A customer asks for a bill and the owner freezes, because the word bill in Nepal is doing three jobs at once. Sometimes it means a piece of paper. Sometimes it means a PAN bill. Sometimes it means a VAT invoice with 13 percent added on top. They are not the same document, and charging the third one when you only have the first is how a small shop creates a tax it cannot pay.
This is the distinction, as the Acts stood when this was written, for fiscal year 2082/83. Finance Acts move these numbers. Before you register, or before you start adding 13 percent, read the current text on ird.gov.np or ask your own accountant. A blog is not a ruling.
A PAN is who you are
A permanent account number is the Inland Revenue Department's way of knowing which person or firm a transaction belongs to. The Income Tax Act, 2058, section 78, is the section that creates it. The Department can require a person to obtain one before transacting, and the same section says that not having a PAN does not free anyone from the tax. In practice a shop that wants a merchant QR, a business bank line, or a bill another business will accept gets a PAN early. It is the number, not a permission to charge VAT.
On Pasal a paid sale becomes a tax invoice only when three things are true together: the sale is paid, the shop has a PAN on file, and that sale has been given the next number in the shop's series. Miss any one of them and the paper says Payment receipt, and it says in words that it is not a tax invoice. A PAN printed at the top, with no invoice number under it, is still a receipt.
A VAT bill is a different registration
Value added tax is the Value Added Tax Act, 2052. The rate in force is 13 percent. Registration is not automatic with a PAN.
Section 11, as amended by the Finance Act, 2081, sets the line on a rolling twelve months of taxable turnover. The Asia Ref consolidation of the Act quotes the amended words directly: fifty lakh rupees (NPR 5,000,000) for goods, and thirty lakh rupees (NPR 3,000,000) for services or for a mix of goods and services. The old twenty lakh figure for services is what that amendment replaced. Several 2026 guides still print the old number. Do not use it.
| Trade | Mandatory VAT, past 12 months |
|---|---|
| Goods only | Above NPR 50,00,000 |
| Services, or goods and services together | Above NPR 30,00,000 |
The Act also tells a person who crosses the line to apply within thirty days. Some trades are told to register from the first sale no matter how small they are. Electronics is often named in that company, along with liquor and several professional services. The list is an IRD matter, and it moves, so the sentence to take to your accountant is "is my trade on the current compulsory list?" and not a sentence from this page.
Below the line, a PAN bill with no VAT on it is the ordinary document. Adding 13 percent because it looks more official collects a tax you are not registered to remit. That is worse than a plain bill.
The small-shop income tax is a third thing
PAN, VAT and how you compute income tax are three doors. PKF T R Upadhya and Co's tax card for 2082/83 describes the presumptive scheme for a resident natural person whose taxable business income does not exceed NPR 3,00,000 and whose business turnover does not exceed NPR 30,00,000, and a turnover-based scheme above that up to NPR 1,00,00,000 of turnover with taxable business income under NPR 10,00,000. Those are income-tax computations. They do not replace a PAN, and they are not the VAT threshold. A kirana can be inside the presumptive band and still be nowhere near a VAT registration.
What to put on the counter this week
If you have a PAN and you are not VAT registered, issue numbered PAN bills for paid sales and do not print a VAT line. If you are VAT registered, the bill has to carry the VAT, the rate, and the number in your series, and you file the return. Pasal will not file it for you. It will refuse to call a receipt a tax invoice until the PAN and the number are both there, and it will add 13 percent only if you have turned VAT on for that shop.
The longer billing piece is what a counter needs. Whether you must register the firm at all is a separate decision. When the Finance Act moves the fifty lakh or the thirty lakh, this page should move with it.