Monthly VAT Return Filing in Nepal (2026): A Practical Guide for SMEs Using the IRD E‑filing Portal

If you run a small or medium enterprise in Nepal, the monthly VAT return is a recurring compliance task that cannot be ignored.

Prerequisites

Before you log in, make sure your business holds an active VAT registration number. You also need a working IRD portal account — either a username and password or a digital signature certificate issued by the Inland Revenue Department. The return covers a calendar month and must be filed by the 25th of the following month.

Portal Walkthrough

After signing in, select “Returns” from the main menu and then choose “VAT Return (Form VAT‑01)”. The dashboard shows the current filing period, any pending returns, and a summary of previously submitted forms. Click “New Return” to start a fresh submission for the selected month.

Preparing Your Records

Gather every sales invoice, purchase invoice, debit note, credit note and import document for the period. Keep a VAT ledger that mirrors your accounting software; reconcile the ledger totals with the trial balance before you begin data entry. Missing or mismatched invoices are the most common cause of validation errors.

How VAT Is Calculated

Output tax is the VAT charged on all taxable supplies made during the month. Input tax credit can be claimed on purchases that relate directly to taxable activities. Exempt and zero‑rated supplies are reported separately and do not generate output tax, but they affect the input‑credit calculation. The net amount is output tax minus eligible input tax plus any adjustments.

Filling Form VAT‑01

Enter total turnover in the first field. Next, break down taxable sales, exempt sales and zero‑rated sales. Input the total input tax you are claiming, then add any adjustments such as bad‑debt relief or prior‑period corrections. The portal automatically computes the net VAT payable or refundable once all numbers are entered.

Submitting and Acknowledgment

Run the built‑in validation check; it flags missing HS or SAC codes, negative values and mismatched totals. After the check passes, click “Submit”. The system generates an acknowledgment receipt with a unique reference number — download and store this PDF for your records.

Paying the Net VAT Due

If the return shows a payable amount, you can settle it through connectIPS, a bank transfer using the challan generated by the portal, or any other authorized payment gateway. Payment must be completed by the 25th deadline; the portal updates the status to “Paid” once the bank confirms receipt.

Common Pitfalls

Invoice‑level mismatches, incorrect HS/SAC codes, omitted input‑tax documentation, late filing and failure to reconcile the return with your books top the list of errors that trigger notices.

Penalties and Interest

The Finance Act imposes a late‑filing fee and interest on any unpaid VAT. Exact percentages are published in the annual gazette; verify the 2026 rates on the IRD website or consult a tax practitioner before the deadline.

What’s New in 2026

As of September 2026 the IRD has not announced major changes to the portal layout or due dates. Keep an eye on official notices for any SME‑specific relief measures or new validation rules that may be introduced later in the fiscal year.

Practical Tips for SMEs

Use accounting software that includes a VAT module to auto‑populate the return. Run a monthly reconciliation checklist a week before the due date. Set calendar reminders for the 20th and 25th of each month. For complex transactions — such as mixed supplies or cross‑border services — engage a qualified tax practitioner to avoid costly mistakes.