Vat Act

The Value-Added Tax Act, 1996 (2052)
Date of Royal Seal and Publication
20 March 1996 (2052.12.7)
Amending Acts:
1. The Value-Added Tax (First Amendment) 17 January 2002

Act, 2002 (2058) (2058.10.4)
Date of Authentication and Publication
2. Some Nepal Laws Amendment Act, 2006 14 October 2006

(2063) (2063.6.28)
3. Republic Strengthening and Some Nepal 21 January 2010

Laws Amendment Act, 2066 (2010)1 (2066.10.7)
4. Some Nepal Laws Amendment Act, 2016 25 February 2016

(2072) (2072.11.13)
5. The Financial Act, 2018 (2075) 16 July 2018

(2075.3.32)
6. The Financial Act, 2019 (2076) 15 July 2019

(2076.3.30)
7. The Financial Act, 2020 (2077) 29 June 2020

(2077.3.15)
8. The Financial Act, 2021 (2078) 29 September 2021

(2078.6.13)
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This Act commenced on 28 May 2008 (15 Jestha 2065).
1
Act No. 14 of the year 2052 (1996)
…………………… 2
An Act Made to Levy and Collect Value-Added Tax
Preamble:
Whereas, it is expedient to collect revenue effectively by managing

the process of levying and recovering the value-added tax on all
transactions including sale, distribution, transfer, import or export of goods
or services, in order to increase the mobilization of revenue by making
effective the process of collection of revenue required for economic
development of the country;
Now, therefore, the Parliament has enacted this Act in the twenty-
fourth year of the reign of His Majesty King Birendra Bir Bikram Shah
Dev.
1. Short title and commencement: (1) This Act may be cited as the
"Value-Added Tax Act, 1996".
(2) It shall come into force on such date as the Government of

Nepal may appoint by a notification in the Nepal Gazette. 3
2. Definitions: Unless the subject or the context otherwise requires, in

this Act,-
(a) "Tax" means the value-added tax to be levied pursuant

to this Act.
2
Removed by the Republic Strengthening and Some Nepal Laws Amendment Act, 2010.
3
This Act came into force since 16 November 1997 (2054.8.1) by a notification in the Nepal Gazette
dated 1 August 1997 (2054.5.2).
2
(b) "Transaction" means the supply of any goods or
service.
(c) "Taxable transaction" means the transactions referred

to in sub-section (1) of Section 5.
4
(d) "Taxable value" means the value to be determined
pursuant to Sections 12 and 12A. in relation to any
goods or service.
(e) "Goods" means both kinds of movable and

immovable property.
(f) "Service" means anything other than goods.

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(g) "Supply" means the sale, exchange, transfer of any
goods or service whether for consideration or nor or
giving of permission thereto or making contract thereon.
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(h) "Consideration" means anything to be obtained as its
value for the supply of goods or service.
(i) "Import" means the act of importing any goods or

service into 7……………. Nepal in accordance with
the prevailing laws.
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(j) "Export" means the act of exporting any goods or
service outside Nepal or to an exporting house or
special economic zone pursuant to the prevailing laws.
4
Amended by the Financial Act, 2018.
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6
7
Deleted by the Republic Strengthening and Some Nepal Laws Amendment Act, 2010.
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3
(k) "Market value" means the value determined pursuant
to Section 13.
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(k1) "Electronic means" means computer, internet, e-mail,
fax, electronic cash machine, fiscal printer like means,
and this term also includes the means of electronic
payment and such other means of similar nature as
specified by the Department.
10
(l) "Person" means any individual, firm, company,
association, institution, partnership firm, co-operative,
joint venture, trust (guthi) or fund, and this term also
includes any government body, religious organization,
benevolent association or other similar body and
branch or sub-branch thereof, which is involved in
taxable transaction, whether for profit motive or not.
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(m) "Registered person" means a person registered
pursuant to Sections 10, 10A. and 10B. to carry on
transaction.
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(n) "Registration number" means the registration number
provided pursuant to Sections 10, 10A. and 10B.
(o) "Supplier" means the person who supplies any goods

or service.
(p) "Recipient" means a person who receives any goods or

service.
9
Inserted by the Financial Act, 2018.
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12
4
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(q) "Taxpayer" means a person who is involved in taxable
transaction or a person who bears the duty to pay tax
pursuant to this Act.
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(q1) "Tax period" means the period in which the taxpayer
is required to submit the tax return pursuant to
Section 18.
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(r) "Department" means the Inland Revenue Department.
(s) "Director General" means the Director General of the

Department.
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(t) "Tax officer" means the tax officer or chief tax officer
or chief tax administrator appointed by the Government
of Nepal, and this term also includes the section officer,
Director, Deputy Director General of the Department or
any other officer so designated by the Government of
Nepal as to exercise the powers of the tax officer under
this Act.
(u) "Prescribed" or "as prescribed" means prescribed or as

prescribed in the rules made under this Act.
3. Tax officer may be appointed or designated: For the purposes of this

Act, the Government of Nepal may appoint a required number of tax
officers and, the Government of Nepal may, if it deems necessary,
also designate any other officer of the Government of Nepal to
perform the function of the tax officer.
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14
Inserted by the First Amendment.
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16
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4. Jurisdiction of tax officer: (1) The jurisdiction of a tax officer shall
be as determined by the Ministry of Finance.
(2) The Director General may so designate and empower

any tax officer to make inspection and monitoring of transaction and
assessment of tax of the taxpayers in any other area than that falling
under his or her jurisdiction.
5. Value-added tax to be levied: (1) Except as otherwise provided in

this Act, the value-added tax shall be levied on the following
transactions:
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(a) On goods or services supplied within …………
Nepal,
(b) On goods or services imported into 19…………… Nepal,
(c) On goods or services exported from20…………. Nepal.
(2) The tax shall be levied on the value of each taxable

transaction.
(3) Notwithstanding anything contained in sub-section (1),

tax shall not be levied on the transaction of goods or services
referred to in Schedule -1. In addition, the tax paid prior to the
purchase of such goods or services shall not be liable to be deducted
pursuant to Section 17 and to be refunded pursuant to Section 24.
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5A. Tax not to be levied on transfer of ownership of transactions: (1)
Notwithstanding anything contained elsewhere in this Act, if a
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registered person sells the transaction being carried on by him or her
to another registered person or if the transaction devolves on his or
her successor upon his or her death, tax shall not be levied on such
transfer of ownership. The registered person or the transferee shall,
in so selling or transferring the transaction, give information thereof
to the Department as prescribed.

in the case of transfer of any industry or business registered or to be
registered under law, the person acquiring ownership shall bear the
obligation of taxation under law.
(3) Subject to sub-section (2), the person acquiring

ownership shall bear the obligation to safely maintain accounts,
records and books of transaction of such an industry or business until
such period (prior to the transfer) as prescribed under this Act.
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5B. Power to order for registration: If there is a reasonable ground to
believe that a person required to be registered is carrying on any
transaction without getting registered, the tax officer may order such
person to get registered.
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Provided that a person who claims that he or she is not
required to get registered because he or she has carried on the
transaction only the value of which does not exceed the amount
prescribed pursuant to Section 9 shall submit an evidence thereof not
later than thirty days of the date of receipt of order for registration.
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6. Place and time of supply: (1) For the purpose of assessment and
realization of tax pursuant to this Act, the matter whether the supply
of any goods or service has been made within or outside Nepal shall
be determined as prescribed.
(2) For the purpose of assessment and realization of the tax

pursuant to this Act, the time of the supply of any goods or service
which occurs earlier out of the following times shall be regarded as
the time of supply of such goods or service:
(a) At the time when the supplier issued the invoice,
(b) In the case of supply of goods, at the time when the

recipient received or took the goods from the supplier’s
place of transaction,
(c) In the case of supply of service, at the time when the

service was rendered,
(d) At the time when the supplier received consideration

for the goods or service.

the following time shall be regarded as the time of supply in any of
the following circumstances:
(a) In the case of telecommunication service to be supplied

continuously or similar other public service, the time
when the invoice was issued,
(b) In the case of the contract providing for the payment by

installments of the value of any goods or service
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partially on more than one day, the day on which the
payment was made or the day mentioned in the contract
on which payment has to be made, whichever occurs
earlier,
(c) In the case of goods or service so used as not to get the

tax deduction facility pursuant to this Act, the time
when such goods or service were used.
(4) If more than one circumstance set forth in sub-section

(2) are simultaneously applicable with respect to the time of supply
of any transaction, the time of supply of such transaction shall be
determined in a manner specified by the Director General
objectively.
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7. Rate of tax: (1) The rate of tax to be levied pursuant to this Act
shall be the flat rate of thirteen percent.

tax on the transaction of goods or services set forth in Schedule-2
shall be levied at the rate of zero percent.
8. Assessment and realization of tax: (1) A registered person shall

assess and realize tax on the taxable value in accordance with this
Act and the rules framed under this Act.
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(2) A person who is registered or not registered to acquire a
service from any person outside Nepal shall assess and realize the tax
on the taxable value in accordance with this Act and the rules framed
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under this Act at the time of payment or at the time of acquisition of
the service, whichever occurs earlier.
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(3) Even though a building, apartment or shopping complex
or similar other structure as specified by the Department which costs
more than five million rupees and which is built for the commercial
purpose has been got constructed by a non-registered person, tax
shall be deposited as if it were built by a registered person. In the
event of a failure to so deposit, tax shall be determined and realized
from the person having ownership of that structure.
Explanation: For the purposes of this sub-section,

"commercial purpose" means the construction and sale of such
building, apartment, shopping complex or similar other structure
specified by the Department or use of such structure for income
generation by accounting it as a running or permanent property.
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8A. Provision of bank guarantee: (1) An industry that exports more than
forty percent of the total sales in the last twelve-month period of its
operation may make import by providing to the concerned Customs
Office a bank guarantee of the amount of tax leviable on importing
such raw materials as required for the production of the quantity of
goods to be exported and on the goods to be imported for a duty free
shop through the bonded warehouse.
Provided that, except for the import by a duty free shop

through the bonded warehouse, in order for other exporter to obtain
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such a facility, the goods prepared from the raw materials for export
shall have ten percent value addition.
(2) The liquors and cigarettes imported through the boned

warehouse facility referred to in sub-section (1) shall be sold only to
a person or body who is entitled to diplomatic and tariff facility as
recommended by the Ministry of Foreign Affairs, Government of
Nepal.
(3) The bank guarantee provided pursuant to sub-section (1)

shall be released from the concerned Customs Office upon
completing the procedures prescribed by the Department.
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9. Exemption for small entrepreneurs: Notwithstanding anything
contained elsewhere in this Act, those small entrepreneurs who carry
on annual taxable transaction not exceeding the prescribed amount
may be exempted, as prescribed, from the requirements to register,
submit returns and complete other process.
Provided that a small entrepreneur, other than a tax payer

submitting taxable pre-estimated income returns pursuant to sub-
section (4) of Section 4 of the Income Tax Act, 2058 (2002) carrying
on transaction of the goods and service subject to value-added tax,
may, if he or she desires to get registered voluntarily, register his or
her transaction after completing the procedures referred to in Section
10, 10A. and 10B.
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10. Registration: 29 (1) Any person wishing to engage in any transaction
shall, prior to its commencement, make an application, in the
prescribed format, to the tax officer for the registration of the
transaction.
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(2) If any person carries transaction of goods or service
liable to tax, such a person shall, not later than thirty days of the date
of levying such tax or of the operation of the transaction, make an
application, in the prescribed form, to the tax officer for the
registration of such transaction.
(3) Notwithstanding anything contained in sub-sections (1)

and (2), a person who carries on the transaction of only such goods
or service exempted from tax as mentioned in Schedule 1 shall not
be required to get registered.
(4) The tax officer shall register each person who duly
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makes an application pursuant to sub-section (1) or (2) and issue
the registration certificate, along with the registration number, to
such a person in such format and within such time-limit as
prescribed.
(5) The registered person shall so display the registration

certificate at his or her principal place of transaction as is
conspicuous to all, and if there are more than one places of
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transaction, the registration certificate attested by the tax officer shall
also be so placed at other places as to be conspicuous to all.
(6) The registered person shall use his or her registration

number in relation to all transactions relating to value-added tax,
excise and customs and also to such other transactions as prescribed.
(7) The registered person shall inform the tax officer of the
change, if any, in the information mentioned in the application made
for registration pursuant to sub-section (1) or (2) not later than fifteen
days of the making of such change.
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10A. Special provision on temporary registration: (1) In the case of an
exhibition, fair organized temporarily and similar other transaction,
the organizer and the entrepreneurs who are not registered in value-
added tax but carry on transaction of taxable goods or services in
such events shall, prior to the commencement of such transaction,
get registered temporarily in value-added tax as prescribed.
(2) An entrepreneur registered in value-added tax pursuant

to sub-section (1) may carry the goods to be kept in the programme
by way of stock transfer.
(3) The tax payer registered only for the programme

referred to in sub-section (1) shall, within seven days of the
completion of the exhibition, fair organized by the taxpayer, cancel
the temporary registration by submitting the details of the transaction
and depositing all the leviable taxes.
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13
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10B. Special provision on registration of joint venture: (1) If two or more
persons establish a joint venture to carry on taxable transaction for a
certain period, such persons shall make an application to the tax
officer of any one of the offices in which such persons have been
registered, for the temporary registration of such a joint venture.
(2) If an application is received pursuant to sub-section (1),

the tax officer shall issue the registration certificate in the prescribed
format.
(3) The joint venture registered pursuant to sub-section (1)

shall cancel the registration after the expiration of the period
specified in the agreement concluded at the time of establishment of
such a joint venture.
(4) The persons involved in a joint venture shall be jointly

or severally liable for the purpose of payment of tax obligation of
that joint venture.
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10C. Special provision on updating of registration records: A person
registered under this Act shall update the information and records as
specified by the Department in the biometric registration system of
the Department 35….
36
11. Cancellation of registration: (1) The tax officer shall cancel the
registration of a registered person if:
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35
Removed by the Financial Act, 2021.
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14
(a) In the case of a body corporate, such a body corporate is
closed down, sold or transferred or otherwise ceases to
exist,
(b) In the case of an individual ownership, such an owner

dies,
(c) In the case of a partnership firm, such a firm is

dissolved or the partner dies,
(d) That person ceases to carry on taxable transactions,
(e) That person is a taxpayer who submits zero return for

twelve consecutive years or has failed to submit any
return at all,
(f) That person is a taxpayer whose taxable transaction is

less than five million rupees in the case of goods and
two million rupees in the case of mixed transaction of
goods and service or of service in the last twelve
months,
(g) That person has been registered mistakenly.
(2) Notwithstanding anything contained in clause (f) of sub-

section (1), if the tax payer registered voluntarily pursuant to Section
9 so intends and makes an application, accompanied by the final
return of the last twelve months, in the prescribed format, the
registration of such a tax payer shall be maintained.
(3) The tax payer shall submit the documents for tax
examination within fifteen days of the submission of tax return for
15
the cancellation of registration, and the tax officer shall, within three
months, cancel such registration after tax examination of the tax
payer or inform the taxpayer if the registration is not liable to
cancellation. The tax payer need not submit the tax return after that
period if the tax officer fails to cancel the registration or to make a
decision for its cancellation within that period.
(4) Stock of the goods, including capital goods, available at

the time of the cancellation of registration on which tax deduction
facility has already been taken, tax shall be assessed and recovered
as if the stock were supplied at the market value.
Explanation: For the purposes of this sub-section, "capital

goods" means any property or any part of the property and the
property to be used in a taxable transaction.
(5) In the case of a tax payer who has any act and obligation
due to be performed under this Act as a result of the commission or
omission of anything in the course of transaction of taxable goods or
service, the cancellation of the registration of such a tax payer shall
not exempt him or her from such obligation.
(6) The other procedures on the cancellation of registration

shall be as prescribed.
12. Taxable value: (1) Except as otherwise provided in this Act, in the
case where only money is consideration, only the price that the
supplier has taken from the recipient shall be the taxable value.
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(2) The taxable value shall include 37 the following amounts:
(a) The amount of expenditures relating to

transportation and distribution borne by the
supplier in connection with the transactions, and
the amount of profit,
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(b) Excise duty, ownership fee and other tax amount
other than the tax under this Act.
Explanation: For the purposes of this clause,

"other tax amount" means tariff, fee or other
charge as specified by the yearly Financial Act.
(3) The Taxable value shall not include the amount of

discount, commission or similar other commercial discount granted
on the value in supplying goods or service.
(4) The taxable value of any goods or service exchanged

under barter shall be equal to the market value of the goods or
service so exchanged.
(5) Except as otherwise provided in this Act, in determining

the taxable value of any imported goods, it shall be determined by
adding its customs value including transportation, insurance, freight,
commission of agents and other persons, and customs duties,
countervailing duties and other taxes, if any, leviable on import,
except the value-added tax.
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(6) If the value of any goods or service is found to be much
lower than the prevailing market value, the taxable value of such
goods or service shall be equal to the market value.
(7) The taxable value of goods or service supplied for

partial consideration shall be equal to the market value.
(8) The security deposited for any goods or service shall not
be considered to be a taxable value until the supplier applies the
security as the consideration for such goods or service, in such
manner as prescribed.
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12A. To levy tax on transaction of timber: (1) Tax shall be levied and
collected on the amount of royalty or the amount of auction of any
timber of a national forest, whichever is higher at the time of the
receipt of order for auction, release deed or order for sawing of such
timber, whichever occurs earlier.
(2) If any timber of a private cultivation, private forest or

community forest is sold for commercial purpose, tax shall be levied
on it in accordance with sub-section (1) as if it were a timber of a
national forest, in spite of such a sale being free from royalty.
13. Market value: (1) 40 The market value of goods or service supplied on
a particular day shall be determined taking into account the
consideration to be received for similar kind of goods or service
freely supplied between unconnected persons.
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40
Amended by the First Amendment.
18
(2) For the purpose of this Section, the procedure for the
determination of market value shall be as prescribed.
(3) If the market value of any goods or service cannot be

determined under sub-sections (1) and (2), the market value of such
goods and service shall be determined in accordance with such
procedure as specified by the Director General.
14. Invoice to be issued: (1) Every registered person is required to issue

an invoice to the recipient, in supplying any goods or service, except
in the cases as prescribed.
(2) The format of the invoice shall be as prescribed.
(3) It shall be the duty of the recipient to obtain the invoice.

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(4) A person who transports taxable goods the value of
which exceeds ten thousand rupees outside the area designated by
the Department shall keep the tax invoice with himself or herself.
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(5) In the case of any such person and such goods as may
be specified by the Department by publishing a notice or issuing an
order in writing, the Department may so specify that has to make
public the retail selling price of such goods for such period as
specified in that notice or order. Upon receipt of such notice or order,
no goods shall be sold or transferred without making public the retail
price thereof.
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(6) Provision shall be made that on the sale of such goods
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by the person specified pursuant to sub-section (5) to any
unregistered person, recovery of consumer level tax too is to be
made by issuing the invoice of the price made public in the
prescribed format.
Provided that any person not specified pursuant to sub-section

(5) 45 may also issue the invoice referred to in this sub-section
voluntarily.
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14A. Electronic invoice: (1) The taxpayer may, with the prior approval of
the Department, issue an electronic invoice.

the Department may, by publishing a notice, order the tax payers
specified in the notice to issue the electronic invoice compulsorily
and link such electronic means to the central invoice/billing
monitoring system (CBMS) of the Department.
(3) The Department shall make and enforce procedures

regarding the security and reliability of the software or equipment
issuing invoice through electronic means.
15. Unregistered person not to collect tax: (1) A person who is not
registered shall not issue any invoice or other document showing the
collection of tax and collect the tax.
(2) If a person who is not registered collects tax, the tax so

collected shall be assessed and recovered from him or her.
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(3) Notwithstanding anything contained in sub-section (1)
or (2), the Government of Nepal, Provincial Government, Local
Level or any international organization or mission resided in Nepal
or public corporation transacting on goods not subject to the value-
added tax shall collect tax on the sale of goods or service subject to
the value-added tax.
16. Accounts of transaction to be maintained: (1) A tax payer shall

maintain and update accounts of his or her transaction of the tax
period referred to in Section 18, and if the tax officer demands such
accounts for inspection, the tax payer shall provide such accounts of
him or her wherever placed to the tax officer.
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(1a) The Department may receive continuous access to the
computer database of the tax payer.
(2) The following shall also be included in the accounts

maintained by the tax payer:
(a) Date of each transaction,
(b) Value of each transaction,
(c) Registration number of the other party of the

transaction if registered, and
(d) Such other matters related with transaction as

prescribed.
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(3) A registered or unregistered person carrying transaction
of goods or service liable to tax shall use the purchase and sales book
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certified by himself or herself for each financial year for the purpose
of maintaining accounts. The tax officer may inspect such accounts
at any time.
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(3a)51 ……………
(4) The tax payer shall preserve the accounts of transactions

for the period as prescribed.
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(5) The accounts maintained by a taxpayer by fulfilling the
procedures specified by this Act or the Rules framed hereunder shall
be recognized unless proved otherwise.
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16A. Records processed by computer to be admissible as evidence: (1)
Notwithstanding anything contained in the prevailing law, the
records relating to taxpayers maintained in the computers installed in
the Department or offices thereunder shall be admissible as evidence
for purposes of tax, except as otherwise proved.
(2) The Department may, by publishing a notice to that

effect, manage the necessary arrangements for issuance of invoices,
book keeping, submission of tax returns and payment through
electronic means.
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16B. To deduct tax paid for goods damaged: The value-added tax paid for
any goods damaged or lost as a result of arson, theft, accident, wear
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54
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and tear or destructive activity or having the usable date expired
may be deducted as prescribed.
17. Tax deduction: (1) A registered person may deduct the amount of tax
paid or to be paid by the person in importing or receiving the goods
or service related with his or her own taxable transaction from the
amount of tax collected by him or her.
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it may be provided that no deduction or only a partial deduction may
be allowed in the case of the prescribed goods that can be used for
commercial or personal purpose.
(3) If the entire portion of the goods or service transacted in

a month is not used in taxable transaction, deduction of the tax
previously paid on any goods or service shall be allowed as
prescribed only for the portion used in taxable transaction of that
goods or service.
(4) If the goods or service for which tax deduction facility

is granted pursuant to this Section cease to be used in taxable
transaction prior to the expiration of the utility period thereof as
prescribed, tax shall be recovered as prescribed as if such goods or
service were sold at the immediate market value.

tax deduction facility to be enjoyed by a registered person dealing
with the already used goods shall be as prescribed.
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(5a) The concerned taxpayer shall be allowed to deduct the
tax paid on the capital goods imported or purchased through a loan
agreement under a financial lease subject to sub-section (2).
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(5b) The concerned taxpayer shall be allowed to deduct the
tax paid pursuant to sub-section (2) of Section 8, Section 12A. and
sub-section (3) of Section 15.
(6) The tax deduction facility under this Act shall be

granted only when a claim is substantiated by such documents as
prescribed.
(7) The provision on deduction of tax paid or to be paid on

the goods in stock at the time of registration and used in the taxable
transaction shall be as prescribed.
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(8) Notwithstanding anything contained elsewhere in this
Section, the name of the taxpayer who fails to submit the tax returns
for consecutive six months shall be published, and such taxpayer’s
remaining amount of tax to be deducted, if any, shall be withheld and
his or her registration may also be suspended.
18. To submit tax returns: (1) Every taxpayer shall, upon making
assessment of the tax payable by him or her in every month, submit
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the tax return, as prescribed, to the tax officer or by a registered
post or through electronic means within twenty-five days of the
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completion of that month. Such return shall be submitted whether or
not a taxable transaction was carried out in that month.
(1a)61 Notwithstanding anything contained in sub-section, (1)

the taxpayers of the districts having no Inland Revenue Office or
Taxpayer Service Office may submit the amount of tax and tax
return to the Funds and Accounts Controller Office of the concerned
district within the 15th day of the month by which he or she is
required to submit his or her tax return. The Funds and Accounts
Controller Office shall send the tax return and the details of the tax
payment received as such to the concerned Inland Revenue Office or
Taxpayer Service Office within seven days.
(1b) 62 The procedure for submitting and sending the tax return
pursuant to sub-sections (1) and (1a) shall be as determined by the
Department.

such taxpayers as prescribed may submit the tax return of a period
that is longer or shorter than one month.
19. Payment of tax: (1) A taxpayer shall pay the 63tax for each tax period
within twenty-five days of the completion of that period.
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(2) If the taxpayer fails to submit the tax within the time
limit mentioned in sub-section (1), additional fee of ten percent per
annum shall be charged on the due amount.
(3) 65…………………
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(4) If a taxpayer submits an application for the remission of
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the additional charges imposed under sub-section (2) stating the
reason that the failure to make timely payment was caused by a
situation beyond the taxpayer's control (force majeure), the Director
General may, if he/she finds the reason reasonable, remit such
charges.
(5) The liability of tax amount to be paid on calculation of

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the additional charges referred to in sub-section (2) and the
interest referred to in Section 26 shall be charged calculating the
period from the date of expiration for submission of the tax of the
transaction of the month by which the duty is created 68within that
tax period.
69
(6) If, in assessing the tax of any taxpayer pursuant to
Section 20, it appears that the amount of tax which he or she
could get refunded exceeds the tax recoverable from him or her in
that tax period, additional charge and interest shall not be
recovered in assessing his or her tax in that tax period.
70
(7) Tax may also be paid within the time-limit mentioned
in sub-section (1) by an electronic means or a cheque guaranteed
by a bank (good for payment cheque). Tax shall be deemed paid
on the date of the payment in case of the payment made through
electronic means and receipt by the Office of cheque guaranteed
65
Deleted by the Financial Act, 2018.
66
67
68
69
70
26
by the bank (good for payment cheque) in the case of payment
made by good for payment cheque.
71
(7a) Notwithstanding anything contained in sub-section
(7), payment of tax exceeding one million rupees shall be made
through a cheque, draft or electronic means.
72
(8) No interest shall be charged and collected on interest,
additional charge and fine.
20. Power of tax officer to assess tax: (1) The tax officer may make
tax assessment in any of the following circumstances:
(a) If the tax return is not submitted within the

time limit,
(b) If an incomplete or erroneous tax return is

submitted,
(c) If a fraudulent tax return is submitted,
(d) If the tax officer has a reason to believe that

the amount of tax was understated or
otherwise incorrect,
(e) 73 If the tax officer has a reason to believe that

the price of supply is under-invoiced,
(f) 74 If supplied in a group company making under-

invoicing,
71
72
73
74
27
(g)75 If transaction is made by such a person
without registration that has to be registered,
(h)76 If sold without issuing invoice,
(i)77 If tax is collected by an unregistered person,
(j) 78 If tax is not paid pursuant to sub-section (2) or

(3) of Section 8,
(k)79 If there exists the situation referred to in sub-

section (4) of Section 17.
(2) In assessing the tax pursuant to sub-section (1), the

assessment may be made on any or all of the following bases:
(a) Proof of transaction,
(b) A tax audit report on transactions submitted by

the concerned tax officer,
(c) Tax paid by another person engaged in a similar

transaction.
(3) Notwithstanding anything contained in sub-section

(2), the burden of proof shall lie with the concerned tax officer in
assessing tax in accordance with the above provisions.
80
(4) In assessing the tax pursuant to sub-section (1), the
assessment shall made within four years from the date of
submission of the tax return. If the tax cannot be assessed within
75
76
77
78
79
80
28
that period, the return so submitted shall ipso facto be considered
to be valid.
81
(4), the Department may order for reassessment of the tax at any
time if any person has evaded tax by preparing a fake account or
invoice or other document or with fraudulent act.
82
(4b) Notwithstanding anything contained in sub-section
(4), the tax officer may not amend the tax, in a case of the
amendment of the assessed tax or reduced the assessed tax by the
Revenue Tribunal or other courts having jurisdiction, to the extent
of such amendment or deduction.
Provided that it shall not be considered as obstruction

for tax assessment in the case of re assessment order made by
such body.
(5) The tax officer shall, in assessing tax pursuant to this

Section, give a period of 83fifteen days to the concerned person to
submit his or her clarification.
21. Tax recovery: (1) If any tax payer fails to pay the payable tax
84
within the time limit referred to in this Act, ……. the concerned
tax officer may recover the tax by using any or all of the
following methods:
(a) By deducting the amount, if any, to be refunded

to the taxpayer,
81
82
83
84
Deleted by the Financial Act, 2018.
29
(b) By seizing any movable and immovable property
of the taxpayer,
85
(c) By selling through auction all or any of the
taxpayer's property at a time or in a series of
auctions,
(d) By causing to deduct amount from the taxpayer's

money held in a bank and financial institution,
(e) By causing to deduct the amount payable to the

taxpayer by the Government of Nepal or a body
corporate owned by the Government of Nepal
or 86Local Levels,
87
(f) By claiming the amount payable by a third party
to the taxpayer,
(g) By withholding import, export and other

transactions of the taxpayer,
88
(h) By preventing him or her from going outside
Nepal.
89
(i) By publication or broadcasting or publishing
in the website of the Department of the name of
taxpayer not paying leviable tax within the time
limit.
85
86
Amended by Some Nepal Laws Amendment Act, 2015.
87
88
Inserted by Financial Act, 2018.
89
Inserted by the Financial Act, 2021
30
90
(2) The information on action taken by the tax officer
pursuant to sub-section (1) shall be provided to the Director
General within twenty-four hours.
91
(3) A sum that is less than one rupee shall not be counted
in recovering or refunding the tax.
92
22. Assessment of tax in special circumstance: Notwithstanding
anything contained elsewhere in this Act, whenever there is a
reason to believe that the recovery of tax is not possible because
any person is about to leave Nepal or to transfer his or her
property to anybody or to remove or conceal assets, the tax
officer may, with the approval of the Director General,
immediately assess and recover or ask for security for the tax due
or payable by such a taxpayer.
22A.93 Provision against tax evasion plan: Notwithstanding anything

contained elsewhere in this Act, if any of the following acts is
done with ill intention to get benefits of tax, it shall be considered
to be a tax evasion plan, and the Director General may order the
tax officer to asses and recover the tax of such taxpayer:
(a) If liability of tax is reduced by carrying out any

plan and act with ill intention to evade tax by
abusing the provision of this Act,
90
91
Inserted by First Amendment.
92
93
31
(b) If any person or body conducts any act with ill
intention to evade tax or concludes any agreement
with such motive.
23. Powers of inspection and audit: (1) The tax officer may
examine, if there is a reasonable ground to believe that a
taxpayer required to be registered under this Act has been
involved in a taxable transaction without being registered.
(2) In order to examine pursuant to sub-section (1),

verify the tax return submitted by a registered person under
Section 18 and assess the tax under Section 20, the tax officer
shall have the following powers:
(a) To inspect all goods, premises, documents,

records and accounts relating to the liability for
tax,
(b) To search the place of transaction of the tax

payer or other places where the evidence related
to an offence under this Act may be found,
(c) To require, in pursuance of discharging his or her

duty, information from a person who prepares
any record, book, ledger or other document or
makes entry therein,
(d) To take possession of, remove and transfer, any

document, book and record from the place of
taxpayer's transaction or other place related
thereto,
32
(e) To perform audit of tax at the taxpayer's place of
transaction or in the Tax Office or at any other
appropriate place.
(3) If the tax officer requests any person, including a

bank or financial institution to furnish any information about
the taxpayer's transaction, it shall be the duty of such person to
furnish such information to the tax officer.
94
23A. Local administration and police to render assistance: In cases
where the tax officer seeks assistance of the local
administration and police in the course of implementing this
Act, it shall be the duty of the local administration and police
to render such assistance.
95
23B. This Act to prevail on tax provision: Notwithstanding anything
contained in the prevailing laws, except in cases where the
Financial Act to be enforced in every year amends this Act and
provides for imposition, assessment, increase, decrease,
exemption, or remission of tax, no other Act shall make any
amendment to, or alter tax provisions referred to in, this Act or
make other tax related provisions.
96
23C. To purchase goods under-invoiced: (1) Notwithstanding
anything contained in the prevailing laws, if any person under
invoices and sells any goods, showing the selling price lower
than the market price, the tax officer may withhold the
remaining goods of similar nature in stock which were under-
94
95
96
33
invoiced and sold and purchase, or cause to be purchased,
them at the selling price made under-invoiced.
(2) If, in the course of purchasing, or causing to be

purchased, the goods by the tax officer pursuant to sub-section
(1), such person does not agree to sell the goods, the tax officer
may take possession of such goods, calculate the same on the
basis of the selling price which was under-invoiced and make
payment when such person comes to get payment.
(3) The goods purchased, or caused to be purchased,

under sub-section (1) or (2) may be sold, or caused to be sold,
at such price and in accordance with such process as specified
by the Director General.
97
23D. Power to hold in custody or seize or demand security: (1) If
any person, firm, company or body conducts transaction with
evasion of tax and if action is not taken immediately it is likely
to have the accused absconded or evidence of the offence lost,
the tax officer may, with the approval of the Director General,
do, or cause to be done, the following acts:
(a) to seal the place of transaction,
(b) to seize the electronic equipment and its record,
(c) to execute a memorandum and demand cash or

asset security in an amount equivalent to the tax
evaded by the person believed to have committed
the offence,
97
34
(d) to seize the bank account in the name of the
taxpayer for three months,
Provided that the bank account may be seized

for additional three months with the approval
of the Director General in the case of non-
completion of the tax assessment process,
(e) to hold in custody for a maximum of forty-five

days, not exceeding fifteen days at one time if
no cash or asset security is deposited pursuant
to clause (c).
(2) The tax officer shall have such powers as the police
have under law with respect to inquiry and investigation into the
offence pursuant to this Act.
24. In case of amount deductible exceeding tax liability: (1) If the

amount of tax deductible by a registered person under Section 17
exceeds in any month the amount of tax collected in that month,
such excess amount may be adjusted with the outstanding
amount, if any, under this Act.
(2) The remainder of the amount after adjustment made

under sub-section (1) may be adjusted with the amount of tax
payable in the next month.
(3) A registered person may make an application to the

tax officer as prescribed, for a lump sum refund of the amount
35
remaining after making adjustment for 98consecutive four months
under this Section.
99
(4) Notwithstanding anything contained in sub-section (2)
or (3), if any registered person whose export sales for a month is
more than forty percentage of his or her total sales for that month
makes an application following the procedures specified in this
Section for the refund of the amount pursuant to Section 17, such
person may get refund of the remaining amount after making
adjustment in the due and payable amount, if any.
100
(5) If any application is made pursuant to sub-section (3)
or (4), the tax officer shall refund the amount held to be
refundable, and if it is not refunded within sixty days in the case
of sub-section (3) and within thirty days in the case of sub-section
(4) of the date of submission of the application, the Government
of Nepal shall also pay an interest on that amount as prescribed.
(6) When a registered person makes a claim for refund of

the amount remaining after adjustment under sub-sections (3) and
(4), such amount cannot be adjusted with the tax collected next
month.
25. Tax may be refunded: (1) The following amount of tax shall be
refunded if an application for refund is submitted within three
years from the date of transaction:
98
99
100
36
(a) 101 If a foreign country grants on the basis of reciprocity
tax exemption facility to diplomats of Nepal whom the
Government of Nepal, Ministry of Foreign Affairs has
granted diplomatic recognition or to diplomatic facility
enjoying persons serving in a regional or international
mission or organization, the amount of tax paid within
Nepal by any diplomat of such a country, regional or
international mission or organization to the extent of
consumption by such a person,
(a1) 102 Tax amount paid by a mission with diplomatic

privilege upon recommendation of the Ministry of
Foreign Affairs, Government of Nepal in the purchase
of goods or service taxable in Nepal,
103
(a2) Tax amount paid by the United Nations
Organization, its member and specialized agencies in
the purchase of taxable goods and service within Nepal
in the course of operation of activities in pursuance of
its objective.
(b) Tax amount of or paid by an international organization

to which the Ministry of Finance, Government of Nepal
has granted the tax exemption facility,
101
102
103
37
(c) Tax amount paid in carrying out a project conducted
104
in …….. Nepal under a bilateral or multilateral
agreement to which the Ministry of Finance,
Government of Nepal has given permission for tax
exemption,
(d) Any tax amount recovered by mistake.

105
(1), the tax amount paid by a diplomatic agency or diplomat in the
purchase of taxable goods or service, tax paid in a purchase of
less than 106ten thousand rupees at one time shall not be refunded.
107
(1b) If the price of any consumable goods or service
purchased is paid through electronic mode of payment pursuant to
the prevailing laws, ten percent of such payment shall be refunded
to his or her bank account under the procedure prescribed by the
Department as a cash incentive.
(2) The tax amount to be refunded under clause (d) of sub-

section (1) shall only be refunded to the person bearing the actual
burden of tax.
108
25A. Tax paid in purchase by foreign tourist to be refunded: The
tax paid in the goods purchased of more than twenty-five
thousand rupees and brought along with himself or herself by a
foreign tourist, returning upon visiting Nepal through air way
104
105
106
107
108
38
shall be refunded in accordance with the procedure prescribed by
the Department. Three percent of such refunded amount shall be
deducted as a service charge.
109
25B. Tax to be refunded from custom point in re-exportation: If any
good is re-exported, the person shall be refunded with the amount
on the basis of evidence of re-exportation of such goods from the
deposit for value-added tax deposited by the concerned person
from the concerned customs office.
110
25C. Tax to be refunded in re-exportation: If the payment is received in
advance in convertible currency after exportation, the amount
paid in purchase for value-added tax shall be refunded to the
concerned person shall.
111
25C(1).Tax to be refunded in excess payment made under deed or
contract: (1) The public body or organization having full or partial
ownership of the Government of Nepal in accordance with the
prevailing laws related to public procurement in the course of
making payment to the concerned contractor or supplier for the
goods or service supplied under the deed agreement or contact,
the amount deposited for tax in its name may be adjusted in the
tax to be paid by the concerned contractor or supplier.
(2) The amount deposited in excess not possible for

adjustment even after making adjustment for executive four
months pursuant to sub-section (1), the concerned contractor or
109
110
111
39
supplier shall, if he or she wishes to have refund of such amount,
submit an application to the tax officer.
(3) Upon receipt of any application pursuant to sub-

section (2), the tax officer shall refund the amount determined to
be refunded within sixty days of submission of such application.
(4) Wherever the concerned contractor or supplier

claimed for the remaining amount after adjustment to be refunded
under sub-section (2), such amount shall not be adjusted in the
amount of tax raised in the next month.
112
25C(2). Tax paid in purchase by the Drugs Industry to be refunded: (1)
If a drugs industry purchases raw material, associated raw
material and packing material for production of drugs from the
domestic industry, such industry may submit an application to the
tax officer to have refunded tax paid in such purchase in every
four months.
(2) Upon receipt of any application pursuant to sub-

section (1), the tax officer shall refund the amount determined to
be refunded within sixty days of submission of such application.
113
25D. Tax not to be refunded: Notwithstanding anything contained
elsewhere in this Act, the amount to be refunded under this Act
112
113
40
shall not be refunded if an application for refund is not made
within three years from the date of expiration of the tax period.
114
26. Interest: (1) If any amount payable under this Act is not paid
within the time-limit, interest shall be charged on the outstanding
amount after the date of expiration of such time-limit. Such
interest shall be calculated even where an application is made for
administrative review under Section 31A. and for appeal under
Section 32.
(2) For the purpose of sub-section (1), the rate of the

interest shall be fifteen percent per annum.
27. To be treated as tax: Any charge, interest and penalty to be levied

under this Act shall be treated as a tax payable under this Act.
28. Provision relating to import: (1) Except as otherwise specified by

the Ministry of Finance, Government of Nepal, the customs
officer shall recover the tax under this Act on the goods imported.
115
(1a) If, after the completion by the customs office of the
custom procedure for exportation of the goods produced or
manufactured in Nepal or after such goods have reached abroad,
such goods are re-imported because the concerned party has
rejected to accept the goods or for any other reason and such
goods are to be exported within three months of such importation,
such goods may be released against the security of the value-
added tax leviable at the time of such bringing back and such
security shall be returned once the goods are re-exported. The
114
115
41
concerned customs office shall provide details of the amount so
deposited as security and returned to the Inland Revenue Department.
(2) The customs officer may exercise the powers

referred to in this Act and the prevailing Customs Act to recover
tax with respect to goods to be imported.
116
29. Punishment: (1) In cases where any person commits any of the
following offences, the tax officer may impose a fine as follows:
(a) Twenty thousand rupees for each time 117 for the
violation of an order given by the tax officer to
register under Section 5B. or for the violation of
sub-section (1) or (2) of Section 10 or for not
being registered pursuant to sub-section (1) of
Section 10A. and sub-section (1) of Section 10B.,
(b) One thousand rupees for each violation, for the

118
violation of sub-section (5) or (6) of Section
10,
119
(b1) Two thousand rupees for each time, for not
keeping a tax board or not keeping the tax board
at the designated place pursuant to this Act or
Rules framed under this Act,
116
117
Amended by Financial Act, 2020.
118
119
42
120
(b2) Ten thousand rupees for each time, for the
violation of sub-section (7) of Section 10,
121
(c) Ten thousand rupees for each time, for the
violation of sub-section (1) of Section 14 by not
issuing an invoice and one thousand rupees for
each time for not taking the invoice,
122
(c1) Ten thousand rupees for each time, for the
123
(d) One hundred percent of the tax collected in
violation of Section 15,
124
(d1) A fine of fifty percent of the amount of tax in
question imposed by the tax officer on a person
required to be registered who engages in
transaction without registration,
125
(e) Ten thousand rupees for a failure to maintain
updated accounts of transaction pursuant to sub-
section (1) of Section 16, and twenty thousand
rupees for each time for refusing inspection of the
books of accounts,
(f) A maximum of five thousand rupees for the

120
121
122
123
124
125
43
(g) Ten thousand rupees for the violation of sub-
section (3) or (4) of Section 16,
126
(g1) 127…..
128
(g2) Five hundred thousand rupees if the taxpayer
who has or has not obtained approval for issuance
of electronic invoice is found to have used a
software that can delete or correct data,
129
(g3) Five hundred thousand rupees if the person
constructing, installing or operating the software
or equipment for issuance of electronic invoice
does not comply with the procedure issued by the
Department pursuant to Section 14A.,
(h) One thousand rupees per tax period or 0.05

percent of the tax payable per day, whichever is
higher, for the violation of the provision of
Section 18,
(i) Five thousand rupees for each time for making

obstruction in the carrying out of the functions
under Section 23,
(j) Two thousand rupees for each invoice or the fine

imposed under sub-section (2), whichever is
higher, for under invoicing,
126
127
128
129
44
Provided that, if the office finds appropriate, it
may purchase or cause to be purchased the goods
that are under invoiced, as prescribed.
(k) Ten thousand rupees for each time, for the

violation of this Act or the Rules framed under
this Act.
130
(1a) The tax officer may impose a fine of up to twenty-
five percent of the claimed tax amount on such basis as specified
by the Department if the tax liability is reduced by not complying
with this Act or the Rules framed under this Act.
131
(1b) If, in inspecting the stock of a taxpayer, the
stock of good more than that recorded in the purchase account is
found, the tax officer may require to make entry of such goods,
set the market price of such goods so found in excess and impose
a fine of fifty percent of such price.
132 133
(1c) The tax office may impose the sentence of a
fine of fifty percent of the issued invoiced price or of
imprisonment for a term not exceeding six months or both on a
seller person who issues invoice only without transferring the
goods or service.
130
131
132
133
45
134
(1d) The tax officer may impose a fine of fifty
percent of the taxable amount to a person, having obligation to
register, if carrying a transaction without registration.
135
(2) If a person commits any of the following offences,
the tax officer may impose on such a person the sentence of a fine
of hundred percent of the claimed amount of tax or of
imprisonment for a term not exceeding six months or both:
(a) Preparing a false account, invoice or other

document,
(b) Evading tax by committing a fraud,
(c) If an unregistered person acts as if he or she were

a registered person,
(d) Selling on under-invoicing,
(e) Carrying on transaction in violation of Section

30.
136
(3) An accomplice who, intentionally or recklessly, aids
or abets or entices or advises any person committing any offence
mentioned in this Act shall be liable to a fine of fifty percent of
the tax paid less by such person.
137
29A. Power of Department to order for deposit of fine: (1)
Notwithstanding anything contained elsewhere in this Act, if any
person admits in writing the commission of one or more than one
134
135
136
137
46
offence as mentioned in sub-section (2) of Section 29 prior to the
commencement of action, the Department may order such person
to deposit the amount fine not exceeding the amount of fine
imposable for the commission of such offence.
(2) The Department shall mention the description of the

offence, amount of fine to be paid and the date for payment of the
fine in in the order to be made pursuant to sub-section (1).
(3) The order made by the Department pursuant to this

Section shall be final.
138
29B. Concerned officer to be responsible: (1) If any body does
not comply with any matter to be complied with under this Act,
every employee of such body working as its officer at that time
shall be responsible for such act.
(2) Any body that does not pay the tax within the
specified period, every officer working for the time being or
before six months shall be deemed to be responsible jointly or
severally for the payment of such tax.
(3) Notwithstanding anything contained in sub-sections

(1) and (2), the said sub-sections shall not apply to the following
circumstances:
(a) In the case of commission of such offence by that

body without notice or approval of such person, and
(b) In the case where that person is found to have

applied or exercised such care, labour and skill as
138
47
may be applied or exercised by a person of common
human reason to prevent such offence.
(4) If any person deposits tax pursuant to sub-section (2),

that person may act as follows:
(a) To recover such amount paid by him or her from

such body,
(b) For the purpose of clause (a), to keep under his or her
control the property of such body which is or may
come under his or her control, not exceeding the
amount so deposited.
(5) If any person takes control of any property pursuant

to clause (b) of sub-section (4), no such body or other person may
make any claim against such person.
Explanation: For the purpose of this Section, "concerned

officer" means the manager of such body or a person working in
that capacity.
30. Suspension of transactions: If a registered person commits any of

the offences mentioned in Section 29 for two or more times, the
Director General may order the tax officer to suspend such
person's place of transaction for up to seven days so that
transaction is not carried out during that period.
139
30A. Power to order for re-assessment of tax: (1) The Director General
may, clearly setting out the reason and executing a memorandum,
order the concerned tax officer or any other tax officer to make re-
139
48
assessment of the tax if it appears from the information received
by the Director General that, prior to its assessment, any action
related to such tax assessment has become irregular or is going to
be irregular.
(2) The Director General may, within four years of the

date of initial tax assessment, order for amendment in the tax
assessment order if it appears that there has been reduction in tax
liability as a result of recklessness or mala fide intention on the
part of the tax officer.
31. To have powers as may be exercisable by the court: For the

purpose of this Act, the tax officer shall have such powers as may
be exercisable by the court with respect to the summoning the
presence, taking statement, of the concerned person, examining
evidence and requiring the submission of documents.
140
31A. Power to make application for administrative review: (1) A
person who is not satisfied with the decision of tax assessment
made by the tax officer may make an application to the Director
General against such decision within thirty days of the receipt of
information of such decision.
(2) If the time limit for making an application under sub-

section (1) expires, such person may, within seven days of such
expiration of the time limit, make an application to the Director
General for the extension of the time limit, setting out the reason
for such expiration, and the Director General may extend the time
140
49
limit for thirty days from the date of such expiration if the reason
mentioned in the application appears reasonable.
(3) The Director may, clearly setting out the reason and
executing a memorandum, give an order to the concerned tax
officer or any other tax officer to void such tax assessment order
and make reassessment of tax if the applicant’s claim seems to be
true upon examination of the application made by the taxpayer
pursuant to sub-section (1).
(4) The Director General shall decide the application

within sixty days of the date on which it was made pursuant to
sub-section (1).
(5) The concerned person may make an appeal to the

Revenue Tribunal pursuant to Section 32 if the Director General
does not make decision within the time limit referred to in sub-
section (4).
(6) The taxpayer who makes an application pursuant to

sub-section (1) shall pay the undisputed amount of tax out of the
141
amount of tax assessed, and deposit one fourth of the disputed
amount.
142
(7) If the amount to be deposited pursuant to sub-
section (6) has been deposited in excess prior to the making of
application, only the amount that remains upon deducting the
amount covered by such amount needs to be deposited.
141
142
50
(8) The amount deposited under this Section shall not be
refunded until the case is finally settled.
143
32. Appeal to the Revenue Tribunal: (1) A person who is not satisfied
with the order of suspension made by the Director General under
Section 30 or decision made by the Director General under Sub-
section (4) of Section 31A may make an appeal to the Revenue
Tribunal.
(2) The person who makes appeal pursuant to sub-

section (1) shall inform the Department in writing, enclosing the
copy of memorandum of appeal within fifteen days of the date of
registration of such appeal.
144
32A. Advance ruling: (1) If any person makes an application in
writing to the Department for the avoidance of any doubt as to the
application of this Act, the Department may issue its opinion
through an advance ruling as prescribed, and inform such person
thereof in writing.

(1), the Department may not issue any advance ruling referred to
in sub-section (1) if any matter concerning any doubt as to the
implementation of this Act is sub judice in the court or has
already been decided by the court.
145
32B. Public circular: (1) The Department may issue public written
circulars along with interpretations about the provisions of this
143
144
145
51
Act in order to make the tax administration simple by applying
the Act uniformly and to provide guidelines to the officers of the
Department or subordinate offices and persons affected by this
Act.
(2) The Department may publish the circulars issued

146
under sub-section (1) on its website or in a newspaper of
national level or other electronic media for information of the
public.
(3) The Department shall be bound to take action

pursuant to any circular issued under sub-section (1) until such
circular is cancelled.
147
33. Security to be deposited: (1) Upon filing an appeal to the Revenue
Tribunal, fifty percent of the disputed tax amount and fine amount
or a bank guarantee of such amount shall be furnished after
deposition of the undisputed tax amount from the tax assessed.
(2) Upon calculation of the amount or bank guarantee to be

furnished, twenty- five percent of tax amount furnished in the
Inland Revenue Department for administrative review shall be
included.
34. Delegation of power: (1) Except for the powers to make tax
assessment and impose punishment, the tax officer may delegate
all or any of the powers conferred on him or her by this Act to his
or her subordinate employees.
146
147
52
(2) No such power as specified in this Act to be
exercised by the Director General may be delegated.
148
34A. Power to obtain expert’s service: The Government of Nepal or
Department may obtain the concerned expert's service for tax
examination, investigation or management related work, and the
provision of governmental confidentiality mentioned in Section
37 shall be applicable to such expert.
35. Identity card of tax officer: Each tax officer shall keep with him
149
or her such identity card as prescribed and the identity card has
to be shown to the concerned person in the course of performing
duty.
36. Serving of notice: Any notice, order or document issued by the

Director General or the tax officer shall be considered to have
been served on a taxpayer after the procedure, as prescribed, has
been completed.
37. Confidentiality: No document or other information related with

tax received from any person shall be disclosed or published
except in the following circumstances:
(a) To inform the revenue collecting officer in

connection with the protection of the revenue of the
Government of Nepal,
148
149
Amended by First Amendment.
53
(b) To produce in the court in accordance with the law
related to revenue in connection with certification of
the liability of a tax payer,
(c) To keep as a part of public records in the course of

proceedings of the Revenue Tribunal or court.
38. Tax officer to be punished: If the Director General decides that

tax assessment was so made maliciously or recklessly that the tax
amount was reduced or increased, he or she shall initiate
departmental action against the assessing tax officer in
accordance with the law related with his or her conditions of
service.
Provided that a reasonable opportunity shall be given to the

tax officer to submit his or her clarification.
39. No responsibility for act done in good faith: Notwithstanding

anything contained elsewhere in this Act, no tax officer shall be
personally responsible for any act which he or she has done in
good faith in the course of discharging his or her duties.
40.150 Reward and informer expense: (1) A person who provides

information with evidence showing that a taxpayer has evaded or
attempted to evade all or some portions of tax may, by a decision
of the Director General, be provided with a reward in an amount
that is equal to twenty percent of the amount of tax recovered on
the basis of that information.
150
54
(2) If there are more than one informer entitled to
reward, the amount of reward shall be given on pro rata basis.

(1), a person who provides information of revenue leakage may be
provided immediately with a sum not exceeding ten thousand
rupees as the informer expense, on the basis of truthfulness of the
information.
(4) The name, surname and address of the person

providing information referred to in sub-sections (1) and (3) shall
be kept confidential.
41. Power to frame Rules: The Government of Nepal may frame

Rules to implement the objectives of this Act.
42. Alteration in schedule: The Government of Nepal may, by a

notification in the Nepal Gazette, make required alteration in the
schedule.
43. Other matters to be governed by prevailing law: The matters

contained in this Act and the Rules framed under this Act shall be
governed accordingly, and the other matters shall be governed by
the prevailing law.
44. Repeal and saving: (1) The following Acts are hereby repealed:
(a) The Sales Tax Act, 2023 (1967).
(b) The Hotel Tax Act, 2018 (1962).
(c) The Contract Tax Act, 2023 (1967).
(d) The Entertainment Act, 2016 (1960).
55
(2) The acts and actions performed under the Acts
repealed pursuant to sub-section (1) shall be deemed to have been
performed under this Act.
56

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The Value-Added Tax Act, 1996 (2052)

Date of Royal Seal and Publication

20 March 1996 (2052.12.7)

1. The Value-Added Tax (First Amendment) 17 January 2002

Date of Authentication and Publication

2. Some Nepal Laws Amendment Act, 2006 14 October 2006

3. Republic Strengthening and Some Nepal 21 January 2010

4. Some Nepal Laws Amendment Act, 2016 25 February 2016

5. The Financial Act, 2018 (2075) 16 July 2018

6. The Financial Act, 2019 (2076) 15 July 2019

7. The Financial Act, 2020 (2077) 29 June 2020

8. The Financial Act, 2021 (2078) 29 September 2021

An Act Made to Levy and Collect Value-Added Tax

Whereas, it is expedient to collect revenue effectively by managing

(2) It shall come into force on such date as the Government of

2. Definitions: Unless the subject or the context otherwise requires, in

(a) "Tax" means the value-added tax to be levied pursuant

(c) "Taxable transaction" means the transactions referred

(e) "Goods" means both kinds of movable and

(f) "Service" means anything other than goods.

(i) "Import" means the act of importing any goods or

(o) "Supplier" means the person who supplies any goods

(p) "Recipient" means a person who receives any goods or

(s) "Director General" means the Director General of the

(u) "Prescribed" or "as prescribed" means prescribed or as

3. Tax officer may be appointed or designated: For the purposes of this

(2) The Director General may so designate and empower

5. Value-added tax to be levied: (1) Except as otherwise provided in

(b) On goods or services imported into 19…………… Nepal,

(c) On goods or services exported from20…………. Nepal.

(2) The tax shall be levied on the value of each taxable

(3) Notwithstanding anything contained in sub-section (1),

(2) Notwithstanding anything contained in sub-section (1),

(3) Subject to sub-section (2), the person acquiring

(2) For the purpose of assessment and realization of the tax

(a) At the time when the supplier issued the invoice,

(b) In the case of supply of goods, at the time when the

(c) In the case of supply of service, at the time when the

(d) At the time when the supplier received consideration

(3) Notwithstanding anything contained in sub-section (2),

(a) In the case of telecommunication service to be supplied

(b) In the case of the contract providing for the payment by

(c) In the case of goods or service so used as not to get the

(4) If more than one circumstance set forth in sub-section

(2) Notwithstanding anything contained in sub-section (1),

8. Assessment and realization of tax: (1) A registered person shall

Explanation: For the purposes of this sub-section,

Provided that, except for the import by a duty free shop

(2) The liquors and cigarettes imported through the boned

(3) The bank guarantee provided pursuant to sub-section (1)

Provided that a small entrepreneur, other than a tax payer

(3) Notwithstanding anything contained in sub-sections (1)

(5) The registered person shall so display the registration

(6) The registered person shall use his or her registration

(2) An entrepreneur registered in value-added tax pursuant

(3) The tax payer registered only for the programme

(2) If an application is received pursuant to sub-section (1),

(3) The joint venture registered pursuant to sub-section (1)

(4) The persons involved in a joint venture shall be jointly