Travel Agency Bookkeeping and VAT in Nepal Explained

Travel agency books are awkward because money passes through you that is not really yours: the fare belongs to the airline or hotel, while your income is a service charge or margin. If those two are mixed, your profit looks too large, your VAT looks wrong and your accountant spends days untangling it. This guide is about record keeping, not tax advice. Always confirm the treatment for your registration with a qualified accountant or the Inland Revenue Department.

The Nepali fiscal year and why it matters

Nepal's fiscal year starts in Shrawan, mid-July by the Gregorian calendar, and your accounts, VAT returns and annual statements follow Bikram Sambat. Flights and tours are planned in AD. A sensible system stores the transaction date in both and lets you filter reports by BS month and fiscal year. If your software only shows AD months, expect a painful reconciliation each year.

Separate what is yours from what is passed through

For each sale, record at least these components separately:

• Supplier cost: what you pay or owe to the airline, hotel or transport partner.
• Taxes and fees that the supplier charges and you pass on.
• Your service charge or margin.
• VAT where it applies to your service line, at the standard 13% rate.

Whether VAT applies to the whole amount, only to your service charge or to a package price depends on the nature of the sale and your registration. We do not state it as a rule here. What we can say is that if your records already split these components, your accountant can apply the right treatment quickly. If they are lumped together, nobody can.

Invoices, receipts and credit notes

Keep a clear difference between an invoice (what the customer owes) and a receipt (what they paid). A customer who pays in three parts should have one invoice and three receipts. When a ticket is cancelled, do not delete the invoice; issue a credit note or adjustment so the sequence stays intact. Deleted or overwritten entries are the first thing an auditor questions.

Situation	Good record	Risky habit
Part payment	Receipt against one invoice	Editing invoice amount
Cancellation	Credit note with reason	Deleting the invoice
Supplier refund due	Pending receivable from supplier	Remembering it
Date change penalty	Separate cost and charge lines	Adjusting the fare

Foreign currency and payment modes

Some suppliers quote in dollars and some customers pay in several modes. Record the original currency amount, the rate you used and the NPR value, so differences are visible rather than hidden in profit. For payments, tag each as cash, bank, cheque or a wallet or QR mode, and reconcile the bank and wallet statements to your records weekly. This is simply good hygiene and does not depend on any particular payment provider.

Advances and liabilities

When a customer pays an advance for a package departing in two months, that money is a liability: you owe a service. Treat it that way in your reports so you do not mistake an advance for earned income. Likewise, keep customer deposits for visa or document services separate from your own fees.

Sub-agent and staff commission

If you pay commission to sub-agents or staff, record it per sale and settle it on a schedule. Commission calculated from memory is one of the most common disputes in agencies. Rules such as "a flat amount per ticket" or "a percentage of service charge" are easy to configure and then produce a statement for each person.

Preparing for the accountant or an audit

Whoever reviews your books will ask the same questions every year. Can you show every invoice number in sequence? Can you match bank deposits to receipts? Can you explain why revenue and supplier payments differ? Prepare a simple year-end pack: ledger balances by customer and supplier, a list of advances received for future travel, cancelled invoices with their credit notes, and a summary of sales by month in Bikram Sambat. If any of these takes days to compile, your day-to-day recording needs tightening.

Keep supporting papers, such as supplier statements and refund confirmations, in a labelled folder or attached to the entry itself. Attachments linked to the transaction are far easier to find in a year than a pile of printouts. Retention periods for business records are set by law, so ask your accountant how long to keep each type rather than guessing.

Small habits that prevent big problems

• Number invoices automatically so gaps are impossible to hide.
• Never reuse a receipt for a different customer.
• Record who handled each transaction.
• Review the edit log at month end.
• Reconcile wallet and bank statements weekly, not yearly.

How software supports this

WebsNP travel agency software is designed to store cost, pass-through charges, service charge and tax on each line, issue invoices and receipts separately, keep a BS and AD date on every entry and report by fiscal year. We configure the tax settings with your accountant's guidance. If you also need full books, our billing software page explains the billing side.

Next step

Take last month's ten largest sales and see whether you can show cost, service charge and VAT separately for each. If not, that is the first thing to fix. Message WebsNP on WhatsApp at +977 9846280400 and we will show you how those lines look in a working system.

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