Registering Your Online Business in Nepal: PAN, VAT, and Company Basics

You've set up your products, taken photos, maybe even made your first few sales over Instagram or a Facebook page. Now a question starts nagging: Am I doing this legally? Do you need a PAN? What about VAT? Do you have to register a company just to sell handmade jewellery or imported gadgets from your room in Kathmandu?

The good news: getting legal as an online seller in Nepal is more straightforward than most people assume, and you can handle the basics yourself without hiring an accountant. This guide walks you through PAN, VAT, and company registration in plain language so you know exactly what applies to you.

Why bother registering at all?

Plenty of Nepali sellers start informally, and for a small hobby income that's common. But once you want to grow, registration stops being optional and starts being useful:

• You can issue proper bills. Many customers, and almost all businesses and offices, ask for a tax invoice (bill) with a PAN number.
• Payment gateways and banks ask for it. To set up a verified eSewa or Khalti merchant account, or a business bank account for settlements, you'll typically need a PAN and registration documents.
• You avoid penalties. Selling regularly without a PAN can attract fines from the Inland Revenue Department (IRD) if you're caught.
• Suppliers and wholesalers take you seriously. Buying stock at wholesale rates often requires a registered business.

Step 1: Understand PAN (the foundation)

PAN stands for Permanent Account Number, issued by the Inland Revenue Department. It's the single most important thing for any seller. There are two flavours that matter to you:

Personal PAN vs. Business PAN

A personal PAN is tied to you as an individual (often needed for salary or basic tax purposes). A business PAN registers your trade or firm and is what lets you buy and sell goods, issue invoices, and file taxes as a business. As an online seller, you want a business PAN.

For a solo seller, the simplest route is registering a sole proprietorship (private firm) and getting a PAN against it. You can do this through the IRD's online taxpayer portal (ird.gov.np) or by visiting your local IRD / tax office. You'll generally need:

• A copy of your citizenship certificate
• Passport-size photos
• Your proposed business name and address
• For a firm, a business/trade registration from the local ward office or the relevant department

Registering at your ward office for a small private firm is often the fastest first step, and many wards issue a business registration certificate the same week. With that in hand, the PAN follows quickly.

Step 2: Know when VAT kicks in

This is where many sellers get confused. You do not need VAT to start. VAT (Value Added Tax, 13% in Nepal) becomes mandatory only when your turnover crosses certain thresholds.

As a rule of thumb, small traders dealing in goods can operate under PAN registration until annual transactions grow large; VAT registration is typically required once turnover crosses the threshold set by the IRD (commonly cited around NPR 50 lakh for goods, with a lower threshold for services). Some categories of goods and services require VAT registration regardless of turnover.

Because thresholds and category rules change, confirm your specific situation on the IRD portal or with the tax office before assuming. The practical takeaway:

• If you're a new or small online seller, start with PAN only. It's enough to operate legally and issue PAN bills.
• Track your monthly sales. As you approach the threshold, register for VAT proactively rather than waiting to be flagged.
• Once VAT-registered, you must charge 13% on applicable sales, issue VAT invoices, and file returns regularly — even in months with zero sales. Missing filings creates penalties, so don't register for VAT before you actually need it.

Step 3: Decide your business structure

Most online sellers fit one of three structures:

1. Sole proprietorship (private firm): One owner, simplest to register, lowest cost. Ideal for a single-person online store or a small shop. You and the business are legally the same person.
2. Partnership firm: Two or more owners sharing the business. Requires a partnership deed.
3. Private limited company (Pvt. Ltd.): A separate legal entity registered with the Office of the Company Registrar (OCR). More paperwork and compliance, but limited liability and a more credible structure if you plan to raise money, take on investors, or scale significantly.

For the vast majority of beginners and growing SMBs, a sole proprietorship with a business PAN is the right starting point. You can always upgrade to a Pvt. Ltd. later as you grow.

Step 4: Connect registration to how you actually sell

Being registered only helps if it flows into your day-to-day operations. A few Nepal-specific tips:

• Digital payments: Use your PAN and bank details to set up merchant accounts with eSewa, Khalti, and your bank rather than collecting money in a personal wallet. Merchant accounts give you cleaner records, faster settlement, and proper transaction reports — which make tax filing far easier.
• Cash on delivery (COD): COD is still huge in Nepal. Keep a simple record of every COD order and the amount your courier remits back to you, so your reported income matches reality.
• Festival spikes: Sales during Dashain and Tihar can be several times your normal volume. A big festive season can push your annual turnover toward the VAT threshold faster than you expect — keep an eye on it.
• Keep your invoices consistent. Every sale should generate a bill with your business name and PAN. Doing this from day one saves painful reconstruction at tax time.

This is where running your store on a platform built for Nepal pays off. With Saauzi, your online store, POS, eSewa/Khalti/bank payments, and delivery all sit in one place, so each order automatically produces a clean record and a proper bill with your PAN — turning compliance from a year-end scramble into something that just happens in the background.

Step 5: File on time

Registration is the start, not the finish. Even a sole proprietor with only a PAN is expected to file an annual income tax return with the IRD. VAT-registered businesses file more frequently. Mark these deadlines in your calendar:

• Income tax: annual filing after the fiscal year ends (Nepal's fiscal year runs mid-July to mid-July).
• VAT (if registered): regular returns on the IRD schedule, even for zero-sales periods.

Filing the basic returns yourself through the IRD portal is realistic for a small seller. Once you cross into VAT and higher turnover, a part-time accountant becomes worth the cost — but you don't need one to begin.

Your actionable takeaway

Don't let "getting legal" paralyse you. Here's the minimal path to start clean today:

1. Register a private firm at your ward office and get a business PAN from the IRD.
2. Skip VAT for now — only register once your turnover approaches the threshold.
3. Open merchant accounts for eSewa, Khalti, and your bank using that PAN.
4. Issue a PAN bill on every sale and keep monthly sales records so you know when VAT (and a real accountant) becomes worth it.

Get the PAN sorted first this week — everything else builds on it.