If you've started selling on Instagram, TikTok, or a website and money is finally coming in, you've probably hit the same worry every new Nepali seller does: "Do I need a PAN for this? Am I doing something illegal?" Let's clear it up in plain language — no jargon, no scare tactics.
The short answer
If you are selling casually and occasionally — a few items to friends, an old phone on a Facebook group — nobody expects you to register anything. But the moment selling becomes a regular business with the intent to earn profit, Nepali law expects you to be registered and to hold a PAN. In practice, the trigger isn't a single rupee figure — it's whether you're operating as a business. Once you advertise, restock, take COD orders weekly, and accept eSewa/Khalti payments, you are a business.
What exactly is a PAN?
PAN stands for Permanent Account Number, issued by the Inland Revenue Department (IRD). It's your tax identity. There are two flavours that confuse people:
- Personal PAN — tied to you as an individual, often used for salary/employment.
- Business PAN — issued to your registered firm so the business can invoice, pay tax, and operate formally.
For selling online as a business, you generally want a business PAN, which comes after you register your firm. PAN by itself isn't the goal — it's one step in becoming a legitimate, bankable business.
PAN vs. firm registration vs. VAT — three different things
People mix these up constantly. They are separate:
- Firm registration — legally creating your business (sole proprietorship, partnership, or private limited company).
- PAN — your tax registration number from IRD, taken after the firm is registered.
- VAT — a separate registration required only once you cross a turnover threshold (or for certain compulsory categories).
Most new and small sellers operate on PAN only and are not required to register for VAT yet. As a rough guide, VAT becomes compulsory when annual transactions cross roughly Rs 50 lakh for goods (and a lower threshold for services), though some business types must register for VAT regardless of size. When you're starting out selling kurtis, gadgets, or homemade products, PAN-only is usually where you'll be — and that's perfectly legal.
When do you legally need to register?
Register and get a PAN when any of these are true:
- You're selling regularly and for profit, not as a one-off.
- You want a merchant account with eSewa, Khalti, or a bank/IME gateway — they ask for firm registration and PAN/VAT documents to give you a business account (a personal wallet is not built for daily sales volume or refunds).
- You need to issue proper bills/invoices to customers or to corporate/wholesale buyers.
- You plan to import stock, deal with suppliers who need a PAN bill, or open a current account in your business's name.
If you're only running a small COD operation through a courier and a personal wallet today, you're not in trouble — but registering early removes a ceiling on your growth and keeps you out of penalty territory as you scale.
How to register — the realistic steps
For most online sellers, a sole proprietorship (एकल स्वामित्व) is the simplest and cheapest path. Typical steps:
- Pick a business name and choose your structure (sole proprietorship is fine to start; go pvt. ltd. later if you take on partners or investment).
- Register the firm — depending on your business type and size, this happens at your local ward/municipality office or the Department of Cottage and Small Industries (घरेलु). You'll typically need citizenship copies, passport photos, and the registration form.
- Apply for PAN at IRD — this can be done online via the IRD taxpayer portal and finalised at your tax office. Bring your registration certificate, citizenship, photos, and a rent agreement if you have a shop/office.
- Open a business bank account using your firm registration and PAN.
- Apply for merchant accounts with eSewa and Khalti using the same documents.
Costs are modest for a sole proprietorship, and many sellers complete it in a few visits. If paperwork stresses you out, a local accountant (lekha) will handle the whole thing affordably.
What about tax once I have a PAN?
Having a PAN doesn't mean huge tax bills. Small businesses below the VAT threshold usually fall under simplified/presumptive tax for small taxpayers — a small fixed annual amount based on turnover bracket — plus an annual income tax return. The key habit: keep records of sales and purchases from day one. Your POS and order history are exactly what you'll need at filing time, so clean data saves you money and stress.
This is where running your store on organized software pays off. With Saauzi, your online store, POS sales, and eSewa/Khalti/bank payments sit in one dashboard, so your revenue records are already structured when it's time to file or apply for a merchant account — no scrambling through screenshots and copybooks.
A note on Dashain–Tihar season
Festival months are when a casual seller often crosses into "real business" volume. If you expect a Dashain/Tihar surge, get your registration and merchant accounts sorted before the rush — gateway approvals and bank accounts take time, and you don't want to be stuck on a personal wallet when orders triple.
Common myths, cleared up
- "I need VAT to sell anything." No — PAN-only is enough for most small sellers.
- "Selling on Instagram is illegal without registration." Casual selling isn't, but a regular business should register.
- "Registration is expensive and complicated." A sole proprietorship is cheap and quick; complexity comes only with pvt. ltd. and VAT.
Your takeaway
If you're selling regularly to make a profit in Nepal, treat it like a business: register a sole proprietorship, get a PAN, and skip VAT until your turnover requires it. Do it before festival season, keep clean sales records from day one, and you'll unlock proper eSewa/Khalti merchant accounts and a business bank account — the foundation every growing Nepali store needs. Start small, stay legal, and let your paperwork grow with your sales, not against them.
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