Before you can legally invoice a client, open a business bank account, or file a single tax return in Nepal, you need a PAN — a Permanent Account Number issued by the Inland Revenue Department. It is the single most fundamental piece of tax compliance infrastructure for any new business or self-employed individual, and yet the registration process trips up a surprising number of first-time applicants. This step-by-step guide walks through what a PAN is, how it differs from VAT registration, exactly what documents you need, and how to avoid the most common causes of delay or rejection.
What a PAN Is and Why Every Business Needs One
A Permanent Account Number (PAN) is a unique identifier the Inland Revenue Department assigns to every taxpayer — individual or business — in Nepal, and it is the foundation on which almost all other tax compliance is built. You need a PAN to file income tax returns, to open most types of business bank accounts, to issue formal invoices or bills for goods and services, to participate in government tenders, and increasingly, to be able to transact with other formal businesses at all, since many companies will not process payments to a vendor without a valid PAN on file. For a new business, obtaining PAN is typically the very first tax-related step, taken immediately after (or sometimes alongside) formal business registration with the Office of the Company Registrar or the relevant local ward/municipal office for a sole proprietorship.
PAN vs VAT Registration — The Key Difference
PAN and VAT are frequently confused, but they serve different purposes and have different registration triggers. PAN is the baseline tax identity every business or income-earning individual needs, regardless of turnover or business type — it is what the IRD uses to track your income tax obligations. VAT registration, by contrast, is specifically required once a business either crosses the threshold turnover set under the Value Added Tax Act, or operates in a category of business that the law requires to register for VAT regardless of turnover (certain professional services and specified trades, for example). In practice, VAT registration is layered on top of an existing PAN — you cannot register for VAT without first having a PAN — which is why understanding PAN registration correctly is the necessary first step even for businesses that know they will need VAT registration shortly after.
Documents Required for Individual vs Company PAN Registration
The exact document list varies slightly by applicant type, but the core requirements are broadly consistent:
- Individual / sole proprietorship: a copy of citizenship certificate (or passport/national ID for foreign nationals), a passport-size photo, proof of business location such as a rent agreement or ward recommendation letter, and — for a sole proprietorship trading under a business name — the local ward/municipality business registration certificate.
- Partnership firm: the partnership deed/agreement, citizenship copies of all partners, and the firm's registration certificate from the Company Registrar's Office or relevant local authority.
- Private limited or public company: the company registration certificate from the Office of the Company Registrar, the company's Memorandum and Articles of Association, citizenship copies of directors/authorised signatories, and a board resolution or letter of authorisation naming the person authorised to apply on the company's behalf.
Have clear scanned copies of every document ready before you begin the online application — incomplete or illegible uploads are one of the most common reasons applications stall partway through.
Step-by-Step Online Application Process
- Create your Taxpayer Portal profile: visit the IRD's official Taxpayer Portal and select the registration option for PAN (and VAT/Excise, if applying simultaneously).
- Fill the Application for Registration: enter your personal or business details, registered address, contact information, and select the correct applicant type (individual, partnership, or company).
- Upload supporting documents: attach your citizenship/registration documents, photo, and any authorisation letters as scanned PDF or image files.
- Visit your local Inland Revenue Office (IRO): most applications require an in-person visit to your jurisdiction's IRO for document verification and, for individuals, biometric capture — the online application alone is generally not sufficient to complete registration.
- Receive your PAN certificate: once verification is complete, your PAN certificate is issued, and you can then create your portal username/password for ongoing e-filing access.
Typical Processing Timeline
For straightforward individual and sole-proprietorship applications with complete documentation, PAN is often issued within a few working days of the in-person verification visit. Company and partnership applications, or any application with incomplete or inconsistent documentation, can take longer, particularly if the IRO requests additional clarification or documents. Applying with a complete, correctly formatted document set the first time is the single biggest factor in keeping the process fast.
Common Reasons Applications Get Rejected or Delayed
- Mismatched details between the online application and the physical documents presented at verification (spelling of name, address, or business name inconsistencies).
- Illegible or incomplete scanned document uploads.
- Missing authorisation letter or board resolution for company applications where someone other than a listed director is submitting the application.
- Business address that cannot be verified against the supporting rent agreement or ward recommendation letter.
- Applying for VAT registration simultaneously without first confirming PAN issuance, creating sequencing confusion in the application.
What to Do After Receiving Your PAN
Once your PAN certificate is issued, three follow-up steps matter immediately: first, use your PAN to open (or formally link) your business bank account, since most banks require it for business account opening; second, create your IRD Taxpayer Portal username and password — a separate step from PAN issuance itself — so you can file returns and make payments online going forward; and third, assess with a chartered accountant whether your business needs to register for VAT immediately (if you already meet the threshold or fall into a mandatory category) or can defer VAT registration until turnover grows, since operating without required VAT registration once you cross the threshold carries its own penalty exposure.
Frequently Asked Questions
Is the PAN registration process different for a sole proprietorship versus a private limited company?
The core online application steps are similar, but a sole proprietorship applies using the owner's citizenship and a ward/municipality-issued business registration certificate, while a private limited company applies using its Company Registrar's Office registration certificate, Memorandum and Articles of Association, and a board-authorised signatory — companies generally require more documentation and, in some cases, a longer verification step given the additional corporate documents involved.
Can I get a PAN before formally registering my business?
Individuals can generally obtain a personal PAN independent of any business registration, but a business PAN (for a sole proprietorship, partnership, or company) requires that the underlying business registration — with the Company Registrar's Office or local ward/municipality — already be in place, since the PAN application requires that registration certificate as supporting documentation.
Do I need a new PAN if I convert my sole proprietorship into a private limited company later?
Converting a business structure generally requires a fresh PAN application under the new entity type, since PAN is tied to the specific legal entity; check with your Inland Revenue Office on the correct transition process, including how to close out the old PAN's outstanding obligations.
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