Monthly VAT Return and eTDS Filing in Nepal: The 25-Day Routine, Step by Step

The VAT Return: Deadline and Tax Period

Under the VAT Act 2052 the default tax period is one Bikram Sambat month. The return is due in the Schedule–10 format within 25 days of the month ending, and the tax shown on it is payable on the same date (s.18(1), s.19(1); VAT Rules r.26(1)). In practice: Kartik’s return is due by the 25th of Mangsir.

The return nets your output VAT (13% charged on taxable sales) against the input VAT on purchases you are entitled to credit. If output exceeds input, you pay the difference. If input exceeds output, the excess carries forward as credit.

Four-monthly (chaumasik) filing, on application

Rule 26(3B) of the VAT Rules 2053, as amended, lets the Department fix a four-monthly tax period instead — but only on application, and only for:

• a taxpayer with annual turnover up to NPR 1,00,00,000 (one crore);
• small and medium industries (added by the VAT Twenty-Eighth Amendment Rules 2083); and
• print, electronic or broadcast publication houses.

It is not automatic: you file monthly until the Inland Revenue Office approves the change. And older guides — including Baker Tilly Nepal’s 2081/82 tax fact sheet — still list the earlier sector test (hotels, tourism, brick producers, media), which the turnover test replaced. Our VAT registration guide covers the amendment history.

How to File a VAT Return on the IRD Taxpayer Portal

The return is filed at ird.gov.np → Taxpayer Portal. The IRD has relabelled screens more than once, so treat the menu names below as a guide rather than a script.

1. Close the month in your books. Reconcile sales invoices and purchase bills, and confirm each supplier’s PAN.
2. Prepare the sales and purchase registers in the IRD’s current prescribed Excel format — it has been re-issued several times, so download it fresh.
3. Open the VAT return entry. On the portal, choose the VAT module and E-VAT Return Entry. The portal issues a submission number tied to a username and password you set; note it, because it is how you return to a saved draft.
4. Select the period. Fiscal year, filing period and month. The filing period must match the one registered against your PAN, or the return will not save.
5. Enter the figures. Taxable sales and their VAT; exempt and zero-rated (export) sales; taxable domestic purchases and imports with their VAT; exempt purchases; debit and credit note adjustments; and any credit brought forward.
6. Save, review, then submit. Tick the declaration and submit. Once submitted, the portal will not let you change the data — its own message is “The data have already been submitted and you cannot change”.
7. Verify the return. A submitted return is not final until it is verified, either by you through the taxpayer login (select the module, enter the submission number, Verify) or by the tax office.
8. Pay through the voucher. Generate the payment voucher for the amount due and pay it at a bank or online (connectIPS and bank channels are commonly used). Keep the voucher number and the filed return as your proof.

The Nil VAT Return

A month with no sales and no purchases still needs a return. The duty to file attaches to being registered, not to trading (s.18(1)), so a dormant VAT-registered business files a nil return every period — same portal, same deadline, zeros in the figures.

Skip it and the late-filing penalty under s.29(1)(j) still applies: the minimum is NPR 1,000 per tax period, which is NPR 12,000 a year for a business with no transactions at all. Two other consequences follow. If a return stays unfiled for four months past its due date, the Tax Officer may block your imports and exports (s.18(3)). And filing nil or no returns for twelve consecutive months is a ground for cancelling your registration under s.11(1) — which, if it happens, brings a VAT charge on stock and assets you still hold.

TDS: The Deposit and the eTDS Return Are Two Jobs

When a business pays rent, a service fee, a contractor, interest or a commission, the Income Tax Act 2058 makes it a withholding agent: it deducts tax from the payment and passes it to the IRD. There is no separate registration for this — making the payment is what creates the duty.

Section 90 then requires two things within 25 days of the end of the month in which the tax was withheld:

• The deposit — paying the withheld tax into the government revenue account by voucher.
• The eTDS return — the statement on the taxpayer portal that lists each payee’s PAN, the amount paid and the tax withheld. This is what gives your supplier or landlord credit for the tax against their own return.

Doing one without the other leaves you non-compliant: a deposit with no statement is cash the IRD cannot attribute to anyone, and a statement with no deposit is a declared debt. On the portal you enter the month’s eTDS records, pay the deposit voucher, then match the deposit to the statement and verify it.

Common TDS rates

These match the full table in our tax filing guide (rates for FY 2082/83, set by the annual Finance Act):

The VAT status of the payee changes the service-fee rate tenfold, so check it before you pay, not when you file.

Penalties and Interest

Late filing and late payment are charged separately, and the charges stack:

Two details matter. The s.119 interest falls on you, not the payee: s.119(3) bars a withholding agent who missed the s.90 deadline from recovering it from the person paid. And the s.117(3) rate is another published conflict — Baker Tilly Nepal’s tax facts and ACT Nepal’s penalty summary give 2.5% a year, while at least one guide reading an older English text of the Act gives 1.5%. We use 2.5%; the late filing penalty calculator applies these rules to your own figures.

Annual Sales and Purchase Books

The monthly registers are not the end of it. Section 16 of the VAT Act requires you to keep a self-certified purchase book and sales book for each fiscal year, at the place of business, and produce them when the Tax Officer asks. Clean monthly registers make the annual books almost free.

On the income tax side, the annual return carries Annex 13 — the D-03 return companies file, and, according to the IRD’s own procedure note, the D-02 return as well. It is commonly described as the counterparty-wise detail of purchases and sales, which is why annual books that disagree with your monthly registers surface at year end. We have not been able to confirm the annex’s current reporting threshold from an IRD source, so check the form as issued for your year rather than relying on a figure from a blog post.

What Commonly Trips Businesses Up

These are the problems most commonly reported by filers and accountants. None is exotic; each costs real money.

• Register mismatches. The figures in your sales and purchase registers do not match the totals on the return, or a register is uploaded in an old template and rejected the day before the deadline.
• The auto-detected VAT mismatch. The IRD matches your purchase entries against the sales your suppliers declared. If a supplier files late, under-reports or quotes a wrong PAN, your input credit gets questioned — even though you paid the VAT. Reconcile with major suppliers monthly and prefer suppliers who file.
• Nil months left unfiled. “We had no sales” is the most common reason a dormant business owes NPR 12,000 a year for doing nothing — and one old unfiled return is enough to hold up a tax clearance certificate.
• A verified eTDS return cannot be edited. A wrong payee PAN or amount, once verified, is commonly reported to need a written correction application at your tax office. Your supplier, meanwhile, cannot claim the credit. Check every PAN before you verify.

A Monthly Calendar That Works

Frequently Asked Questions

What is the last date for filing a VAT return in Nepal?

Within 25 days of the end of each Nepali month — so by the 25th of the following month. The VAT payable is due on the same day. Four-monthly filers file within 25 days of the end of each four-month period.

Who can file VAT every four months instead of monthly?

On application, a taxpayer with annual turnover up to NPR 1,00,00,000, small and medium industries, and publication or broadcasting houses (VAT Rules r.26(3B), as amended). It is not automatic: you keep filing monthly until your Inland Revenue Office approves the change.

Do I have to file a VAT return if I had no sales?

Yes. A VAT-registered business files a nil return for every period. Missing it attracts at least NPR 1,000 per period under s.29(1)(j) of the VAT Act, and twelve consecutive months of nil or no returns is a ground for cancelling the registration.

What is the difference between depositing TDS and filing eTDS?

The deposit pays the withheld tax into the government account; the eTDS return is the statement that tells the IRD whose tax it is, by payee PAN. Both are due within 25 days of the month end, and missing either one carries its own charge.

Can I correct an eTDS return after verifying it?

Not online. Once verified, a correction is commonly reported to need a written application at your tax office, and until it is fixed the payee cannot claim the credit. Check every PAN and amount before you verify.