Electronic Billing Procedure 2074 explained for Nepali businesses

Why are there two approvals, not one?

This part causes the most confusion. One approval is for the product and the other is for your business.

The software is listed. The maker of a billing device or billing software certifies that its product meets the standards in the procedure, and the Department lists it. For a product made in Nepal the maker certifies. For an imported product the authorised distributor does. The Department publishes which devices and software are listed on its own website, ird.gov.np. A business is required to use only a listed device or listed software to bill electronically.

Your business holds a permission letter. Listing is about the product. Permission is about you. A taxpayer who wants to issue invoices electronically, or who has been told to, applies to their own tax office. The application uses the prescribed format and comes with supporting documents. A tax officer or information technology officer checks that the proposed software is on the list and meets the standards. The office head then issues the permission letter. If you trade from more than one place, you disclose every branch and the software used there. Branches must run the same software as the head office.

Vendors sometimes mix these two up. The vendor’s listing does not give your business permission. You need both.

What does the software have to do?

The software standards are the longest part of the procedure, and they are written as a technical specification. In plain terms:

• The software runs on a database management system that can process SQL queries. SQL is the standard language for reading and writing data in a database.
• Data once entered cannot be deleted. Log archiving is switched on, so the database keeps its record of changes, and backups can be restored.
• Every record carries the entry date and time, whether the record is still in effect, and who entered it.
• The database holds a table or materialised view (a saved view of data inside the database), with the attributes the procedure lists. It issues invoice numbers in sequence within each fiscal year. That detail must be viewable and printable as a report.
• An invoice with its sequential number prints once. If a copy has to be printed, the printed copy says so clearly and shows how many times it has been printed. That count is stored and available during an investigation.
• The printed invoice still has to satisfy the Value Added Tax Act 2052, the Income Tax Act 2058 and the Excise Act 2058 where they apply, in the format those laws set.
• An issued invoice may be cancelled with the reason recorded. The cancellation updates the master bill schedule, and a report shows the full detail of cancelled invoices.
• The software shows and prints sales and invoice details in the prescribed schedule format.
• There is an audit trail report, or activity log, that records what every user did. It can be viewed and printed.
• Corrections are made by ending the effect of a record and writing a new one, with a separate report of corrected records.
• Database tables export to Excel, XML and PDF from the front end, the screens you use every day.
• A designated user can back up the database and the log archive.
• A user manual exists in Nepali or English, printed and also inside the software as help.
• The software is built to send invoice data to the Department’s central server through a web service or web API, which is a standard way for two computer systems to exchange data.

One more clause is worth knowing because it gives your customers money back. Where a sale is paid by an electronic payment instrument, the software has to send the prescribed details automatically to the payment system operator or payment service provider. This is so that ten percent of the VAT amount can be refunded to the consumer.

What is CBMS?

CBMS stands for Central Billing Monitoring System. It is the Department’s own system for watching the invoicing activity of businesses that have permission to bill electronically.

Taxpayers the Department names have to send invoice data to CBMS at the moment the invoice is issued. Sending a batch at the end of the month does not meet the rule. For a cloud system, the office checks that this arrangement is in place before granting permission.

Separately, the Department may connect any electronic billing system to CBMS and monitor it continuously. It may also inspect or test your system, your device and your vendor at any time. If it finds a breach of the procedure or of the conditions in your permission letter, action follows under the relevant Act and Rules.

Where does the server have to live?

The cloud clauses are detailed. Read them if your business is buying online software.

If you run your own central server, it has to be inside Nepal. You tell the Department and your tax office where it is, and they must be able to reach it.

If you rent a server or buy a hosted service, four things apply. The person operating the server has to be registered in Nepal. The server has to be inside Nepal, with prior notice of its location. The Department and office must have access. The system also has to be multi-tenant in the strict sense. Multi-tenant means many businesses share one system, and here it means one taxpayer’s data is stored apart from another’s and cannot mix.

On top of that, three parties sign an agreement in the prescribed format covering data storage and security: the software maker or distributor, the server operator and the business issuing invoices. A copy goes to the Department and the office.

Multinational companies are the only exception. They may keep the central server outside the country. Their invoice activity still has to be written automatically, at the time of issue, to a separate audit log server. That server sits inside Nepal, and the Department must be able to reach it.

Operating rules you will feel day to day

Once you hold permission, every transaction is billed through the permitted system. If that becomes impossible, you can bill another way only with the prior approval of your tax office. You must keep a backup of the database and the log for each fiscal year. Keep that backup for as long as you are required to keep your accounts. In practice, this clause makes the year-end close a real task, because each fiscal year needs its own backup.

What this means when you choose software

Four questions are enough to tell a serious vendor from a careless one.

1. Is your product on the Department’s list, and will you show me the certification? Then check the list yourself at ird.gov.np. A logo on a website is not proof.
2. Where is the server, who operates it, and are they registered in Nepal?
3. Show me a reprint. Does it say it is a copy, and does it show the reprint count?
4. Show me the activity log and the cancelled invoice report on screen.

Kuver Books is built to follow this procedure. Invoice numbers run in sequence inside the Nepali fiscal year and are never reused or edited. A reprint is marked as a copy and counted. A cancellation records a reason and keeps the original record. The activity log covers every user action and prints. Reports export for your filing, including the counterparty schedule your VAT return needs. Our listing details and where customer data is hosted are both published on the IRD listing page.

Two cautions. First, the procedure is amended, and notices extend electronic billing to new groups of taxpayers over time. Second, nothing here tells you whether your particular business is required to bill electronically today. For that, and for anything that depends on your turnover or trade, confirm with the IRD or your accountant.