Types of Invoices in Nepal

[Please refer to the disclaimer section before taking any decisions on the basis of this article]

What is an invoice or bill?

An invoice or bill is a document that outlines the details of a transaction between a seller and a buyer. It includes information such as the products or services provided, the quantity, the price, any applicable taxes or fees, and the total amount due. Invoicing is a crucial part of any business, as it helps to keep track of sales, manage cash flow, and ensure timely payments. Understanding the basics of invoicing is essential for both businesses and individuals, as it can help to prevent misunderstandings and disputes. This blog will provide a comprehensive overview of invoices and bills, including their purpose, different types, and best practices for creating and managing them.

Note 1

In the context of Nepal, different laws requires a businessperson to issue/ provide and the customer to obtain the invoice or bills for any transaction done by him/her. The Consumer Protection Act, 2075 obliges both the seller and buyer to issue and obtain bills respectively. 

Invoices types to issue in Nepal and their Enforcing legislations:

1. PAN Bill

A person conducting business who is not registered for Value Added Tax (VAT) needs to issue such bills.

Enforcing Legislation : Income Tax Regulations, 2059; Rule 23(4)

Legal Wording : Taxpayer conducting business after obtaining Permanent Account Number shall issue an invoice in sequential series of numbers mentioning name of taxpayer, address and the PAN.

Format : Not specified.

2. Tax Invoice

It is to be issued by a person registered in Value Added Tax (VAT). It is commonly referred to as VAT Bills in common tongue.

Enforcing Legislation : Value Added Tax Act, 2052; Section 14

Legal Wording :  

• 17(1): Unless and until tax officer approves, if a registered person procures goods or service, then the receiver shall be provided with Tax Invoice as mentioned in Anusuchi 5 and Anusuchi 5A and shall disclose the type, size, model and brand(if any) of the commodity.
• 17(1A): Notwithstanding anything contained in Rule 17(1), while selling goods or services as per Section 14(6), then Tax Invoice in format as provided in Anusuchi 5B. [Consumer level VAT, separate mini-article to be written soon]
• 17(2): The invoice shall explicitly express "Tax Invoice" in the face page of invoice. This invoice shall be prepared in triplicates.
• Original Copy: Provide to the customer
• Second Copy: Maintain as to provide to tax officer whenever he/she requires
• Third Copy: Maintain for the purpose of the person self   

Customer's Obligation : You should note that it is the responsibility of the customer too to obtain the Tax Invoice, non-compliance of which attracts penalty of Rs. 1,000 per instance.

Penalty for Seller for not issuing Tax Invoice : Rs. 10,000 fine per instance

Format :     

• Anusuchi 5 & 5A for 17(1) 
• Anusuchi 5B for 17(1A)    

    

Anusuchi 5 Format - Normal Tax Invoice

Anusuchi 5A Format for Non-Life Insurer

Anusuchi 5B Format - Consumer Level VAT 

3. Abbreviated Tax Invoice (A.T.I.)

It is to be issued by a person registered for VAT only after approval from the Inland Revenue Department (IRD). It can be issued only for upto Rs. 10,000 (inclusive of VAT) at a time. If a customer demands for the Tax Invoice, then the seller is obliged to provide him/her a Tax Invoice.

Enforcing Legislation : Value Added Tax Regulations, 2053; Rule 18(1)

Legal Wording :  Notwithstanding anything contained in Rule 17, if a registered person selling goods in retail requests tax officer disclosing the issue as above of retail selling, then the tax officer may give the person the permission to issue A.T.I. as mentioned in Anusuchi-6 instead of Tax Invoice. This can be issued only upto the amount of Rs 10,000. But, a Tax Invoice has to be issued if the customer demands for the same regardless of the amount of the bill.

Format : Anusuchi 6

Anusuchi 6 Format - Abbreviated Tax Invoice

4. Excise Invoice

It is to be issued by a person manufacturing excisable goods or services. This means the person needs to be registered with the Inland Revenue Department as an excisable goods or service producer. It is just a tax invoice which incorporates excise duty in it before calculation of VAT.

Enforcing Legislation : Excise Regulations, 2059

Legal Wording :  

• Rule 6(4): Excise duty to be collected from Tax Invoice of format as in Anusuchi 13 for goods or service to be issued in Self Removal System and deposit as per section 3.
• Rule 6(5): After the Demand Form to issue goods under Physical Control System is approved, goods are to be issued by issuing Invoice as in Anusuchi 13
• Rule 29A: Tax Invoice to be issued in format of Anusuchi 13 while selling service as mentioned in section 3(1) of the act.

Format : Anusuchi 13

Anusuchi 13 Format - Tax Invoice for Excise

What You should Remember:

Remember once again that as a customer it is your duty to obtain invoices or else you may be penalized for not doing so and also from the seller's part, the non-issuance of invoices attracts even more financial penalizations.

What will be brought Next:

Another article will be published in relation to Electronic Billing (e-billing/ e-invoicing) in Nepal along with the legal provisions related to it.

You may be being cheated!

If you are getting a bill-like paper containing anything like "Provisional Bill", "Cash Memo", "Receipt" or a plain paper print-out or written on it where it does not contain a 9-digit Permanent Account Number (PAN), then remember that it is a fake bill, or say it's not an invoice or a bill, it is cheating you in the name of invoicing. Remember to read the heading of the paper your seller provides to you.

@EMBF

Notes:

• To be noted that the laws have provided invoices formats in Nepali language as the laws are drafted and passed in Nepali language
• The words "Anusuchi" (Nepali) mentioned in this article means "schedule" (English) and the schedules of formats mentioned in the articles are of the respective legislations mentioned in the "Enforcing Legislation" section of each type of invoice
• All the date used in this article are in Bikram Sambat (B.S.), the national calendar used in Nepal which is about 56.7 years ahead of the Gregorian calendar system
• Note 1 : Source of image is: https://www.pngitem.com/middle/iJRiRwb_that-s-my-billing-invoice-icon-invoice-icon/

Disclaimer :

The information provided in this article about types of tax invoices in Nepal is based on the author's research and understanding of the relevant laws and regulations in effect as of March 2023. It is intended for general informational purposes only and should not be construed as legal, tax, or financial advice.

The author does not claim to be a legal or tax expert and readers are advised to consult with qualified professionals for advice on their specific tax situations. The author also does not assume any liability or responsibility for the accuracy, completeness, or timeliness of the information presented in this article.

The author does not guarantee that the information provided in this article is free from errors or omissions and encourages readers to independently verify any information before making any decisions or taking any actions based on it.

The use of any information provided in this article is at the reader's own risk, and the author shall not be liable for any losses, damages, or expenses arising from the use of or reliance on the information provided herein.