What every invoice must show
- The words 'कर बीजक' (tax invoice) printed clearly on the face of the copy given to the buyer, and three copies in all: the original to the buyer, a second kept separately for the tax office on demand, a third for your own records.
- Both parties' PAN and a serial number. Income Tax Rules rule 23(4) requires every PAN holder in business to issue serially numbered invoices carrying their name, address and PAN — that applies whether or not you are VAT-registered. For the buyer it matters commercially: an expense on an invoice over NPR 2,000 with no PAN on it is not deductible.
- For goods, the type and size, and for imported items at least the first four digits of the harmonised code as it appears on the customs declaration, plus model and brand where there is one.
- Two separate dates — Schedule-5 has a field for the date of the transaction and another for the date the invoice was issued — and the method of payment (cash, cheque, credit or other). An abbreviated invoice (Schedule-6) is allowed for retail only with the tax officer's written permission, never for a sale over NPR 10,000, and it gives the buyer no input credit.
Numbering, keeping and correcting invoices
Keep records for the periods in the law. The VAT Rules 2053 (rule 23(7)) require VAT records to be kept for six years, while Income Tax Act section 81(2) requires business records to be kept in Nepal for five years from the end of the income year unless the Department notifies otherwise. VAT-registered businesses must also keep an up-to-date transaction record and a self-certified purchase and sales ledger for each fiscal year (VAT Act section 16). A document that is not in Nepali or English may be ordered translated at the taxpayer's cost (Income Tax Act section 81(3)).
Correct an invoice with a credit or debit note, not by overwriting. Rule 20 of the VAT Rules requires a serial number, the date, the supplier's name, address and registration number, the buyer's details, the number and date of the original tax invoice, a description and the reason, the amount of the change and the change in tax. A monthly record of these notes must be kept. A sale paid in foreign currency is invoiced in rupees at the Nepal Rastra Bank rate on the transaction date (rule 21).
Penalties under VAT Act section 29: Rs 10,000 for not issuing an invoice, Rs 1,000 for not taking one, Rs 10,000 for not keeping up-to-date records and Rs 20,000 for not allowing inspection of them. Under-invoicing costs Rs 2,000 per invoice or the section 29(2) penalty if higher. Not keeping Income Tax Act records costs the higher of 0.1% of assessable income and Rs 1,000 (section 117(2)).
Electronic invoicing in Nepal
Yes, and the net is widening. VAT Act section 14A lets any taxpayer issue electronic invoices with the tax office's prior approval, and lets the Department order named taxpayers to issue them and to wire their billing system into its Central Billing Monitoring System (CBMS). IRD's notice of 20 Jestha 2079 made e-billing compulsory from 1 Shrawan 2079 (17 July 2022) for taxpayers whose VAT or income return for 2077/78 or 2078/79 showed turnover above NPR 100,000,000, and for every cinema hall on the box-office system; the earlier notice of 29 Falgun 2075 already covered hotels, restaurants and eateries and internet service providers above NPR 50,000,000 and departmental stores, marts, flooring and furnishing businesses above NPR 100,000,000. Banks and others that by their nature do not invoice consumers directly are outside it. On CBMS linkage the current instruments differ: IRD's decision of 27 Chaitra 2082, published 4 Baishakh 2083, requires it for annual turnover above NPR 200,000,000, while point 70(kha) of the FY 2083/84 budget speech sets the line at NPR 100,000,000, and IRD offices are issuing notices on the NPR 100,000,000 figure. Only equipment and software listed by IRD may be used, under the Electronic Invoice Procedure 2074. Software that can delete or alter records carries a NPR 500,000 fine; Finance Act 2083 regraded the penalties on e-invoice issuers to a floor of NPR 100,000 and a ceiling of NPR 500,000, and lets the Department supply a billing system itself.