Nepal tax guide

Nepal tax penalties, interest and appeals

Last checked 27 October 2026 (10 Kartik 2083). By Black Rock, the maker of BRAccount.

Each of Nepal's tax Acts sets its own late charges. VAT paid late costs a 10% a year fee and 15% a year interest; TDS 15% a year on the deposit and 2.5% a year on the statement; income tax 15% a year; excise 0.05% a day. Late returns have their own fines, and invoices, records and billing software carry fixed fines. A taxpayer who disputes an assessment asks for administrative review within 30 days and may then appeal to the Revenue Tribunal within 35 days, after paying in part of the disputed tax.

The short version

Interest is simple, never on interest or fines, and runs during review and appeal.
VAT and income tax count interest by the month: a part month counts as a whole month.
Review within 30 days: pay the undisputed tax and a quarter of the disputed (income tax, VAT).
Tribunal appeal within 35 days: the undisputed tax and half of the disputed tax and fine, or a bank guarantee; customs and excise pay all of it.
Until 30 Poush 2083 (14 January 2027), paying the tax with 1% waives the interest, fees and fines on most arrears.

Late payment and late returns

Tax	Paid late	Return filed late	Law
VAT	10% a year additional fee + 15% a year interest, by the month	0.05% of the tax a day or Rs 1,000 a period, whichever is higher	VAT Act s19(2), s26, s29(1)(h); Rules r29(3)
TDS	15% a year, per month or part month, the payer's own cost	2.5% a year of the TDS, per month or part month	Income Tax Act s119, s117(3)
Advance tax instalments	15% a year on the shortfall below 90%, until the return date	Estimated-tax statement: Rs 5,000 or 0.01% of assessable income	s118, s117(1)(a)
Income tax	15% a year, per month or part month	0.1% a year of assessable income or Rs 1,200 (Rs 100 a month under a year), whichever is higher	s119, s117(1)(c)
Advance tax collectors	15% a year	1.5% a year of the tax to be collected	s95A, s117(1)(b)
Excise	0.05% of the duty a day	0.05% of the duty a day or Rs 1,000, whichever is higher	Excise Act s4ख(2), s16(4)(ग)
Luxury fee, skill promotion fee	15% a year	0.05% a day or Rs 1,000; 25% if not collected	Finance Act 2083 Schedules 5-6
Education and health equity fees	15% a year	Rs 1,000 a return; 25% for evasion	Schedules 7-8
Telecom service charge	5% a month	-	Finance Act 2083 s8

An approved instalment plan for arrears that is then missed adds 5% a year (Income Tax Act s119(4)); excise instalment arrears also carry 5% a year (Excise Act s16(4)(ध३)).

Worked examples

VAT of Rs 1,00,000 paid 73 days late: Three months (two and a part): additional fee 10% ÷ 12 × 3 = Rs 2,500; interest 15% ÷ 12 × 3 = Rs 3,750; total Rs 6,250
The same return filed 10 days late: 0.05% × 10 days × Rs 1,00,000 = Rs 500, below the minimum: Rs 1,000
VAT of Rs 10,00,000, return 30 days late: 0.05% × 30 × Rs 10,00,000 = Rs 15,000
TDS of Rs 12,000 deposited 1 day late, statement 40 days late: Interest 15% ÷ 12 × 1 = Rs 150; statement fee 2.5% ÷ 12 × 2 = Rs 50
Income tax return two months late, assessable income Rs 1 crore: 0.1% × Rs 1,00,00,000 × 2/12 = Rs 1,667, above the Rs 200 minimum
Advance tax instalment of Rs 3,00,000, Rs 2,00,000 paid: Paid 67%, below 90%: 15% ÷ 12 on the Rs 1,00,000 shortfall, Rs 1,250 a month until the return date

Fixed fines

Breach	Fine	Law
Billing software that can delete or edit invoice data (e-invoicing taxpayer)	Rs 5,00,000; other e-billing breaches Rs 1,00,000	VAT Act s29(1)(g2); Income Tax Act s119A(1) (Finance Act 2083)
A vendor, installer or operator of billing software ignoring IRD's procedure	Rs 5,00,000	Income Tax Act s119A(2)
No VAT invoice issued / buyer not taking one	Rs 10,000 / Rs 1,000 each time	VAT Act s29(1)(c)
Goods above Rs 10,000 moved without the invoice	Rs 10,000 each time	s29(1)(c1)
Breaking IRD's directive on moving goods	Rs 50,000 each time	s29(1)(m) (Finance Act 2083)
Not registering for VAT when due	Rs 20,000 each time	s29(1)(a)
Collecting VAT while unregistered	100% of the VAT collected	s29(1)(d)
VAT books not up to date / inspection refused	Rs 10,000 / Rs 20,000	s29(1)(e)
Income tax records not kept	0.1% of assessable income or Rs 1,000 a year, whichever is higher	Income Tax Act s117(2)
Business takings into a personal bank account	Rs 5,000 or 2% of the amount, whichever is higher	s81A, s119A(3)
Stock above the purchase book	50% of its market value	VAT Act s29(1b)
Invoice without a supply	50% of the invoice value	s29(1c)
Misusing an exemption under the Finance Act	The exempted tax plus an equal fine	Finance Act 2083 s18(4)

Administrative review

A taxpayer who disagrees with an assessment or other decision applies for administrative review to the Director General within 30 days of receiving it (Income Tax Act s115; VAT Act s31A). The application needs the undisputed tax paid in full and a quarter of the disputed tax deposited (VAT s31A(6): one-fourth since the Finance Act 2076; income tax s115(6)). If the Department does not decide within its time limit, the taxpayer may go to the Revenue Tribunal.

Appeal to the Revenue Tribunal

Time limit: 35 days from hearing the decision or being served its noticeRevenue Tribunal Act s9(4)
Deposit: income tax and VAT: The undisputed tax paid and half of the disputed tax, fees and fines deposited, or a bank guarantee for it; the review deposit countsIncome Tax Act s116(5); VAT Act s33
Deposit: customs duty and excise: 100% of the assessed duty, plus any fineRevenue Tribunal Act s9(1)
Deposit: other taxes: 50% of the assessed tax and 100% of any fineRevenue Tribunal Act s9(1)
Telling the Department: Register a copy of the appeal with the Department within 15 daysIncome Tax Act s116(2), s115(9)
Filing: With the deposit receipt and a certified copy of the decision; an appeal filed late or without the deposit is returned unregisteredRevenue Tribunal Rules r9-r10
Hearings: Weekly lists every Friday; adjournments on petition at most twice; judgment the day the hearing endsRules r12, r15
Effect: The appeal does not stop the decision being carried out; interest keeps running; deposits are not refunded until the case endsIncome Tax Act s116(3); VAT Act s26, s31A(8)

The Revenue Tribunal Rules 2030 still print the older deposit (all of the tax, or half with security for the other half); the later Acts' figures above apply.

Settling old dues under the Finance Act 2083

Until 30 Poush 2083 (14 January 2027), arrears of VAT, income tax and excise, including assessed and disputed amounts (not for telecom businesses), are settled by paying the tax with 1%; the fees, additional fees, fines and interest are then waived (Finance Act 2083 s41, s44-s46). A disputed case must be withdrawn first. Details and the other dates are in the Finance Act 2083 guide.

Questions

What is the interest rate on unpaid tax in Nepal?

15% a year under both the VAT Act (s26) and the Income Tax Act (the general interest rate, s2(bg) and s119). It is simple interest, counted by the month.

What is the late fee for a VAT return in Nepal?

0.05% of the tax for each day late, or Rs 1,000 a period, whichever is higher (VAT Act s29(1)(h)); paying late adds a 10% a year additional fee and 15% a year interest.

What is the penalty for a late income tax return?

0.1% a year of assessable income or Rs 1,200 a return, whichever is higher, and Rs 100 a month when it is less than a year late (Income Tax Act s117(1)(c)).

How long do I have to appeal a tax assessment in Nepal?

30 days to apply for administrative review to the Director General, then 35 days from the review decision to appeal to the Revenue Tribunal.

How much must be deposited to appeal a VAT or income tax assessment?

For review, the undisputed tax and a quarter of the disputed tax. For the Revenue Tribunal, the undisputed tax and half of the disputed tax and fine, or a bank guarantee; the review deposit counts towards it.

Can the VAT additional fee be waived?

The Director General may waive the s19(2) additional fee when the taxpayer shows it could not pay for reasons beyond its control (VAT Act s19(4)). Until 30 Poush 2083 the Finance Act 2083 amnesty also waives fees, fines and interest on payment of the tax with 1%.

Sources

IRD billing software guide Request access