VAT Return Filing Nepal: Deadlines & Penalties

📅 Which fiscal year is this? Nepal’s current fiscal year is FY 2083/84, which began on Shrawan 1, 2083 (17 July 2026). Tax rates change with each Finance Act, and a great many Nepali tax pages online still display older figures. Every rate below states the year it belongs to — and where we could only verify an earlier year, we say so instead of pretending otherwise.

Nepal is no longer a single-rate VAT country. That is the biggest VAT change in years, and most businesses have not registered it yet. Alongside it came e-invoicing powers, a new correction window, and a change to how the electronic-payment discount works.

⭐ VAT now has more than one rate. The Finance Act 2083 amended Section 7 of the VAT Act so the law provides for 0%, 5%, 13%, and any further rate the Government prescribes by Gazette notification. 13% remains the standard rate.

The New 5% Rate

What now attracts 5% VAT	Note
Passenger transport and cargo or delivery through resident ride-hailing platforms	The platform operator collects and remits under a new reverse-charge provision
Electricity to end consumers using more than 50 units a month	Business-to-business electricity trading is exempt

Which other goods and services fall into 5% is not yet knowable. The law creates the power; the assignment happens through Gazette notification. If someone tells you a broader list is already in force, ask to see the notification.

When You Must File

MonthlyThe default for most registrants

25 daysAfter the end of each tax period

Nil tooA return is required even with no transactions

Four-monthly filing is available on application to a narrow set: tourism service providers and hoteliers, publication and broadcasting media, and brick producers. Everyone else files monthly.

⚠ The nil return is not optional, and the statute is blunt about it. The VAT Act requires the return to be submitted “whether or not a taxable transaction was carried out in that month”. A dormant registered business that stops filing is accumulating penalties for every period, silently. If your business has gone quiet, either file nil returns or deregister — do not simply stop.

Two useful new provisions: taxpayers in districts without an Inland Revenue Office may file and pay within 15 days after month end through the Local Government or DTCO. And a taxpayer who filed on time may now correct errors by filing an amended return within 7 days of the original — a genuine relief for honest mistakes.

What Late Filing Costs

Charge	Amount
Late or non-filing	Rs 1,000 per tax period or 0.05% of tax payable per day — whichever is higher
Late payment	5% additional charge to the end of the following month, then a further 5%
Interest	15% per year from when the tax first became due
Six consecutive months unfiled	Name published, refunds withheld, registration may be suspended

⚠ One figure we could not pin down. The Finance Act 2083 raised a penalty in Section 29(1) from Rs 1,000 to Rs 10,000, but the clause lettering shifted between amendments and we could not map it to the current provision — so we cannot tell you with certainty whether the late-filing fine is now Rs 1,000 or Rs 10,000 per period. Assume the higher figure when deciding whether to file late, and confirm with your practitioner. Relief for force majeure is available from the Director General.

Input VAT Credit

A registered person deducts input tax paid on imports and purchases used for taxable transactions, substantiated by the prescribed documents. Restricted or partial credit applies to aeroplanes, motor vehicles and other prescribed high-value dual-use items.

Excess credit does not vanish, but it waits. Where input exceeds output, the excess is carried and set off against payable VAT for the next four months; only then is it refundable. Once determined, a refund is due within 30 days, after which 15% annual interest runs in your favour.

On the claim time limit: a one-year window from the invoice date is commonly stated, but we found no primary text fixing it. Do not sit on old invoices assuming you can claim them later — claim in the period they belong to.

🤝 Behind on VAT returns, or unsure which rate now applies?

Tell us your business type and filing status. Digital Solution will help you understand where you stand and what regularising will involve — and tell you plainly when you need a registered practitioner.

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Three More Changes Worth Knowing

Electronic payment discount is now instant

The 10% VAT benefit on electronic payments changed from a refund to an immediate exemption at billing — effectively a 1.3% discount visible on the invoice rather than money you wait for.

E-invoicing powers

IRD may now mandate e-invoices integrated with the Centralized Billing Monitoring System. Using software capable of erasing or altering transaction data carries a fine of Rs 5,00,000; other breaches Rs 1,00,000.

Automated refunds

A fully automated VAT refund system has been introduced.

Circulars are now binding

IRD public circulars are treated as final under both the Income Tax Act and the VAT Act unless a court rules otherwise — so a circular is no longer just guidance.

The e-invoicing fine deserves attention. Rs 5,00,000 for using billing software that can erase or alter records is a serious amount for a small business. If you use informal or modified billing software, that is now a specific, named exposure — not a general compliance risk.

Frequently Asked Questions

What is the VAT rate in Nepal?

13% remains standard, but the law now also provides for 0%, 5% and further rates by notification. The 5% currently applies to ride-hailing transport and delivery, and to electricity for consumers using over 50 units a month.

When is the VAT return due?

Within 25 days of the end of the tax period, with payment due in the same window.

Do I have to file if I had no transactions?

Yes. The Act requires a return whether or not any taxable transaction occurred.

Who can file four-monthly instead of monthly?

Tourism service providers and hoteliers, publication and broadcasting media, and brick producers — on application.

What is the penalty for late VAT filing?

Rs 1,000 per period or 0.05% of tax per day, whichever is higher — though a Finance Act 2083 amendment may have raised this to Rs 10,000. Confirm before assuming the lower figure.

Can I correct a mistake in a filed return?

If you filed on time, you may file an amended return within 7 days of the original.

How long can I carry excess input credit?

It is set off against payable VAT for the next four months, after which it becomes refundable.

What if my district has no Inland Revenue Office?

You may file and pay within 15 days after month end through the Local Government or DTCO.

Sources

Value Added Tax Act 2052 — Sections 7, 17, 18, 19, 26 and 29, via consolidated published text; note that clause lettering has shifted through amendments.
Finance Act 2083 changes as set out in published professional budget and tax summaries for FY 2083/84.

VAT Return Filing in Nepal: New Rates, Deadlines and Penalties