This blog explains — in simple terms — who must issue a VAT invoice, what it must contain, which format applies, and what the public should expect to receive. For your reference format of VAT invoice has been attached :

Part 1: What Must Every VAT Invoice Include?

Whether printed or issued through online billing software, every VAT invoice must contain the following fields as per the prescribed format:

1. Invoice Number and Date — A unique, sequential bill number and the transaction date (कारोबार मिति) as well as the invoice issuance date (बीजक जारी भएको मिति)

2. Seller's PAN (Taxpayer Registration Number) — The seller's Permanent Account Number (करदाता दर्ता नम्बर), name, and address

3. Buyer's Details — Name, address, and PAN of the buyer. If the buyer is a registered taxpayer, their PAN must be mentioned.

4. Mode of Payment — Whether the transaction was settled by cash (नगद), cheque (चेक), credit/debit (उधारो), or other means

5. HS Code (हार्मोनाइज्डकोड) — NEW REQUIREMENT: The Harmonized System Code for each item of goods, at minimum the first 4 digits. For imported goods, this must match the Customs Declaration (भन्सार प्रज्ञापन पत्र).

6. Description of Goods/Services — Clear description including type (किसिम), size (साइज), model, and brand where applicable

7. Quantity and Unit Price — Number of units sold (परिमाण) and price per unit (प्रति इकाई मूल्य)

8. Discount — Discount percentage and amount, if any

9. Taxable Value and VAT — The value on which VAT is applied (कर लाग्ने मूल्य), the VAT rate (%), and the VAT amount, stated separately

10. Total Amount (Grand Total) — The final payable amount inclusive of VAT (जम्मा)

11. Seller's Signature — Authorized signature of the seller (बिक्रेताको सही)

Part 2: Who Must Issue a Tax Invoice?

PAN Registration — Mandatory for All Businesses

Every business operating in Nepal must register for a Permanent Account Number (PAN) from the IRD, regardless of their size or turnover. A PAN-registered business that has not yet crossed the VAT threshold must issue a PAN invoice (not a VAT invoice) for its transactions.

VAT Registration — When Does It Become Mandatory?

VAT registration is mandatory once a business crosses the following annual turnover thresholds under Section 10 of the Value Added Tax Act, 2052:

Type of Business Annual Turnover Threshold

Goods only Above Rs. 50 Lakhs (Rs. 5 Million)

Services only Above Rs. 30 Lakhs (Rs. 3 Million)

Mixed (Goods + Services) Above Rs. 30 Lakhs (Rs. 3 Million)

Once registered for VAT, a business must charge 13% VAT on all taxable supplies and issue a VAT invoice as per the prescribed format. Voluntary registration is also permitted for businesses below the threshold.

Which Businesses Must Issue VAT Invoices?

• All VAT-registered traders, importers, manufacturers, and wholesalers

• Retailers selling taxable goods or services

• Restaurants, hotels, supermarkets, and service businesses registered for VAT

• Businesses using computerized or online billing systems approved by IRD

Part 3: The Three Prescribed Invoice Formats

The IRD prescribes three types of VAT invoices under the VAT Rules, 2053 — all three of which have been updated by the Twenty-Sixth Amendment to include the HS Code column:

Format Legal Reference Used For Key Feature

Schedule 5 Rule 17, Sub-rule (1) Standard B2B Full buyer and seller details required

and B2C transactions

Schedule 5Kha Rule 17, Sub-rule (1Kha) Retail sales with Price shown as VAT consumer price -inclusive consumer price

Schedule 6 Rule 18, Sub-rule (1) Small/abbreviated Cannot be used if taxable value transactions exceeds Rs. 10,000

Nepal VAT Invoice : What Businesses Must Issue and What the Public Must Know

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