What is e-billing system, and how does it work?

Inland Revenue Department, has issued a notice that mandates to issue e-billing for selected companies from From Shrawan 1, 2079.

Any company with an annual transaction or revenue of more than Rs 10 crore must issue computer-generated e-bills. They will have to pay a heavy fine of up to Rs 5 lakhs, if they do not comply.

If your company has an annual transaction or turnover of more than Rs 10 crores, this article is for you and your company.

The new rule also has an impact to bring more companies to direct VAT scrutiny and help the companies move toward digital technology as part of Digital Nepal Framework.

Confused about the e-Billing system?

An e-Billing system is an IRD authorized software that allows you to generate, print and issue Tax Invoice. The system also helps you to maintain Sales and Purchase Register electronically. It means you do not have to keep Manual Sales and Purchase Register that you would normally keep when issuing manual paper/pad based Invoices.

Whenever required by the Tax Office, the software is also capable to send or sync the Invoice records to IRD Central Billing Monitoring System.

E-billing has a number of advantages, including:

  • More transparent record keeping than paper bills.
  • Faster payment and notification of payment status when integrated with online payment system.
  • No hassle of keeping paper records for long period of time as you can keep electronic records.
  • Simplified bookkeeping and accounting  when used with full featured accounting system with electronic billing feature.
  • Clean and Clear bills to the customer without handwritten mistakes

What are the Inland Revenue Department criteria for Electronic Billing ?

According to the latest Tax Office notice, the following companies should issue e-Billing:

  • Every companies who had annual transaction of Rs 10 crore or more according to their FY 2077/78 or 2078/79 VAT Return or Income Tax Return
  • Hotels, Restaurants, Cafes (HoReCa), and Internet Service Providers (ISPs) having an annual turnover of more than Rs 5 crores
  • Department stores, marts, flooring and furnishing businesses having an annual revenue of more than Rs 10 crores
  • All Cinema halls issuing tickets under Box Office System regardless of the transaction amount.

Please note that even if you have lower than the specified transaction, you can opt to issue e-Bill and keep sales and purchase register electronically.

On the 20th Jestha, 2079, the Inland Revenue Department issued a notice regarding e-billing.

How do you implement an e-billing system in your business?

If you fall in the mandatory e-Bill issuing category company or opt to issue e-Bill on your own:

  1. Go to IRD website > Taxpayer’s Portal and register a request for Electronic Billing
  2. Select a software you will be using to issue Tax Invoice from the list of available software in the website. The list comes as an option when submitting form.
  3. Tax Office officials will visit your office to verify you have installed the approved software and check the compliance requirement. We will help you explain the compliance requirement and demonstrate the compliance to the tax officers.
  4. Once satisfied, Tax Office will give you permission to issue Tax Invoice from the software as e-Bill

Documents and records you need to keep handy when the Tax Officer visits your office to verify the system you want to use:

  • Software Details and Server Location
  • Invoice and Invoice Data Samples (20 nos)
  • App features and specifications
  • VAT Billing Compliance checklist
  • Software user manual
  • Invoice Material View Report
  • Contract with the software provider
  • Software Purchase Invoice from the Supplier

After verifying all these documents and records, and if satisfied, the Tax Officer will grant you permission to use e-billing system.

If enterprises with an annual turnover of more than Rs 10 crore are discovered not providing e-bills as required, IRD will levy fine of up to Rs 5 lakh. Companies that utilize the e-billing system without authorization from the Inland Revenue Department are also subject to a similar fines.

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