7 min readBy Shaish Guni
Invoice format in Nepal: PAN bills, VAT and clients abroad
Most Nepali freelancers start with a PAN and a client abroad. This guide covers what your bill must show, when VAT starts, and how to bill a client in US dollars. Every tax point was checked against the IRD on 9 November 2026.
The short answer
- Below the VAT threshold, you issue a PAN bill: your PAN, no VAT.
- Above it, you register for VAT and issue a VAT invoice at 13%. For services the threshold is Rs 30 lakh a year, though the IRD’s FAQ page still says Rs 20 lakh.
- Services to a client outside Nepal are zero-rated under the VAT Act, with conditions.
- Bill foreign clients in the currency you agreed. A VAT invoice paid in foreign currency must also show the rupee amount.
PAN bill or VAT invoice
Your PAN (permanent account number) is your tax number. The IRD says anyone who wants to earn taxable income must get one. A PAN bill is the bill you issue with that number when you are not registered for VAT. It carries no VAT.
A VAT invoice (the Act calls it a tax invoice) is what you issue once you are registered. The VAT Act says every registered person must issue one for each supply. The rate is a flat 13%. Since the 2083 Economic Act, the government can set lower rates for some goods and services by notice, so 13% is the ceiling and the usual rate.
| Detail | PAN bill | VAT invoice |
|---|---|---|
| Who issues it | A business with a PAN that is not registered for VAT | A business registered for VAT |
| Number shown | Your PAN | Your PAN, which is also your VAT registration number |
| VAT charged | None | 13% on taxable sales, or 0% on zero-rated ones |
| Buyer's PAN | Needed when the buyer is a business | Needed when the buyer is a business |
| Format | No set layout in the sources we checked | Set in Schedule 5 of the VAT Rules, revised in 2024 |
From the VAT Act, the IRD FAQ and the IRD notice on bills. Checked 9 November 2026.
Who must register for VAT
You must register when your taxable turnover passes the threshold. The test is the last 12 months, or what you expect in the next 3. The thresholds are:
- Goods: over Rs 50 lakh (Rs 5 million) a year.
- Services, or goods and services mixed: over Rs 30 lakh (Rs 3 million) a year.
The sources disagree on the services figure, so check it. The 2081/82 budget raised it from Rs 20 lakh to Rs 30 lakh, per NBSM’s budget summary and a 2026 guide. NBSM notes the figure sits in the VAT Rules and was inferred before they were published. The IRD’s FAQ page still says Rs 20 lakh. The IRD’s booklet on the 2083 Economic Act lists no change to the threshold.
Turnover is not the only test. The IRD FAQ lists other cases, such as some imports and business loans, that require registration at any turnover. The Act gives you 30 days to apply once you become liable. Trading without a required registration can bring a fine of 50% of the tax due, per the IRD FAQ.
One point for exporters: the IRD calls a zero-rated sale a taxable sale. So income from clients abroad likely counts toward the threshold. Confirm that with your accountant.
What your invoice needs
The IRD sources confirm a few fields. The full VAT invoice layout is Schedule 5 of the VAT Rules, which was revised in 2024. Ask your accountant for the current form.
Confirmed by the IRD
- Your PAN, on every bill and tax invoice.
- The buyer’s PAN, when the buyer is a business in Nepal.
- On a VAT invoice, the VAT at the rate that applies.
- On a VAT invoice paid in foreign currency, the rupee amount at the Nepal Rastra Bank rate on the day.
- A short-form (abbreviated) tax invoice only up to Rs 10,000. Above that, the IRD FAQ says the fine is Rs 1,000 each time.
What any invoice needs to work
- Your name, address and contact details.
- The client’s name and address.
- An invoice number and the date.
- A line for each piece of work, with the amount.
- The total, the currency and the due date.
- Exactly how to pay you.
These are good practice, not a list from the rules. The free invoice generator covers all of them. Put your PAN in the From box, set the currency to $ or Rs, and add payment details in the notes.
Invoicing clients abroad
USD or NPR. Bill in the currency you agreed with the client. Most clients abroad expect US dollars. If you are VAT-registered, the IRD says the tax invoice must also show the rupee amount at the Nepal Rastra Bank rate on the day. We found no such rule for a PAN bill. Adding the rupee amount still helps your own books.
Is it zero-rated? Schedule 2 of the VAT Act lists services supplied to persons outside Nepal at 0%. It covers two cases:
- A Nepal resident supplies a service to a person outside Nepal who has no business, business representative or legal agent in Nepal.
- A person resident and registered in Nepal supplies goods or services to a person living outside Nepal.
Zero rate only matters once you are VAT-registered. A PAN bill has no VAT to zero. The IRD says a zero-rated sale still lets you claim back VAT you paid on purchases. Some commentators say the rules on foreign-currency proof have changed over the years. We found no currency condition in the current Act. We could not confirm what proof the IRD asks for, so ask your accountant.
Income tax is separate. The IRD FAQ lists an income tax concession, to fiscal year 2084/85, for IT services exported for foreign currency. Software programming, BPO and cloud computing are named. Who qualifies and by how much is a question for your accountant.
How the client pays. Two common options are a SWIFT bank transfer to your account in Nepal, or Payoneer. Write the exact details on the invoice: account name, bank, SWIFT code and account number, or your Payoneer details. Ask your bank or provider what they charge. For software that bills in USD and works from Nepal, see proposal software for freelancers in Nepal.
This is not tax advice
Tax rules in Nepal change with each Economic Act. Check anything here with the Inland Revenue Department or a local accountant before you rely on it.
Nepal invoice questions
- What is a PAN bill in Nepal?
- It is a bill from a business that has a PAN but is not registered for VAT. It shows your PAN and no VAT. The IRD says every bill must show the seller's PAN, and the buyer's PAN too when the buyer is a business. Once you register for VAT, you issue a VAT invoice instead.
- Do freelancers in Nepal have to register for VAT?
- Usually only above the threshold, though the IRD lists a few other cases. For services, the 2081/82 budget set it at Rs 30 lakh of taxable turnover in 12 months. The IRD's own FAQ page still says Rs 20 lakh. Goods are Rs 50 lakh. Check the current figure with the IRD or an accountant.
- Can I invoice a foreign client in US dollars?
- Yes, in the currency you agreed. If you are VAT-registered and paid in convertible foreign currency, the IRD says the tax invoice must also show the rupee amount, at the Nepal Rastra Bank rate on the day. On a PAN bill, adding the rupee amount is our suggestion, not a rule we found.
- Do I charge 13% VAT to a client abroad?
- Usually not. Schedule 2 of the VAT Act puts services supplied to a person outside Nepal at a zero rate. One clause needs the client to have no business, representative or agent in Nepal. If your client has a Nepal office, ask an accountant before you zero-rate.
- Can ApeiroCraft make an invoice for Nepal?
- Yes. Your PAN or VAT number prints on every invoice, the currency can be USD or NPR, and you set the tax rate yourself. ApeiroCraft is not accounting software and files nothing with the IRD. The free invoice generator works too, with your PAN in the From box.
Sources
All checked 9 November 2026.
- IRD: Value Added Tax Act, 2052, as amended by Finance Act 2082
- IRD: The Value-Added Tax Act, 1996 (2052), English translation
- IRD: Frequently asked questions
- IRD: Economic Act 2083 information booklet
- IRD: Notice on issuing bills and invoices
- NBSM: Nepal Budget 2081-82, highlights from a tax perspective
- Beancount: Nepal VAT threshold guide (October 2026)
- Bizsewa: New VAT invoice formats, 46th amendment to the VAT Rules