PAN and VAT in Nepal

PAN and VAT in Nepal

Permanent Account Number:

A PAN (Permanent Account Number) card is a government-issued identity document that defines an individual as a tax payer. It is also vital to maintain track of the taxes that citizens have paid all along. From the past fiscal year 2019/20, the Nepalese government has made it necessary for all salaried workers in both private and government organizations to register and obtain a PAN. Tax Payer Identification Number (TPIN) is another term used for PAN, and the PAN card and PAN certificate are the documents on which the number is printed. This number is a kind of identity for any individual or tax payer and is also used by the government to keep track of the taxes paid by its residents. A PAN number can’t be changed and doesn’t need to be renewed after it’s been issued.

Since the Nepalese government is transitioning from an informal to a formal economy, registering and acquiring a Personal PAN (PPAN) is significant. According to experts, such as the Director of the Inland Revenue Department, the mandatory deployment of the PPAN would also assist to identify participants to the social security tax, which is a component of the Social Security Fund and its future social security schemes. All salaried government and private employees in Nepal are required to register and get a Personal Identification Number (PAN). For the typical Nepalese, this is a relatively new concept.

How to apply for PAN card:

  1. Visit the website of the Inland Revenue Department (IRD) at www.ird.gov.np.
  2. Locate the Tax Payer Portal link under the Services menu and click it.
  3. Click the Registration (PAN, VAT, EXCISE) tab on the left side. Locate the registration application by expanding the vertical menu.
  4. Following that, a registration form will show on the main screen. Now, fill in the requested information and select the IRD office closest to you in the ‘Verifying Offices’ section.
  5. You will be given a Submission Number if you press the OK button. Take note of this number and click the next button.
  6. Fill in all of the required personal information. Finally, press the Save button.
  7. To print a copy of the completed application form, click the Print button.
  8. Take the printed copy to the nearest IRD office in your area.
  9. The IRD office will next validate your information and issue you a PAN card.

It may take you some minutes or even an hour to get your personal account number depending on the number of applicants.

Every transaction exceeding Rs 1,000 performed by a firm or company now requires an obligatory Permanent Account Number (PAN) bill, according to the government. To withdraw their salary and benefits in the new fiscal year 2019-20, all employees will need to obtain a PAN. The requirement of a PAN will allow the tax administration office to simply track every transaction of commercial entities that are reported as expenses. 

Here is a random PAN bill format:

pan nepal

Value Added Tax:

VAT is an indirect tax on the creation or addition of value. The notion of VAT was first introduced in Nepal in 2049/50, however the law was not enacted until BS 2050. The Value Added Tax (VAT) was adopted in 1998 and is the primary source of revenue for the government. The Nepalese Inland Revenue Department is in charge of administering it. The regular VAT rate in Nepal is 13%. All goods and services that are taxed at the usual rate are included, with the exception of those that are taxed at 0% or are tax-exempt. A penalty of Rs 20,000 (formerly Rs 10,000) per tax period would be imposed if a person does not register for VAT even if the criteria for compulsory registration is met.

A random VAT bill sample is presented below:

vat nepal