IRD Introduces 10% VAT Rebate for Electronic Payments at Hotels, Restaurants, and Bars

The Inland Revenue Department (IRD) has introduced a 10% tax rebate on Value Added Tax (VAT) for payments made to hotels, restaurants, and bars through electronic means.

This initiative aims to promote electronic transactions and strengthen the culture of tax compliance in Nepal. The rebate applies to payments made using debit cards, credit cards, QR codes, and mobile payment systems. As per the decision based on the Value Added Tax Act 1996, the refund will be credited directly to consumers’ bank accounts when payments are made electronically.

To participate in the scheme, the IRD has set five conditions targeting businesses, taxpayers, payment portals, and financial institutions. Businesses must ensure that customers can receive the rebate and must display relevant information about VAT refunds. Payment portals are required to update their systems in accordance with the Electronic Billing Work Procedure 2072 (Revised), while financial institutions are tasked with facilitating the smooth operation of the rebate system. This scheme, initially proposed in the 2019/20 budget, is a step toward encouraging electronic payments and moving toward a cashless economy.