A VAT-registered business with zero sales and zero purchases in a given month is not exempt from filing - it must still submit a nil return by the 25th. Many businesses skip this step assuming "nothing happened" means "nothing to file," and end up with an avoidable late filing fine. Here is exactly how a nil return works.
Key takeaways
- A nil return is required for any tax period with no taxable sales or purchases, even if the business is temporarily inactive.
- It is filed on the same IRD Taxpayer Portal, by the same 25th-of-the-month deadline, as a normal VAT return.
- Skipping a nil return still attracts the standard late filing fine of NPR 1,000 per period, even though no VAT is owed.
- Consecutive nil returns over an extended period may prompt an inquiry from your Inland Revenue Office about your business status.
- If your business has permanently closed, filing nil returns is not a substitute for formal de-registration.
What counts as a nil return
A nil return applies when, during the tax period, your business had no taxable sales, no taxable purchases, and no VAT to report in either direction. This commonly happens with seasonal businesses in their off months, newly registered businesses waiting for their first sale, businesses temporarily paused for renovation or relocation, or exporters between shipment cycles. It does not apply if you had any taxable activity at all, even a single small sale or purchase - in that case, you file a normal return reflecting those figures instead.
Step-by-step: filing a nil return on the IRD portal
- Confirm the period truly had zero activityDouble-check your sales and purchase registers for the month. Even one small taxable transaction means you should file a normal return instead of a nil return.
- Log in to the IRD Taxpayer PortalSign in at taxpayerportal.ird.gov.np using your PAN and password, the same credentials used for a regular VAT return.
- Select the VAT return option and the correct tax periodChoose the Nepali month you are filing for. Selecting the wrong period is the most common error even for a simple nil return.
- Enter zero in the sales and purchase fieldsLeave or set the taxable sales, output VAT, taxable purchases, and input VAT fields at zero. Some portal versions have a direct "nil return" option that pre-fills these fields.
- Review and submit before the 25thConfirm all fields show zero and submit. The portal will generate a return acknowledgement confirming the nil filing, just as it would for a normal return.
- Save the acknowledgementKeep the nil return confirmation with your records. It is evidence of compliance if your Inland Revenue Office later asks about a run of inactive periods.
Skipping it is not free
A nil return that is simply not filed is treated the same as any other missed return: it attracts the standard late filing fine of NPR 1,000 per tax period, since the fine is tied to the failure to file, not to the amount of VAT owed. See What Happens If You Miss the VAT Filing Deadline in Nepal? for the full penalty breakdown.
When repeated nil returns raise questions
Filing one or two nil returns in a row is normal for many seasonal or newly registered businesses. However, an extended run of nil returns can prompt your Inland Revenue Office to ask why a registered business shows no activity at all, particularly if it does not match the nature of the business. Be prepared to explain the reason, whether it is seasonality, a temporary pause, or a delayed start, and keep any supporting records such as a lease, closure notice, or correspondence with the IRD.
Before you file a nil return, check
- You have reviewed both the sales and purchase registers for the full period, not just sales
- No import, service, or reverse-charge transactions occurred that could still create a VAT liability
- No debit or credit notes from a prior period fall due for adjustment in this period
- You are filing the correct Nepali month, not the current or previous one by mistake
Nil return versus de-registration
If your business has closed permanently or has genuinely stopped operating for good, filing nil returns indefinitely is not the correct long-term step. VAT registration can be cancelled through a formal de-registration process with the IRD, after which no further returns, nil or otherwise, are required. Continuing to file nil returns for a business that has actually closed simply delays a step you will eventually need to take, and leaves your VAT number active with an ongoing filing obligation.
Related reading
For the full filing process when you do have transactions, see How to File VAT Return in Nepal: Step-by-Step 2026 Guide. For exactly how the 25th deadline is calculated, read VAT Filing Deadline in Nepal: 25th of Every Month Explained. If you have already missed one, see What Happens If You Miss the VAT Filing Deadline in Nepal?.
Frequently asked questions
Do I need to submit any documents with a nil return?
No supporting documents are typically required to file the nil return itself on the portal. Keep your sales and purchase registers on hand regardless, in case your Inland Revenue Office asks you to substantiate the inactive period later.
Can I file several months of nil returns at once if I fell behind?
Each tax period generally needs to be filed as its own return, even if several are overdue at the same time. File the oldest outstanding period first and work forward, since each one is assessed for the late filing fine independently.
What if I had a purchase but no sales in the month?
That is not a nil return. Any taxable purchase, even without a matching sale, should be reported as a normal return, and the resulting input VAT can typically be carried forward to a future period when you do have sales.
Does a nil return affect my ability to claim input VAT later?
Filing a nil return for a period with genuinely no activity does not forfeit any future input VAT claims, since there was nothing to claim in that period. Carried-forward input VAT from an earlier period remains available in later periods, subject to the normal rules.
Had some activity this month after all? Use our step-by-step VAT filing guide to file a normal return instead.
Conclusion
A nil VAT return takes only a few minutes on the IRD Taxpayer Portal, but it is not optional simply because a month had no transactions. Treat it as part of your regular monthly routine: check your books, confirm there was truly zero activity, and submit by the 25th like any other return. If the inactivity is permanent rather than temporary, plan for formal de-registration instead of relying on nil returns indefinitely.
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