PAN Bill In Nepal – Format – Limit – Rules And Free Sample – 2026

If you run a business in Nepal and you are not registered for VAT, you issue a PAN Bill – also called a PAN invoice or PAN Bill.

But most business owners have Questions – How much can I bill through PAN? What should be on the bill? When must I switch to VAT? What is the fine if I do not issue one?

This guide answers all of those questions in plain language – based directly on Nepal’s Value Added Tax Act 2052, VAT Regulations (Rule 56) and Income Tax Act 2058.

Also Helpful: Personal PAN Card Registration In Nepal

What Is A PAN Bill In Nepal?

PAN stands for Permanent Account Number. A PAN bill is a legal transaction document issued by a business or individual that is registered under PAN but not under VAT.

In Simple Terms: if your business is too small to require VAT registration, you use a PAN bill for every sale. It acts as legal proof of the transaction for income tax purposes under the Income Tax Act 2058.

Key Point: A PAN bill does NOT include VAT (13%). It is a simple invoice showing the transaction amount without any added tax. VAT is only on bills issued by VAT-registered businesses.

Who Issues A PAN Bill In Nepal?

Any individual or business that is:

Registered with a PAN number at the Inland Revenue Department (IRD).
NOT registered for VAT (meaning annual turnover is below the VAT threshold).
Conducting taxable transactions – selling goods or providing services.

This typically includes small shops, freelancers, consultants, traders and service providers whose annual business income is below Nepal’s VAT registration threshold.

PAN Bill Format – What Must Be Included

Nepal’s Inland Revenue Department does not prescribe a single fixed template for PAN bills, but there are mandatory fields that every PAN bill must contain to be legally valid.

Required Field	Details / Example
Seller’s Full Name	The business or individual name as registered with IRD
Seller’s PAN Number	Your 9-digit PAN number (e.g. 123456789)
Business Address	Full registered address of the seller
Bill Number	Sequential invoice number (e.g. 001, 002 – must not repeat)
Bill Date	Date of transaction in BS (Bikram Sambat) format
Buyer’s Name	Name of the person or business purchasing
Description of Goods/Services	Clear description of what is being sold or provided
Quantity and Rate	Number of units and price per unit
Total Amount	Final amount in Nepali Rupees (no VAT added)
Signature	Authorized signature of the seller or representative

Important: PAN bills must be serially numbered. Skipping numbers, repeating numbers or issuing unnumbered bills is a compliance violation. Keep a physical or digital copy of every bill issued.

PAN Bill Format In Nepal – Design Requirements

While no single government-mandated template exists, your PAN bill design should:

Clearly display your PAN number at the top or in the header.
Show the business name prominently.
Include a unique bill number on every invoice.
Be printed or written clearly – handwritten bills are acceptable.
Not include any VAT amount or VAT number (since you are not VAT-registered).

PAN Bill Transaction Limit In Nepal

This is the most misunderstood topic in Nepali business taxation. The short answer is – there is no fixed maximum amount per PAN bill transaction.

You can issue a PAN bill for NRs. 5,000 or NRs. 5 lakh – the amount per bill is not restricted. What is restricted is your total annual turnover. Here is how the threshold works:

Business Type	Annual Turnover Limit for PAN Bill	What Happens After Limit
Goods / Products	Up to NRs. 50 lakh (NRs. 5,000,000)	Must register for VAT and issue VAT bills
Services	Up to NRs. 20 lakh (NRs. 2,000,000)	Must register for VAT and issue VAT bills
Mixed (Goods + Services)	Depends on taxable goods portion	Assessed separately – consult IRD

Example: If you are a goods trader and have already billed NRs. 45 lakh this year and a new customer wants to buy NRs. 8 lakh worth of goods – that single transaction will push you over NRs. 50 lakh. At that point, you cannot issue a PAN bill. You must first register for VAT and then issue a VAT bill for that transaction.

Practical Rule: Watch your cumulative annual turnover, not the amount per bill. One bill can be any amount – but once your total annual turnover crosses the VAT threshold, you must switch to VAT billing.

NRs. 20,000 Rule In Pan Bill In Nepal

Many business owners in Nepal have heard the rumor that “You Cannot Issue A PAN Bill Above NRs. 20,000.” This is a common misconception.

Here Is The Truth: VAT Regulation Rule 56 states that government bodies – including local governments (Palika), provincial governments and federal government offices – are required to purchase goods or services worth more than NRs. 20,000 only from VAT-registered suppliers.

This NRs. 20,000 rule applies ONLY to government procurement. It does NOT apply to private businesses or individual transactions. If you are selling to a private customer, you can issue a PAN bill for any amount – as long as your total annual turnover stays within the VAT threshold.

This rule was historically used by businesses to split large government orders into multiple bills of under NRs. 20,000 – a practice that is now tracked and penalized by the IRD.

TDS On PAN Bills In Nepal

TDS stands for Tax Deducted at Source . TDS may apply to certain payments even when the supplier is only PAN-registered.

Under Nepal’s Income Tax Act 2058, specific types of payments require the paying party to deduct TDS before making payment – regardless of whether a VAT or PAN bill is involved.

Payment Type	TDS Rate	Who Deducts
Contract / Service payment above NRs. 50,000	1.5%	The paying party (buyer)
Professional / Consulting fees	15%	The paying party
Rent payment	10%	The tenant / payer
Commission income	15%	The payer
Salary / Wages	As per slab	Employer

TDS is not a final tax – it is an advance payment toward the supplier’s annual income tax. The TDS deducted is shown as a credit when filing the annual income tax return. If TDS deducted exceeds your total tax liability, you can claim a refund from IRD.

Penalties For Not Issuing A PAN Bill

The Value Added Tax Act 2052 (as amended) specifies penalties for billing non-compliance. Even for PAN-registered businesses that are not VAT-registered, several penalties apply:

Violation	Penalty	Legal Reference
Not displaying PAN registration certificate at business	NRs. 1,000	Section 29(1)(Kha)
Not displaying tax notice board (Karpati)	NRs. 2,000	Section 29(1)(A)
Not issuing any bill (PAN or VAT) to buyer	NRs. 10,000 per invoice	Section 29(1)(Ga)
Account books not updated or not maintained	NRs. 10,000	Section 29(1)(Ma)
Not allowing IRD inspection or audit	NRs. 20,000	Section 29(1)(9)
Operating a branch/warehouse without IRD approval	NRs. 10,000 per instance	Section 29(1)(ya1)
Preparing false bills or tax evasion	10% of evaded tax + up to 6 months imprisonment	Section 29(2)

Note: If your business is operating while your firm is VAT-suspended (non-filer status) and you continue to issue bills – that is treated as operating without registration, attracting the 10% penalty on the tax amount plus possible imprisonment under Section 29(2).

PAN Bill Vs VAT Bill – Key Differences

Understanding when to issue a PAN bill versus a VAT bill is essential for every business owner in Nepal. Here is a side-by-side comparison.

Comparison Point	PAN Bill	VAT Bill
Who issues it	PAN-registered businesses NOT registered for VAT	VAT-registered businesses
Does it include VAT?	No – no VAT amount on the bill	Yes – 13% VAT added on taxable amount
Annual turnover threshold	Goods: under NRs. 50L and Services: under Rs. 20L	Goods: NRs. 50L+ and Services: NRs. 20L+
Legal basis	Income Tax Act 2058	Value Added Tax Act 2052
Government purchases above NRs. 20,000	Not accepted – VAT bill required	Required for all such transactions
Buyer can claim input tax credit	No	Yes – buyer can reclaim VAT paid
Bill format complexity	Simpler – no VAT calculation needed	More detailed – must show VAT separately

Is There A Limit On How Much I Can Bill Using A PAN Bill?

No fixed per-bill limit exists. You can issue a PAN bill for any amount. However, your total annual turnover must remain below NRs. 50 lakh (for goods) or NRs. 20 lakh (for services). Once your cumulative turnover crosses that threshold, you must switch to VAT billing.

Can I Issue A PAN Bill For A Government Office Purchase?

Only if the amount is NRs. 20,000 or below. For government purchases above NRs. 20,000, the buyer is legally required to purchase only from a VAT-registered supplier. You will need to be VAT-registered to serve such contracts.

What Is The Difference Between A PAN Bill And A Cash Receipt?

A PAN bill is a legal tax document issued by a PAN-registered business. It must include your PAN number, sequential bill number and all transaction details. A cash receipt is informal and has no legal standing for tax purposes. Always issue a proper PAN bill, not just a receipt.

Can I Use A PAN Bill Format In Word Or Excel?

Yes. There is no restriction on the medium – handwritten, Word, Excel or billing software are all acceptable as long as all mandatory fields are present and bills are serially numbered.

What Happens If I Keep Issuing PAN Bills After Crossing The VAT Threshold?

This is treated as operating without proper registration. Penalties include 10% of the tax amount and up to 6 months imprisonment under the VAT Act 2052 Section 29(2). It is critical to monitor your annual turnover and register for VAT before you cross the threshold.

Do I Need To Submit My PAN Bills To IRD?

You do not submit individual bills, but you must maintain all issued PAN bills as records and make them available for IRD inspection. Under the VAT Act, business transaction records must be kept for at least 5 years.