Most Nepali shop owners know they need a PAN card. Fewer know exactly when online sales push them into VAT territory — or what happens if they cross that line without registering. Whether you are taking orders through WhatsApp, running a full online store, or selling in-person and online, here is the straight answer on both obligations.
PAN and VAT Are Not the Same Thing
These two terms get confused constantly. The distinction matters:
- PAN (Permanent Account Number) — issued by the Inland Revenue Department (IRD). Required for any business or income-earning individual in Nepal. There is no minimum turnover. If you earn profit from selling, you need a PAN.
- VAT (Value Added Tax) — a 13% tax collected on taxable sales and remitted to the government. VAT registration is only mandatory once your annual turnover crosses a specific threshold. Not every small seller needs it.
Think of PAN as your tax identity. VAT registration is a separate obligation that kicks in at scale.
The VAT Threshold: The Numbers That Trigger Mandatory Registration
Nepal's VAT Act sets the following annual turnover limits for mandatory registration:
- Goods sellers (physical products): Above NPR 50 lakh (Rs. 5,000,000) per fiscal year
- Service providers: Above NPR 20 lakh (Rs. 2,000,000) per fiscal year
If your online store sells clothing, electronics, food products, or other physical goods, the NPR 50 lakh mark is the one to track. If you primarily sell services — design, consulting, software — the NPR 20 lakh threshold applies.
These thresholds can change with Nepal's annual budget. Verify the current figures directly with IRD or a registered tax consultant before making decisions. The figures above reflect the established thresholds under the Value Added Tax Act, 2052.
Does Online Revenue Count Toward the Threshold?
Yes — completely. IRD does not distinguish between where a sale happens. Your physical shop counter, Instagram DM orders, and your online store all count together. Every sale across every channel contributes to your annual turnover figure.
This catches many online sellers off guard. A small boutique might do NPR 22 lakh in walk-in sales, then add NPR 30 lakh in online orders during Dashain and Tihar. Combined, they have crossed the threshold mid-year without realizing it.
Digital payments through eSewa, Khalti, and bank transfers leave a clear, timestamped audit trail. IRD has been increasing its scrutiny of e-commerce transactions precisely because this data exists. Do not assume that accepting digital payments keeps you invisible — it does the opposite.
If You Stay Below the Threshold: What You Still Owe
Below the VAT threshold, you do not collect or remit VAT. But you are not off the hook entirely:
- Obtain and maintain an active PAN — this is not optional at any income level
- Display your PAN on every bill, invoice, or receipt you issue to customers
- File your annual income tax return (individual or business, as applicable)
- Keep records of sales and expenses — IRD can request these
Even if your store earns NPR 8 lakh a year, that income is taxable. PAN registration and income tax filing are the baseline for any seller, online or offline.
What Happens When You Cross the VAT Threshold
Once your annual turnover exceeds the applicable limit, you must register for VAT within 30 days of crossing it. After registration:
- You charge customers 13% VAT on taxable sales and show it clearly on invoices
- You file VAT returns monthly — due by the 25th of the following month
- You can claim input tax credit on VAT already paid on your own purchases (stock, supplies)
- Your invoices must display both your PAN and your VAT registration number
Failing to register after crossing the threshold — or registering late — carries financial penalties. The input tax credit benefit is real, though: VAT-registered businesses often recover a meaningful amount on their procurement costs.
Displaying PAN on Your Online Store: The Legal Requirement
Regardless of VAT status, your PAN must appear on every invoice or receipt issued to a customer. For an online store, this means:
- Order confirmation emails and digital receipts must include your PAN
- If VAT-registered, the VAT number must appear alongside PAN on all invoices
- Business buyers — shops, companies, freelancers filing taxes — will specifically request this when they need to record expenses
Saauzi's invoice settings let you enter your PAN and VAT number once, so they print automatically on every customer receipt — no manual entry per order, no compliance gaps during a busy Tihar sale.
How to Register: Step by Step
Getting Your PAN
- Visit the IRD taxpayer portal (ird.gov.np) or your nearest IRD office
- Complete the PAN registration form — individual or business entity
- Submit a copy of your citizenship certificate and business registration documents if applicable
- PAN is usually issued the same day or within a few working days
Registering for VAT (when required)
- Log in to the IRD taxpayer portal with your PAN credentials
- Submit the VAT registration application with your business registration certificate and evidence of turnover
- IRD may conduct a premises inspection before approving the application
- Once approved, you receive a VAT registration certificate with your VAT number
A registered tax consultant or chartered accountant (CA) can handle both processes for you — typically for a few thousand rupees — and is worth the cost if paperwork is not your strength.
Situations Specific to Online Sellers
COD, eSewa, and Khalti Payments
Whether a customer pays you in cash on delivery, via eSewa, via Khalti, or by bank transfer, the sale counts identically for tax purposes. Do not assume that cash collections are untracked — your courier company's delivery records and your own sales logs are sufficient documentation for an audit.
Seasonal Sales Spikes
Dashain and Tihar can double or triple a month's normal revenue. If you are approaching the NPR 50 lakh annual mark, project your full-year turnover at the start of the festival season — not at year-end. Crossing the threshold in Kartik and discovering it in Ashad means you owe back-penalties for months of unregistered VAT collection.
Mixed Goods and Services
Some sellers offer both products and services — for example, custom printing with design work, or packaged goods with installation. In mixed cases, IRD generally applies the threshold relevant to your primary business activity. A CA can confirm the correct classification for your specific situation.
The Practical Takeaway
Register your PAN now if you have not already — it costs nothing and takes one visit. Track your cumulative sales across all channels every quarter. If you are approaching NPR 40–45 lakh in a year, engage a CA before you cross the VAT threshold, not after. And make sure your PAN appears on every invoice your store generates, whether you sell ten orders a month or a thousand.
Nepal's tax system is not designed to burden small sellers — the thresholds exist to give genuine breathing room to early-stage businesses. The cost comes from ignoring the rules, not from following them.
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