Abbreviated VAT Invoice and its tax implications in Nepal Genuine

Types of VAT Invoice as per VAT rules and regulations 2053 are :-

  • Abbreviated VAT Invoice.
  • Normal VAT Invoice.
  • Consumer Level VAT Invoice.
  • Invoice as per Annexure 5

Abbreviated VAT Invoice

Abbreviated VAT Invoice is also “Condensed VAT Invoice”. There are many businesses that provide a wide variety of goods or services at various quantities to large number of Final level Customers. Examples of such Businesses include Grocery Retailers, Clothes retailer, etc. Maintaining detailed VAT Invoice for such businesses is inefficient, costly and less practical. In order to address this situation, provision for ” Abbreviated VAT Invoice” has been drafted in the VAT Rules and Regulations 2053 Rule No. 18. Let us understand the deeper concepts involved around Abbreviated VAT Invoice in a FAQ/QNA format.

Who are eligible to issue Abbreviated VAT Invoice?

Any VAT Registered Entity providing goods or services at consumer level to general public are eligible to Issue this VAT Invoice.

What is the Limit of Sales Value for issuing Abbreviated VAT Invoice?

This type of VAT Invoice can be issued to the maximum sales amount to Rs 10,000/- including VAT.

Can I issue this VAT Invoice without any compliance work?

No, you cannot. Before issuing such Invoice, you have to obtain authorization letter from Inland Revenue Office. To get authorization letter, you have to write an application requesting Tax Officer to permit for an issue of Abbreviated Tax Invoice. Tax Officer will study the business and if suitable as above, permission will be granted to issue such Invoice.

Can the buyer of goods and services from Abbreviated Invoice Claim Input Tax Credit?

No, Current provision does not allow buyer to claim Input Tax Credit on the purchases made through such Invoice.

What if the buyer asks for proper VAT Invoice?

Even though you are permitted to issue such Invoice, you have to issue proper VAT invoice if customers request for it.

What are the items not included in this type of Invoice?

Items not shown in this Invoice are:- marked price before VAT, VAT amount and VAT registration number of buyer.

What types of records are to be kept by taxpayer issuing Abbreviated Invoice?

Records to be kept include:- copy of original invoices, copy of till-roll invoice and total sum of a day, VAT amount of each transactions and all other records to be kept by VAT registered Entity.

If there is no VAT amount on this type of invoice, then how is the VAT collected?

The VAT collected is calculated using the basic percentage computation as:

VAT Amount= (Selling Price including VAT*0.13)/113

Prescribed Format of Abbreviated VAT Invoice.

Abbreviated VAT Invoice

Invoice Number:                                                                                                                   Date:  

Seller Name:                                                                                                 Location:

Supplier VAT No:                                                                                                         VAT Rate:

SNParticularsQuantityAmountTotal
     
     
   Discount 
   Total 

Final Words on Abbreviated VAT Invoice.

Abbreviated VAT Invoice is thus a summarized form of VAT Invoice useful for retail consumers. Since this invoice is issued primarily to consumers and there is no requirement of showing buyer’s PAN, Input VAT claim is prohibited for this Invoice. Generally, this type of Invoice is electronically generated and is quite smaller in size. Large retailers and chain supermarkets like Bhatbhateni, KTM CTY, and others issue this type of Invoice to General Public.

Normal VAT Invoice.

Everyone is familiar with Normal VAT Invoice. This invoice contains all the required Details of The Seller and Buyer. The Details regarding Seller’s and Buyer’s PAN, business location of buyer and seller, particulars of the item purchased, quantity and rate of the purchase, any trade discounts provided and VAT calculation are available in this type of Invoice.

Prescribed Format of Normal VAT Invoice

Invoice Number:                                                                                                                   Date:  

Seller Name:                                                                                                 Location:

Buyer’s Name: Location:

Supplier VAT No:                                                                                                        

SNParticularsQuantityAmountTotal
     
     
   Sub Total 
   Discount 
VAT
Grand Total
Normal VAT Invoice.

Insurance Level VAT Invoice. Schedule 5A

VAT rule has prescribed a different form of VAT Invoice for Insurance Businesses. As there are varieties of Services Involved in Insurance Business, normal VAT Invoice would create operational difficulties.

Prescribed Format of Insurance Level VAT Invoice.

Insured Costumer Number:                                                                                                                   Date:  

Insured Name: Location:

ParticularsAmount
Insurance No.: ……………………… Cover Note No.: ………………..
Confirmation No. …………………………… Insurance Premium: ……………….
Insurance Amount: ………………………………..
From ………………………………………….. to ……………………………… Transfer Fee: …………………………………..
Ticket Fee : ……………………..
Total Taxable Amount
VAT
Grand Total

Consumer Level VAT Invoice ( Schedule 5B)

Consumer Level VAT Invoice is issued by special businesses that deals with special goods prescribed by the IRD. The major difference of this Invoice is that the Discount is subtracted after the calculation( meaning the Taxable Value of these goods are the Value prescribed by IRD and no discounts can be deducted on these goods). IRD publishes the Retail Price of certain goods in the National Gazette.

Any businesses the trades with such goods should always notify IRD in case any trade of such goods occurs. On the sale of these goods, VAT is levied on the Maximum Selling Price of the goods without deduction of any discounts.( Maximum VAT is collected on these goods). These goods Include, vehicles prices at dealer , alcohols and beverages at dealer, cigarettes at dealer, etc.

Prescribed Format of Consumer Level VAT Invoice.

Invoice Number:                                                                                                                   Date:  

Seller Name:                                                                                                 Location:

Buyer’s Name: Location:

Supplier VAT No:                                                                                                        

SNParticularsQuantityAmountTotal
     
     
   Sub Total 
   VAT 
Discount
Grand Total
Consumer Level VAT Invoice.

Compliance regarding VAT Invoice.

It is to be Noted that all these Invoices should be sequentially numbered and must Start with with 001 at the Start of a Fiscal Year. In case any Business has multiple branches, each branches should have some reference code with the VAT Invoice number and each Branches should have Invoice number Starting From 001.

Example . Let us suppose Design Hardware had two branches, one at Kathmandu and other at Pokhara. At the start of fiscal year, each of the branches of Design Hardware should obtain a new Invoice Book with the invoices starting from 001 along with the Reference number as : KTM001 for Kathmandu Branch and Pkh001 for Pokhara Branch.(any other reference can also be used).

Also Study Criteria for VAT Registration.

At least 3 copies of the Invoice Should be created. One copy for the customer, one for accounting/ other Departments and one for Reference.

In case of transportation of Goods of more than Rs 10,000/-, VAT invoice should be compulsorily attached to the file.

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