Is PAN and VAT Number Same? PAN vs VAT in Nepal Explained

Yes. In Nepal your VAT number is the same as your PAN. A business gets one 9-digit Permanent Account Number from the Inland Revenue Department (IRD). If it later registers for VAT, the same PAN is used as its VAT registration number; no separate VAT number is issued. The difference is what the registration lets you do. PAN is the mandatory tax ID for every business. VAT registration is an extra status that requires you to charge 13% VAT on sales and lets you claim back VAT on purchases.

PAN vs VAT: comparison table

Is the PAN and VAT number the same?

Yes. IRD's single-PAN system uses one number across income tax, VAT and excise. When a PAN-registered business registers for VAT, its existing PAN becomes its VAT number and its PAN certificate shows the VAT registration. So "PAN number", "VAT number" and "PAN/VAT no." on a bill all mean the same 9 digits. What differs is whether that PAN is VAT-registered.

What is PAN?

A Permanent Account Number (PAN) is the 9-digit ID that IRD (through Inland Revenue and Taxpayer Service offices) issues to every taxpayer: sole proprietors, partnerships, companies, NGOs and individuals with taxable income. PAN registration is mandatory for any income-generating activity. Not having a PAN does not exempt you from tax or late fees.

What is VAT registration?

Value Added Tax is charged at 13% on taxable goods and services. A VAT-registered business adds 13% to its sales (output VAT), deducts VAT it paid on purchases (input VAT), and pays the difference to IRD.

When VAT registration is mandatory:

Any business may also register voluntarily below the threshold.

PAN bill vs VAT bill

For most B2B buyers, a VAT bill is cheaper in effect, because they recover the 13% VAT and you suffer a lower TDS rate. That is one reason many service businesses register voluntarily.

Should a new business register for PAN or VAT?

Every business must have a PAN. Choose VAT as well if:

• your turnover is near or above the threshold, or you are in a notified sector;
• your customers are VAT-registered businesses that want VAT invoices;
• you buy a lot of VAT-able inputs and want the credit; or
• you sell services to companies and want 1.5% TDS instead of 15%.

Stay PAN-only if you sell mainly to consumers below the threshold and want simpler compliance. You can register for VAT later.

Need help registering? Khatapana Taxes & Accounting handles PAN/VAT registration and monthly filings.

FAQ

Is the PAN and VAT number the same in Nepal? Yes. A VAT-registered business uses its 9-digit PAN as its VAT number; no separate number is issued.

What is the difference between PAN and VAT? PAN is the mandatory taxpayer ID for every business. VAT registration is an additional status requiring you to charge 13% VAT and file VAT returns, with the right to claim input VAT.

What is the difference between a PAN bill and a VAT bill? A PAN bill is an ordinary invoice without VAT. A VAT bill is a tax invoice showing 13% VAT separately, which a VAT-registered buyer can claim as input credit.

Is VAT registration compulsory in Nepal? Only above the turnover threshold (Rs 50 lakh for goods; Rs 30 lakh for services or mixed) or for IRD-notified businesses. Otherwise it is voluntary.

Can a PAN-only business charge VAT? No. Only VAT-registered businesses can charge VAT and issue tax invoices.

What TDS applies to PAN and VAT bills for services? Generally 15% on PAN bills and 1.5% on VAT bills (on the pre-VAT amount). Rates can change with each Finance Act.