How to Calculate VAT in Nepal: 13% VAT Explained with Examples
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How to calculate 13% VAT in Nepal: add VAT to a price, remove VAT from a VAT-inclusive price, and read a VAT bill correctly, with worked examples.
VAT questions come up all the time from the restaurants and shops that buy from us. "Is this price with VAT or without?", "How much VAT am I paying?", "Why doesn't my calculation match the bill?" The maths is simple once you see it laid out, so here it is.
This article explains the arithmetic. For questions about registration, filing or what you can claim, talk to your accountant or the Inland Revenue Department.
The VAT rate in Nepal
The standard VAT rate in Nepal is 13%. Some goods and services are exempt, such as many basic unprocessed foods, but most packaged goods, restaurant bills and services carry 13% VAT.
Adding VAT to a price
If you know the price before VAT:
VAT = price × 0.13
Total = price × 1.13
Example: an item costs Rs. 1,000 before VAT.
VAT = 1,000 × 0.13 = Rs. 130
Total = Rs. 1,130
Removing VAT from a VAT-inclusive price
This is where most mistakes happen. If a price already includes VAT, you can't just take 13% off it.
Price before VAT = total ÷ 1.13
VAT = total − price before VAT
Example: a bill total is Rs. 1,130 including VAT.
Price before VAT = 1,130 ÷ 1.13 = Rs. 1,000
VAT = 1,130 − 1,000 = Rs. 130
If you had taken 13% off Rs. 1,130, you would get Rs. 146.90, which is wrong. A shortcut that works: VAT inside a VAT-inclusive total = total × 13 ÷ 113.
Quick reference
| Price before VAT | VAT (13%) | Total with VAT |
|---|---|---|
| Rs. 100 | Rs. 13 | Rs. 113 |
| Rs. 500 | Rs. 65 | Rs. 565 |
| Rs. 1,000 | Rs. 130 | Rs. 1,130 |
| Rs. 5,000 | Rs. 650 | Rs. 5,650 |
| Rs. 10,000 | Rs. 1,300 | Rs. 11,300 |
Restaurant bills: service charge and VAT
Many restaurants in Nepal add a 10% service charge. VAT is then usually calculated on the bill including the service charge.
Example: food total Rs. 2,000.
Service charge 10% = Rs. 200, subtotal Rs. 2,200
VAT 13% on 2,200 = Rs. 286
Total = Rs. 2,486
Reading a VAT bill
A valid VAT bill in Nepal shows:
- The seller's name, address and PAN/VAT number
- The buyer's name and PAN, for business purchases
- Bill number and date
- Each item, quantity and price
- Taxable amount, VAT amount and total, shown separately
If your business is VAT registered, keep every purchase bill. Your accountant will need them to claim input VAT.
Use the calculator
To skip the arithmetic, use our VAT calculator: enter an amount and it shows the VAT and the total both ways, with or without VAT. Shop owners may also find the discount calculator and margin calculator useful when pricing products.
