Value Added Tax (VAT) in Nepal is charged at a standard rate of 13% on taxable goods and services. VAT-registered businesses charge VAT on sales, claim credit for VAT on purchases, and pay the difference through a VAT return — usually every month.
How VAT works
A VAT-registered business adds VAT to its taxable sales (output VAT) and pays VAT on its business purchases (input VAT). It pays the government the difference.
If input VAT is higher than output VAT, the excess is usually carried forward to the next period.
VAT rates
| Type of supply | VAT |
|---|---|
| Most goods and services | 13% |
| Exports | 0% |
| Exempt goods and services listed in the VAT Act | No VAT |
| Ride-sharing services and electricity to end users (from 2083/84) | 5% |
From FY 2083/84 the Finance Act also lets the government set multiple VAT rates — not above the standard rate — by notice in the Nepal Gazette, and a committee is to study multi-rate VAT.
Who must register for VAT?
A business must register once its taxable turnover crosses the threshold set by the VAT law, and some businesses must register regardless of turnover. Businesses below the threshold can usually register voluntarily. Check the current threshold for goods, services and mixed businesses with the Inland Revenue Department before you decide. Your VAT registration uses your PAN.
Tax invoices
A VAT-registered business must issue a tax invoice for taxable sales. Input VAT can only be claimed with a valid tax invoice from a VAT-registered supplier. From 2083/84:
- the Department can require named taxpayers to register with the Central Billing Monitoring System (CBMS) and issue invoices digitally, or use the Department's own billing system;
- under the Income Tax Act, a taxpayer issuing electronic invoices is charged Rs 5,00,000 for using software that can delete or change invoice data, and Rs 1,00,000 for other non-compliance with the e-invoice rules.
VAT returns and payment
VAT returns are generally filed monthly, with the tax paid within 25 days after the end of the month. From 2083/84, a return filed on time can be amended within 7 days of submission through the prescribed procedure.
VAT changes in Budget 2083/84
- 5% VAT on ride-sharing services and on electricity supplied to end users.
- Power to set multiple VAT rates by Gazette notice.
- A 10% VAT rebate at the point of purchase for consumers paying digitally on notified goods and services, replacing the earlier refund.
- Stricter digital-invoice and CBMS requirements.
Read the full summary in VAT changes in Budget 2083/84.
Keep VAT in your books, not a spreadsheet
KhataIN calculates output and input VAT on every invoice and bill and prepares sales and purchase registers by BS month, so your VAT return matches your records.
Sources
- Institute of Chartered Accountants of Nepal (ICAN), Highlights of Federal Budget of Nepal FY 2083/84 — amendments to the Income Tax Act, 2058 and the Value Added Tax Act, 2052.
- Inland Revenue Department, ird.gov.np — Acts, rules, notices and the taxpayer portal.
Last checked: 15 September 2026 (Bhadra 30, 2083). Tax law changes with each Finance Act — confirm your own situation with the Inland Revenue Department or a registered tax professional.