxpayer must therefore:

• File the Schedule 11 return within 30 days of the circumstance arising
• In that return, include under other adjustments (debit) 13% of the value of taxable goods in stock, and 13% of the current market value of capital goods on which credit was previously claimed
• Pay any tax outstanding under that return, earlier returns or assessments
• Submit documents for tax audit within 15 days of filing the Schedule 11 return
• Keep filing returns until notified of deregistration, or for three months
• Pay any tax assessed through the deregistration audit

The tax officer must:

• Examine the documents and determine the tax liability
• Require payment of any outstanding tax
• Cancel the registration once it is paid
• Inform the taxpayer
• Give notice within three months of the application whether registration is cancelled

• An organised body closes, is sold or transferred, or otherwise ceases to exist
• The owner of a sole proprietorship dies
• A partnership is dissolved or a partner dies
• The registered person stops making taxable supplies
• The taxpayer files nil returns, or no returns, for 12 consecutive months
• Turnover in the past 12 months was below the threshold
• Registration was made in error

A taxpayer who has filed nil returns for one year continuously can apply to deregister.

The deregistration application and the Schedule 11 return for business closure, followed by the documents needed for the tax audit after applying.

Not until one year has passed since registration. After one year, you can apply to deregister.

For a sole proprietorship, you cannot transfer your registration number. Sell the business and cancel your registration; the buyer must obtain a new number. When a business is sold or closed, stock and capital goods on hand are treated as sold at market value, and VAT at the prevailing rate must be paid on them.

On deregistration, goods in stock are treated as sold, and VAT must be paid on them.

For a sole proprietorship, you cannot give your registration number to your son. Transfer the business to him and cancel your registration; he must obtain a new number.

not until the office notifies you it has been cancelled. Submit your accounting documents for audit within 15 days of applying.

If you filed the Schedule 11 return and verified it through the department's computer system (ITS), you need not keep filing. However, the office must cancel the registration and give you proof. If it has not, contact the office.

If you have filed the Schedule 11 return, you need not keep filing returns. But the registration is not treated as cancelled until the office notifies you.

The partners are jointly and severally liable for the joint venture's outstanding tax liability.

Only for the work for which it was formed, until that work is completed. The registration must then be cancelled.

Where it was formed and registered for specific work and a specific period, once the work and period set in the agreement end.

It can register only at one of the offices where its members are registered. For example, if person A is registered at the Inland Revenue Office in Dharan and person B at Biratnagar, their joint venture can register at Dharan or Biratnagar only.

Where a person applies in writing to the department to resolve uncertainty about how the VAT Act applies to their situation, the department's written opinion given in response is an advance ruling. The provision is in section 32ka of the VAT Act.

You can apply for an advance ruling on uncertainty in applying the Act, except where the matter is pending before a court or has already been decided by one.