Nepal's fiscal year doesn't follow the calendar year. It runs from 1 Shrawan to 31 Ashad in Bikram Sambat — approximately mid-July to mid-July in the Gregorian calendar. This means Nepal's tax year straddles two Western calendar years, which confuses anyone who learned accounting in a Western context.
For every business operating in Nepal, the fiscal year structure determines when your tax obligations fall due, when your accounts must be prepared, and when various compliance deadlines hit. Missing these dates has real financial consequences — penalties, interest, and in some cases, legal action from the Inland Revenue Department.
This is your complete, practical guide to Nepal's fiscal year calendar for business owners.
Why Nepal Uses Bikram Sambat
Nepal officially adopted Bikram Sambat (BS) as its national calendar in 1958 (2015 BS). The calendar is solar and is approximately 56-57 years ahead of the Gregorian calendar. In 2082 BS, it is 2025-26 AD. The fiscal year follows BS months, with Shrawan (approximately mid-July) beginning the new financial year.
The choice of Shrawan as fiscal year start has agricultural and cultural roots — it marks the beginning of the monsoon planting season, which historically determined Nepal's economic activity. Today, it remains the baseline for all tax and regulatory compliance.
The Complete Tax Calendar
Annual Income Tax Filing
Sole traders and individuals with business income:
Annual income tax returns for individual taxpayers are due by the end of Poush (late January) of the following year. For fiscal year 2081-82 BS (ending Ashad 31, 2082), the filing deadline is Poush 31, 2082.
Companies and partnerships:
Corporate income tax returns are due within 3 months of fiscal year end — by the end of Ashwin (mid-October). Companies must also prepare audited financial statements before filing.
Advance Tax Payments
Businesses and individuals with significant income must make advance tax payments during the year, rather than paying the full amount at year-end. The schedule:
- First installment: Poush 40 (end of January)
- Second installment: Chaitra 40 (end of March)
- Third installment: Ashad 31 (end of fiscal year)
Each installment is 25% of the estimated annual tax liability. If you significantly under-estimate advance tax, you pay interest on the shortfall when you file your final return. Getting advance tax right requires a reasonable estimate of your annual income — which requires decent record-keeping throughout the year.
VAT Returns (Bimonthly)
VAT-registered businesses file a return every two months. The filing and payment deadlines:
| Period | Filing Deadline |
|---|---|
| Shrawan – Bhadra | Ashwin 25 |
| Ashwin – Kartik | Mangsir 25 |
| Mangsir – Poush | Magh 25 |
| Magh – Falgun | Chaitra 25 |
| Chaitra – Baisakh | Jestha 25 |
| Jestha – Ashad | Shrawan 25 |
Late filing penalty: NPR 2,000 per month, plus 15% annual interest on unpaid VAT. Six deadlines per year means six opportunities to face penalties if your record-keeping is disorganised. Many businesses fall behind on VAT because they wait until the deadline to calculate their figures — which is fine if your records are current, catastrophic if they're not.
TDS (Tax Deducted at Source)
If you pay employees, contractors, service providers, or rent, you are typically required to deduct TDS from those payments and deposit it with the IRD. The monthly TDS deposit deadline is the 25th of the following month.
Common TDS situations for small businesses:
- Employee salaries above the tax-free threshold (NPR 5 lakh per year): deduct income tax at applicable rates
- Rent payments above NPR 10,000 per month: deduct 10% TDS
- Professional service fees (consulting, legal, accounting): deduct 15% TDS
- Contractor payments: deduct 1.5% TDS (in construction and service sectors)
TDS you've deducted but not deposited with the IRD is treated as tax evasion — serious consequences apply. Set a calendar reminder for the 25th of each month.
Social Security Fund (SSF) Contributions
If you have registered employees, SSF contributions are due by the end of each month. The combined contribution (11% employee + 20% employer = 31% of basic salary) must be deposited to the SSF monthly. Late deposits incur penalties of 0.1% per day.
The Year-End Preparation Period
The last month of the fiscal year — Ashad (approximately mid-June to mid-July) — is the busiest period for Nepal's business and accounting community. Several things happen:
Physical stock count
Your year-end closing stock is a number that affects your taxable income. Specifically: opening stock + purchases - closing stock = cost of goods sold. The closing stock count must be accurate because the IRD can assess it during an audit. Do your physical count in the last week of Ashad.
Outstanding receivables review
At fiscal year end, review all outstanding khata. Attempt to collect before the year closes. Money owed to you that you've already recognised as income but haven't collected is still taxable income — you can't defer it to next year just by not collecting it.
Expense verification
Gather all purchase bills for the year. In Nepal, expenses must be supported by proper documentation — purchase invoices, bills, or VAT invoices — to be claimed as deductions. Undocumented expenses are often disallowed during IRD audits. If you're missing bills, contact suppliers to get duplicates before the year closes.
Bank reconciliation
Reconcile your bank statements with your income and expense records for the full year. Any discrepancies between bank deposits and recorded income are a red flag for auditors. Identify and explain all discrepancies before your CA prepares your accounts.
Common Mistakes in Nepali Fiscal Year Management
Ignoring advance tax
Many small business owners skip advance tax payments, planning to pay everything at year end. The IRD charges 15% annual interest on shortfalls in advance tax — making this an expensive mistake on large incomes.
Late VAT filing
The NPR 2,000 monthly penalty for late VAT filing adds up quickly. Six VAT filing periods per year means six NPR 2,000 penalties = NPR 12,000 just in base penalties if you miss every one. Plus interest on unpaid VAT amounts.
Not keeping purchase bills
Buying goods without getting a proper bill from your supplier is extremely common in Nepal's informal market. This is understandable — but it means you can't deduct those expenses, which increases your taxable income. Insist on bills for all significant purchases.
Confusing BS and AD dates
Filing a VAT return covering the wrong two months because you mixed up BS and AD dates is a real error that happens to businesses using foreign software. All your accounting software should default to BS dates.
Using Software to Manage Fiscal Year Compliance
The biggest practical advantage of digital accounting and POS tools for Nepal businesses is what they do to fiscal year compliance. When every transaction is recorded with a BS date and correct payment method throughout the year:
- VAT returns take 30 minutes instead of 3 days — the data is already organised by period
- Year-end income totals are accurate and instantly exportable
- Stock count is verified against your system count rather than rebuilt from scratch
- Your CA's work is streamlined — which reduces your accounting fees
Businesses that maintain good digital records through the year consistently report lower stress, lower accounting fees, and fewer surprises at tax time than those who reconstruct their accounts annually from paper records and memory.
Frequently Asked Questions
Q: I'm a new business. When does my first fiscal year start?
A: Your first fiscal year starts on the day you began trading, but your first full fiscal year runs 1 Shrawan to 31 Ashad. If you started in, say, Mangsir 2081, your first year runs from Mangsir to Ashad 2082 (a partial year). Most CAs recommend filing for a full fiscal year from your first 1 Shrawan after registration.
Q: What if I can't file my tax return on time due to a genuine emergency?
A: The IRD can grant extensions in genuine hardship cases, but you must apply before the deadline. Extensions are not automatically granted and typically require documentation. The penalty still applies if you miss the deadline without pre-approval.
Q: I run a small shop. Do I really need to worry about all these deadlines?
A: The deadlines that apply to you depend on your situation. If you're not VAT registered and have no employees, your main obligation is the annual income tax return. If you are VAT registered and have staff, you have six VAT deadlines, monthly TDS deadlines, and monthly SSF deadlines to manage. Know which category you're in and track only those deadlines.
Q: Can I use electronic filing for all these returns?
A: VAT returns and TDS returns can be filed online at ird.gov.np. Income tax returns can also be e-filed with a valid PAN and digital signature (or through a registered tax agent). E-filing is faster and provides an instant acknowledgment — strongly recommended over manual submission.
Q: Does Nepal have any amnesty program for businesses that are behind on filing?
A: The IRD occasionally announces amnesty schemes where accumulated penalties are waived for businesses that come current on their filings. These schemes appear irregularly. Don't count on an amnesty to solve accumulated non-compliance — but if one is announced, take advantage of it immediately.
Q: My CA is very busy during Shrawan and Bhadra. How do I ensure they prioritise my accounts?
A: Provide your year-end data as early in Ashad as possible — before the year has even closed. If your records are clean and complete, your CA can prepare your accounts in advance and file them the moment the fiscal year closes. CAs who receive disorganized, late data from clients deprioritize those clients during peak season. Being an organised client gets you better service.
Q: Can the IRD audit me even if I've filed all my returns correctly?
A: Yes. The IRD conducts both random audits and risk-based audits. Businesses with unusual income-to-expense ratios, large cash transactions, rapid growth, or industry patterns that differ from their peers are more likely to be selected. The best audit protection is accurate records — not avoiding the audit, but being able to substantiate everything on your return with documentation.
Nepal's fiscal year calendar is manageable once you know the dates and have systems in place to generate the required data. The businesses that struggle at tax time are almost always the ones that let record-keeping slip during the year. Invest 15 minutes per day in keeping your records current and the fiscal year will take care of itself.