Nepal's fiscal year ends on the last day of Ashadh. To close it, count your stock, reconcile every bank and wallet account, clean up receivables and payables, record depreciation and accruals, settle VAT and TDS, then produce final reports, file the income tax return by the end of Ashwin and carry the balances into the new year.
Check which English date Ashadh end falls on with the Nepali date converter, or see the year at a glance on the Nepali calendar.
When does the fiscal year end in Nepal?
The fiscal year runs from Shrawan 1 to the last day of Ashadh. Because BS months are 29 to 32 days long, the English date of Ashadh end changes each year. See Nepal's fiscal year for the full calendar.
1. Record every transaction up to Ashadh end
- Enter all sales, purchase bills, expenses and payments dated up to the last day of Ashadh.
- Anything dated Shrawan 1 or later belongs to the new year.
2. Count your stock
Do a full physical count on the last day of Ashadh or as close to it as possible, and record any shortage, damage or expiry. Your closing stock directly sets this year's cost of goods sold and profit. See stock counting and shrinkage.
3. Reconcile bank, wallet and cash
- Match each bank account and digital wallet with its statement at Ashadh end.
- Record bank charges and interest you haven't entered yet.
- Count the cash drawer and petty cash, and agree them to the books.
4. Review receivables and payables
| Check | What to do |
|---|---|
| Customer balances | Confirm big balances with customers; record payments received |
| Old dues | Decide which are truly doubtful and talk to your accountant about writing them off |
| Supplier balances | Match with supplier statements; record bills received late |
| Advances | Make sure advances paid or received are not counted as sales or purchases |
5. Record depreciation and year-end adjustments
- Depreciation on furniture, equipment, vehicles and computers. Income tax depreciation follows the pool rules of the Income Tax Act, 2058, which can differ from your book figures — your accountant will handle both.
- Expenses owed but unpaid — for example Ashadh rent, electricity or salaries paid in Shrawan.
- Prepaid expenses — insurance or rent paid in advance for next year.
- Owner drawings recorded as drawings, not expenses.
6. Settle VAT and TDS
- File the Ashadh VAT return and pay any VAT due within 25 days after the month ends, if you file monthly.
- Deposit and report TDS deducted from salaries, rent and other payments for Ashadh.
- Pay the third advance tax instalment by Ashadh end if you are required to pay advance tax.
- Check that your sales and purchase VAT registers for the year agree with your books.
The tax deadlines in Nepal guide lists the exact dates.
7. Run your final reports
8. File the income tax return
Under section 96 of the Income Tax Act, 2058, the annual income tax return is due within three months after the fiscal year ends — by the end of Ashwin. Under section 98 you can apply in writing to the Inland Revenue Department, before the deadline, for an extension of up to three months — which moves the date to the end of Poush. The extension is for filing; check with the IRD or your tax adviser how interest applies to any tax still unpaid.
Use the income tax calculator for a quick estimate, and read income tax in Nepal.
9. Close the year and carry balances forward
- Close the books for the old year so no one can change it by mistake.
- Carry forward the closing balances of assets, liabilities and capital as the new year's opening balances. Income and expense accounts start the new year at zero; the year's profit moves into capital.
- Keep bills, statements, count sheets and reports for the period the tax law requires.
KhataIN Business includes a fiscal-year close, period close, stock counts with variance posting and year-end financial reports — try it at business.khatain.com.
Frequently asked questions
When is the income tax return due for a small business in Nepal?
Within three months after the fiscal year ends, which is the end of Ashwin. A business can apply in writing before that date for an extension of up to three months, to the end of Poush. Check the IRD website each year for any notice about the deadline.
What happens to profit when the year is closed?
Income and expense accounts are reset to zero for the new year, and the year's net profit or loss is added to the owner's capital or retained earnings. Assets, liabilities and capital carry forward as opening balances.