How to file a VAT return in Nepal every month

When is the VAT return due?

Most VAT-registered businesses in Nepal file monthly. The return for a Nepali month is due by the 25th of the following Nepali month, and the payment is due at the same time. Some categories of taxpayer are allowed a longer cycle, and the Department can set a different one. If you believe you are not a monthly filer, get that confirmed in writing. Do not assume it.

The deadline follows the Nepali calendar, so it moves against the Gregorian calendar. A reminder set for the 10th of every English month will drift. A quiet month does not extend the deadline either: a nil return (a return showing no trade) is still due.

Week by week, what to do

During the month, issue every sale on a proper invoice at the time of the sale, in sequence. Record every purchase bill as it arrives. Save the supplier’s registration number on the supplier record, not typed into a note. If a supplier bill is missing a number or shows VAT inside the price, send it back straight away, not in three weeks.

In the last week of the month, reconcile, which means checking your records against each other. Three checks catch most errors:

1. Does the sales register total agree with your invoice numbering, with no gaps and no numbers reused? Gaps are the first thing an officer looks for.
2. Does every credit note and debit note point at an original invoice, and has the VAT on it been adjusted in the same period?
3. Does the purchase register total agree with the bills you physically hold, and does every bill you are claiming carry a valid registration number?

Before you file, print the sales register, the purchase register, both return registers and the VAT summary. Work out the net figure yourself before the portal shows it. Then, if the two figures differ, you can look into it calmly instead of being caught by surprise.

How is the VAT figure built?

Output VAT is the tax you charged customers on taxable sales in the period. Input VAT is the tax you paid suppliers on purchases for the business in the period. It counts only where a valid tax invoice from a registered supplier supports the purchase, and the purchase is not in a category the Act disallows.

Net VAT payable is output VAT minus eligible input VAT. If input VAT is larger, you hold a credit. A credit is generally carried forward, and a refund is available only in the circumstances the Act provides, within its time limits.

Here is how the sum works, without real numbers. Your sales register gives one total for taxable sales and one for the VAT charged. Your purchase register gives the same pair for purchases. Two subtractions produce the figure you pay. Zero-rated or exempt sales are reported separately, and they change the arithmetic. So mark exempt items correctly in your item list from the start, instead of fixing them at filing time.

What is the counterparty schedule?

The return goes in with a schedule of your counterparties, meaning the businesses you bought from and sold to. It is a table with one entry per party. Each entry carries the registration number and trade name, opening and closing balances, and purchases and sales split between goods and services. Because of this schedule, a wrong registration number on a customer record causes a real filing problem.

Fix it at the start. Enter the registration number when you create the customer or supplier, not when you need the schedule. We explain the schedule itself in Annex 13 explained.

Filing and paying

You file on the Department’s taxpayer portal with your own login. You then pay through the voucher or bank channel your office accepts. Keep the submitted return and the payment receipt together with the month’s registers. An auditor asking about a period three years from now wants all three in one place.

Customers sometimes ask about one more rule. Where a sale is paid by an electronic payment instrument, the Electronic Billing Procedure 2074 requires listed billing software to pass the prescribed details to the payment provider. This is so that ten percent of the VAT amount can be refunded to the consumer. That refund goes to the consumer. It does not reduce the VAT you report.

What goes wrong most often?

• Filing late, or not at all, in a month with no trade. Fines and interest apply to the failure, however small the trade.
• Claiming input VAT on an incomplete bill. Without a valid invoice there is no claim.
• Gaps in the numbering. These are usually caused by a second bill book or a spreadsheet running alongside the software.
• Editing an issued invoice. Corrections belong in credit and debit notes. Where you bill electronically, deleting or editing is not permitted at all.
• Wrong or missing registration numbers on parties. The mistake shows up in the counterparty schedule.
• Mixed up months. A bill dated at the very end of a Nepali month and entered in the next period will not reconcile. Work in Bikram Sambat for tax purposes and convert to English dates only when you need to. The date converter is there for exactly that.

Making the month boring

Aim for a filing that raises no questions. Three habits get you there. Keep one numbering sequence, with no parallel bill book. Make sure supplier and customer records carry the right registration numbers from the day they are created. Reconcile in the last week of the month, not after the deadline.

Software helps because it produces the registers as reports, so you do not build them by hand. In Kuver Books the VAT hub has the sales register, the purchase register and both return registers. It also has a VAT summary laid out by Nepali month, with monthly, cumulative and remaining figures. The counterparty schedule shows registration numbers, trade names, opening and closing balances and the goods and services split. Each one exports to spreadsheet or PDF for filing, and date filters work in Bikram Sambat. Invoices are numbered in sequence within the fiscal year and cannot be reused or edited, so the gaps that cause questions do not appear. Credit and debit notes stay linked to the original invoice.

What the software will not do is decide your filing cycle, your exemptions or your refund eligibility. Those are for the IRD or your accountant.