Hotel Billing in Nepal: VAT, Service Charge and Records

Hotel billing in Nepal usually combines a room or food charge, a service charge and VAT, and the customer expects one clear invoice. This article explains how those pieces fit together, which records matter, and how software should be set up. It is about record keeping and software, not tax advice: always confirm current rates and requirements with the Inland Revenue Department and the relevant tourism authorities, or with your accountant.

The building blocks of a hotel bill

A typical bill has four layers. First, the base charge: room nights, restaurant items, bar items, laundry or transport. Second, any discount, which should be approved and visible. Third, a service charge where the hotel applies one. Fourth, VAT, which has long been 13% in Nepal for standard supplies. How these are stacked, and whether the service charge itself is included in the base on which VAT is calculated, is a question for your accountant and the current rules. A good system lets you decide the order and shows the result clearly, rather than hard-wiring one answer.

Why the order of calculation matters

Take a simple example, purely illustrative. Suppose a room costs a round number and a service charge is added first, then VAT is added on the total. Compare that with VAT applied to the base only. The final bill differs, and over a full season across hundreds of bills the difference becomes large. If your invoices and your tax returns use different logic, your accountant will find mismatches at year end. This is why the calculation must be a setting your accountant has signed off, not something each cashier does on a calculator.

Records worth keeping

• Sequential invoice numbers with no gaps, and a record of any cancelled invoice with a reason.
• The guest or company name and, where the buyer is a registered business, its PAN so the invoice is usable for their books.
• Folio details behind each invoice: which night, which outlet, which user posted the charge.
• Payments by method, including advances and refunds, so cash and bank figures reconcile.
• Daily and monthly sales summaries split into taxable amount, service charge and VAT.

Keep these in a form you can export for your accountant. A spreadsheet export of sales by day is often enough for monthly filing support, while the full invoice archive supports any later query.

Nepali dates and the fiscal year

Nepal's fiscal year starts in Shrawan, and tax filings are organised by Bikram Sambat months. Your billing software should therefore be able to report by BS month and fiscal year, while still storing AD dates for the booking calendar. Ask for a sample monthly report in BS months before you commit. If the report only lists AD dates, your accountant will need to convert manually every month.

Handling foreign guests and currency

Many tourist hotels accept payment in foreign currency or through cards. The invoice is still raised in NPR. Record the amount received, the method and, where you note it, the exchange rate used by your cashier. Keep the process consistent so that the day-end cash report remains understandable. Check current rules on foreign currency receipts and tourism-related billing with the proper authorities rather than relying on word of mouth from other hoteliers.

Corporate and agent billing

Company stays and travel agent bookings often need a bill to the company and a separate bill for personal extras. They also may involve credit terms, so you need a ledger showing who owes what and for how long. Software that tracks receivables per company, with statements and receipts, turns an awkward spreadsheet into a regular collection routine.

Billing situation	What to set up
Walk-in guest paying cash	Folio, invoice, payment method recorded
Company paying room only	Split folio, company ledger, statement
Agent booking with commission	Agent account, commission calculation, settlement record
Restaurant guest not staying	Table bill with tax lines, no room posting
Advance and cancellation	Advance receipt, adjustment or refund record

Discounts, complimentary stays and write-offs

Every hotel gives away something: a complimentary night for an agent, a discount for a long stay, a waived charge after a complaint. For tax and control purposes these should never be silent. Record who approved it, the reason, and the amount. In software this usually means a discount line with a mandatory note and manager permission. When your accountant reviews the month, they can then see exactly which reductions were given and why, instead of discovering a gap between expected and actual sales. The same applies to bad debts: a company that never pays should be written off by a decision, with a record, not by quietly dropping the balance.

Setting up billing software safely

1. Ask your accountant to write down the exact calculation order, rates and rounding rule.
2. Give that note to the vendor and ask them to configure and demonstrate it on three sample bills.
3. Compare the software result with a manual calculation on each one.
4. Lock tax settings so that only a manager can change them, and record when they are changed.
5. Review settings each Shrawan and whenever the authorities announce changes.

WebsNP configures VAT and service charge in our hotel management software to the instructions you give us, and the same approach carries into the restaurant POS so that dining and room bills follow one consistent logic. We do not claim any approval for the software from tax or tourism bodies; we make it configurable so that you can follow the rules that apply to you. Send your sample invoice on WhatsApp at +977 9846280400 and we will show how it would look on screen.

Get a demo and quote for Hotel Management Software

Tell us about your business and we will reply the same working day with a demo and a clear quote. No obligation.

Chat on WhatsApp

Or call / WhatsApp +977 9846280400

Your name Phone / WhatsApp Email (optional) Business / organisation What do you need?

Request demo

More guides on Hotel Management Software