What the Inland Revenue Department does
The IRD (आन्तरिक राजस्व विभाग) is a department of the Ministry of Finance. Its website lists the laws it works under: the Income Tax Act, the Value Added Tax Act, the Excise Act, the Liquor Act, the Revenue Tribunal Act and each year's Finance Act.
Its head office is in Lazimpat, Kathmandu, with branch offices across the country. The office opens Monday to Friday, from 9:00 to 5:00 in summer and 9:00 to 4:00 in winter.
IRD online services you will use
Most dealings with the IRD now happen online. These are the services its website lists:
- Taxpayer Portal: where you register, file returns and manage your tax account. The IRD currently runs the original portal and a new one side by side.
- PAN search: check that a supplier's or customer's PAN is valid before you bill.
- Tax clearance search: confirm that a tax clearance certificate is genuine.
- Tax rates and exemptions: the official rate tables for each fiscal year.
- IRD Nepal mobile app: for Android and iPhone.
The IRD has also published a video on creating an individual PAN online from a national identity card number.
Tax rates for fiscal year 2083/84
On 22 Shrawan 2083 the IRD published three rate tables for the year: income tax for individuals, income tax for companies and other entities, and tax deducted at source (TDS) on payments. A Finance Act 2083 information booklet followed on 22 Bhadau 2083, with a revised edition on 26 Asoj 2083.
In summary, as set out in our Nepal Tax Guide: individuals and couples pay 1% up to Rs 10 lakh, then 10%, 20% and 27%, and 29% above Rs 40 lakh. Most companies pay 25%, and banks, insurers, telecom, tobacco, liquor and petroleum businesses pay 30%. The general TDS rate is 15%, with lower rates for specific payments.
Always confirm a rate against the IRD's own table before you rely on it. The links are at the end of this guide.
VAT in brief
VAT is charged at 13% on most goods and services, and exports are zero-rated. A business must register once twelve months of sales or purchases pass Rs 50 lakh for goods or Rs 30 lakh for services. Returns are due within 25 days of the end of each Nepali month.
The IRD publishes the Value Added Tax Act 2052 with its amendments; the current text on its site is dated 18 Poush 2082.
Electronic billing and approved software
Electronic billing in Nepal is governed by the Electronic Billing Procedure 2082 (विद्युतीय बीजक कार्यविधि २०८२). It sets out how billing software must behave and how it is approved.
The IRD's website has a section for electronic invoices (विद्युतीय बीजक). When we read it, that section still listed the earlier Electronic Invoice Procedure 2074 with its fourth amendment, so ask the IRD or your tax adviser for the 2082 text if you cannot find it there.
If your business is required to bill electronically, your software needs IRD approval. Ask any vendor for its approval letter and confirm it with the IRD. BRAccount is built around the electronic billing rules but is not on the IRD's approved list yet.
The taxpayer incentive gift programme
The IRD runs a programme that rewards customers for asking for a bill. Buyers enter their invoices in the programme's system, and winners are announced every fortnight on the IRD website. For a business, it is one more reason to issue a proper invoice for every sale.
What your accounting software should handle
- VAT at 0, 5 and 13%, applied by rule and summed into the monthly return.
- Bikram Sambat dates and the Shrawan to Asar fiscal year.
- Tax, abbreviated and non-VAT invoice formats.
- PAN recorded for every supplier and customer.
- TDS worked out on payments, with a record for each deduction.
- An audit trail, and backups you can restore.
BRAccount applies VAT by rule and keeps your books in BS dates and rupees.
See BRAccount