How to File Your Income Tax Return Online in Nepal (D-01 / D-03 / D-04)

Nepal's Inland Revenue Department (IRD) uses numbered self-assessment forms in its Taxpayer Portal, and choosing the right one is the first step. The form you file depends on your annual turnover, your taxable business income, and whether you qualify for the simplified presumptive or turnover-based schemes under the Income Tax Act, 2058 (2002 AD). Filing the wrong form is a common reason returns must be re-entered, so confirm your category before you begin.

The D-01 return is the presumptive self-assessment return, for a resident natural person whose only income is Nepal-source business income and who stays under the taxable-income and turnover ceilings set under Section 4. The D-02 return is the transaction- or turnover-based return for slightly larger small businesses that exceed the presumptive limits but remain below the turnover-tax ceiling. The D-03 return is the full non-presumptive self-assessment return used by companies, larger firms, professionals and anyone who must compute tax on actual income after deductions.

The D-04 return is different in purpose: it is the estimated (advance) tax return, in which you declare your projected income and tax for the whole fiscal year so that advance tax can be paid in instalments. It is filed earlier in the year, not at year-end, and many businesses that file D-02 or D-03 must also file a D-04 estimate. Certain professionals, including lawyers, doctors, auditors, chartered accountants, engineers and consultants, cannot use the presumptive D-01 scheme regardless of turnover and must file under the standard rules.

Presumptive taxation exists so the smallest businesses can comply without full bookkeeping or an audit. To qualify for D-01 under Section 4 of the Income Tax Act, you must be a resident natural person (not a company or partnership), earn only Nepal-source business income, and not have claimed a medical tax credit under Section 51 or advance tax credit under Section 93. You must also stay within the taxable-income and annual-turnover ceilings fixed for the relevant fiscal year.

For recent fiscal years the presumptive ceilings have been set at taxable business income of up to Rs 300,000 and annual turnover of up to Rs 3,000,000; businesses above those turnover levels but below the higher turnover-tax ceiling generally fall under the transaction/turnover-based D-02 scheme instead. Because these thresholds and the flat presumptive amounts are revised through the annual Finance Act, always confirm the current figures for your fiscal year before filing.

Under D-01 you pay a fixed lump-sum amount rather than a percentage of profit, and the amount typically depends on where the business operates (metropolitan, sub-metropolitan, municipality or rural municipality). This is one of the simplest returns on the portal: there is no sales-and-purchase ledger to reconcile, only a short declaration. A recent relief measure allowed businesses with no transactions in the year to report zero presumptive tax.

The D-03 is the return most companies, larger proprietorships and professionals will use. Unlike D-01, it is a genuine self-assessment: you report your actual income, allowable expenses and deductions, and the tax is computed on net taxable income at the applicable slab or corporate rate. For companies, the D-03 is normally filed on the basis of audited financial statements prepared by a registered auditor, so your accounts should be finalised before you begin entry.

On the portal, D-03 entry involves declaring income heads, business sales, purchases and expenses, adjustments, and any tax already withheld (TDS) or paid in advance. The system aggregates these into an income statement and calculates the balance of tax payable. Because the D-03 feeds directly into your compliance record, accuracy matters: the figures you self-assess here are what the Inland Revenue Office reviews, and they are the return referenced when you later apply for a tax clearance certificate.

A correctly filed and paid D-03 (together with any VAT returns) is a precondition for obtaining the tax clearance certificate, known in Nepali as the kar chukta praman patra. That certificate proves you have no outstanding tax, interest or penalty against your PAN and is frequently demanded for tenders, contracts, share transfers, renewals and visa or foreign-employment paperwork. If any tax, interest or penalty remains unpaid, the clearance certificate will not be issued.

The D-04 estimated tax return is filed early in the fiscal year, not at the close. In it you declare your projected sales, profit and estimated tax for the whole year so the IRD can collect tax in advance. A business is generally required to file the estimate and pay advance tax when its estimated annual tax liability exceeds Rs 7,500; smaller taxpayers are exempt. Businesses that file a D-02 turnover return are also expected to file the estimated return.

Advance tax is paid in instalments tied to Nepali-calendar deadlines. Under the Income Tax Act the estimate and the first instalment fall due by the end of Poush (mid-January), with further instalments by the end of Chaitra (mid-April) and the balance by the end of Ashad (mid-July, the fiscal year-end). The cumulative targets are commonly cited as roughly 40 percent by Poush-end, 70 percent by Chaitra-end and 100 percent by Ashad-end of the estimated liability. Confirm the exact percentages for your case, as guidance is sometimes expressed as discrete instalments rather than cumulative totals.

The estimate is not final: your actual liability is settled when you file the annual D-01, D-02 or D-03 return after year-end. Advance tax already paid is credited against the final tax, and any shortfall is settled (with interest) when filing the annual return, so filing a realistic D-04 helps you avoid interest for under-paying advance tax.

All of these returns are filed through the IRD Taxpayer Portal at taxpayerportal.ird.gov.np (reached via the department's main site, ird.gov.np). You need an active PAN (Permanent Account Number) and portal login credentials; if you have never used the portal, complete the one-time taxpayer login/registration using your PAN details and registered mobile number. Have your finalised accounts, sales and purchase figures, and any TDS or advance-tax details ready before you start, because each return is generated against a unique submission number.

After logging in, open the Taxpayer Portal application and expand the Income Tax menu (click the plus sign beside it). Choose the return that matches your category — D-01 Return Entry, D-02, D-03 Return Entry, or the estimated D-04 — and select the correct fiscal year. The portal issues a submission number for that return; note it down, as it identifies your draft and is used at every later stage, including verification at the office.

Next, enter the required financial information. For D-01 this is a short presumptive declaration; for D-02 and D-03 you enter income, business sales and purchases, expenses, deductions and any tax already withheld or paid in advance. The system computes the tax payable. Review every figure carefully, then submit the return electronically. Pay any balance of tax through the portal's payment options (voucher/bank/e-payment) so the return is not left with an outstanding liability.

Finally, the return is verified at your Inland Revenue Office or Taxpayer Service Office. Verification links your submitted return and its submission number to your PAN record and finalises it in the IRD system. Keep a printout of the filed return, the submission number and the tax-payment voucher for your records and for any later tax-clearance application.

Nepal's fiscal year runs from Shrawan 1 to the end of Ashad (roughly mid-July to mid-July in the Gregorian calendar). Under Section 96 of the Income Tax Act, the annual income tax return is due within three months of the fiscal year-end — that is, by the end of Ashwin (Ashoj), around mid-October. This is the statutory deadline for the D-01, D-02 and D-03 annual returns.

If you cannot file by Ashwin-end, you may apply to the tax officer for an extension, which is commonly granted for a further three months, pushing the deadline to the end of Poush (around mid-January). The extension applies to filing; it does not by itself waive interest on tax that was due earlier, and the estimated-tax/advance-tax obligations still run on their own Poush, Chaitra and Ashad schedule. In some years the IRD or Ministry of Finance announces blanket extensions, so check for current-year notices.

Because BS (Bikram Sambat) month-ends do not fall on the same AD date every year, always confirm the precise Gregorian cut-off for your fiscal year from an official IRD notice, and submit well before Ashwin-end rather than on the last day when the portal is busy.

Late or non-filing of a return carries a fee under Section 117 of the Income Tax Act, 2058. For non-submission of an income return under Section 96, the fee is charged for each month (or part of a month) of delay at the higher of an annualised percentage of your assessable income or a fixed monthly amount. The Section 117 formula is often summarised as the greater of about 0.1 percent of assessable income per year (roughly one-and-a-half percent per annum applied monthly in some readings of the provision) or a fixed minimum per month — but the exact rate and the minimum monthly figure have changed over time, so verify the current wording for your year.

Separately, if tax was due and not paid on time, interest accrues under the Act's late-payment provisions on the outstanding tax, in addition to the Section 117 return-filing fee. Underestimating advance tax on the D-04 can also attract interest when the shortfall is settled. In practice a late filer can therefore owe three things at once: the return-filing fee, interest on unpaid tax, and the tax itself.

Beyond the money, an unfiled or unpaid return blocks your tax clearance certificate and can complicate PAN renewal, VAT compliance and any business licensing that depends on being in good standing. The cheapest path is to file on time, or apply for the Poush-end extension in advance, rather than pay compounding fees and interest later. Because penalty amounts and minimum fees are revised by the annual Finance Act, treat any specific rupee figure here as indicative and confirm it on the IRD portal.