Nepal VAT Registration Thresholds for Goods and Services

Know the currently stated thresholds

IRD’s VAT FAQ currently states annual thresholds of more than NPR 5 million for VAT-attracting goods and more than NPR 2 million for taxable services. Confirm the current Rules and notices when the business approaches a limit because thresholds can be amended.

Turnover is not profit

Registration testing generally follows sales or purchase/turnover indicators, not net income after expenses. Maintain a rolling taxable-sales report and do not exclude credit sales, digital receipts or branch sales merely because cash has not reached one bank account.

Mixed businesses need a written method

A shop that also installs, repairs or consults should not assume the goods threshold covers every receipt. Separate goods, services, exempt supplies and disposals, then apply the rule supported by the current law to the combined facts.

Act before crossing

Review turnover monthly and forecast the next few months. Once registration becomes compulsory, delayed registration can expose the business to output VAT and consequences even if VAT was not collected from customers.

• Monthly taxable turnover
• Rolling twelve-month total
• Forecast confirmed orders
• Exempt and zero-rated sales shown separately
• Date registration advice was obtained

A practical control to retain

Keep a registration dashboard that is independent of the annual financial statements. It should show rolling taxable goods, taxable services, exempt supplies and unusual disposals, with cancelled sales removed through a visible adjustment. Add alerts before the threshold is reached and nominate who will submit the application, change invoices and communicate pricing. Registration discovered after contracts are signed can turn VAT into the seller’s own cost.

For small businesses, freelancers, retailers and accountants, the sign-off should answer the guide's four core questions in writing: IRD currently states NPR 5 million for taxable goods and NPR 2 million for taxable services. Use taxable turnover, not profit. Mixed activities require careful classification. Compulsory rules can override the general threshold. Record who checked those answers, the source date and any unresolved fact. If a later invoice, contract or Schedule amendment changes one answer, reopen the classification or return treatment instead of silently carrying the old assumption forward.