VAT, Invoices and Stock Records for Nepali Traders

For a Nepali trader, stock records, purchase bills and sales invoices are three views of the same facts. If they disagree, your accountant spends days reconciling, your closing stock is doubtful and a tax enquiry becomes harder to answer. This article explains in general terms how they connect. It is about record keeping, not tax advice, so confirm rules with the IRD or your accountant.

Three records that must agree

Opening stock plus purchases minus sales minus losses should equal closing stock. Each part comes from a document:

• Purchase bills from suppliers, with their invoice numbers, dates and VAT.
• Sales invoices you issue, numbered in sequence.
• Stock movements such as transfers, returns, damage and adjustments.

When these are entered in separate places by separate people, gaps appear. A single system where a purchase entry adds stock and a sales entry removes it closes most of those gaps by design.

VAT at 13%

The standard VAT rate in Nepal is 13%. A VAT registered business charges it on taxable sales and can generally claim credit for VAT paid on taxable purchases, subject to the rules. That makes purchase bill details important: supplier name, PAN, bill number, date, taxable amount and VAT amount. A missing or wrong supplier PAN can cause trouble later. Whether your business must register, which goods are exempt and how returns are filed are matters the IRD decides, so ask them or your accountant instead of relying on a general article or a software vendor.

Fiscal year and opening balances

The Nepali fiscal year starts in Shrawan. At year end the closing stock becomes the next year's opening stock. Good practice is to count stock close to year end, post differences with reasons, then carry the quantities and values forward. If your software supports it, the carried forward balance should not be retyped by hand, because retyping is where mistakes enter.

Godown and branch records

If you hold goods in more than one place, each movement between them needs a record. A transfer is not a sale and should not carry VAT as one, but it must be visible so the totals add up. Keep a transfer note with date, item, quantity, from, to and the name of the person who moved it. Where goods are held in a rented godown or with a third party, record that clearly too, because it explains why stock is not at your shop.

Sales returns, purchase returns and damaged goods

Event	Stock effect	Record to keep
Customer returns goods	Stock increases if resalable	Return or credit note linked to the original invoice
You return goods to supplier	Stock decreases	Purchase return linked to the supplier bill
Goods damaged or expired	Stock decreases	Adjustment with reason and sign-off
Free samples or gifts	Stock decreases	Adjustment with reason

How each of these is treated for VAT is a question for your accountant. What software can do is make sure the stock side is never forgotten.

Keeping the paper trail in order

Records are only useful if you can find them. File purchase bills in date order by supplier, and keep a note of the system entry number on each. Do the same for sales invoice copies and transfer notes. When an auditor or tax officer asks about a particular item, you should be able to move from the stock ledger to the bill in minutes. Decide who is responsible for filing, because bills left in a drawer for months are the ones that go missing.

Keep in mind that record retention periods are set by law and may change. Ask your accountant how long you must keep purchase, sales and stock documents and store them accordingly, in paper or as scans. Backups of your software data should be kept in a second place, such as an external drive or a cloud copy, so a fire, theft or hardware failure does not erase your history.

Common reconciliation gaps

When stock, purchases and sales do not agree, the cause is usually one of a short list: a bill dated in the wrong month, a return not linked to its original invoice, a purchase entered in the wrong unit or an opening balance carried forward incorrectly. Working through these in order is faster than searching blindly, and a good system lets you filter by date, supplier and item to find the break quickly.

Imported goods

If you import, the cost of an item includes more than the supplier price. Customs duty, clearing charges and transport add to landed cost, and the right figure affects margin and closing stock value. Record the extra costs against the shipment so item cost is not understated. Dealers who import in volume should also read about import and export software.

What the software should give your accountant

• A purchase register and sales register by month and by VAT type.
• A stock ledger showing every movement for an item.
• Closing stock quantity and value by item, with the costing method named.
• A list of adjustments with reasons and users.

The WebsNP inventory software is designed to produce these, configured with 13% VAT where you are registered. It is meant to support your accountant, not replace them, and we do not claim any official approval or integration with the IRD unless we have confirmed and configured it for your case.

Your next step

Ask your accountant which reports they want at year end and in what format. Bring that list to a WhatsApp chat or demo with us and we will show how the system produces each one. For billing at a counter see VAT billing software.

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