VAT Bill vs PAN Bill for Nepal Workshops: Which One Do You Issue?
Walk into garages across Nepal and you will see two kinds of bills: ones with a 13% VAT line, and ones that show a PAN number and a single total. Which one a workshop issues is not a style choice — it follows from how the workshop is registered with the Inland Revenue Department (IRD). Here is the plain-language difference, and how to set up your billing so the two never get mixed up.
What is a PAN bill?
PAN is the Permanent Account Number a business gets when it registers with the IRD. A workshop that is registered for PAN but not for VAT issues PAN bills: the bill shows the work done and the total, and charges no VAT on top.
What is a VAT bill?
A VAT-registered workshop adds 13% VAT to its parts and labour, and shows the pre-VAT subtotal, the VAT amount and the total as separate figures. That VAT is collected on behalf of the government and reported in your VAT filings. The detail is in our 13% VAT billing guide.
VAT bill vs PAN bill at a glance
| What to compare | VAT bill | PAN bill |
|---|---|---|
| Who issues it | A workshop registered for VAT with the IRD | A workshop registered for PAN only |
| VAT charged | 13% on parts and labour | None |
| What the invoice shows | Subtotal, VAT and total as separate lines | One total — the price entered is what the customer pays |
| Monthly reporting | VAT collected is reported, and VAT paid on purchases can be claimed | No VAT to collect or claim |
Which one does your workshop need?
That depends on your registration, not on preference. If the IRD has registered you for VAT, you charge VAT. If you are registered for PAN only, you do not, and you should not add VAT to a bill. Which side of the line your workshop falls on is a question for your accountant or the IRD, because registration rules and thresholds can change — confirm it before you set up your billing.
How MekanikMitra handles both
In MekanikMitra this is one setting for the whole workshop, not a decision on every invoice. In Workshop Settings you choose your tax registration with the IRD — VAT-registered or PAN-only — and every new invoice follows it automatically.
- VAT-registered workshop: invoices are created with 13% VAT, shown as separate subtotal, VAT and total lines
- PAN-only workshop: invoices are created with no VAT, no VAT lines appear, and the price you enter is the total the customer pays
- A PAN-only workshop cannot add VAT to an invoice, so a VAT line cannot slip onto a PAN bill by accident
- Your customer's PAN is printed on the invoice when it is saved on their profile
The monthly IRD report works for both. A VAT-registered workshop gets its monthly VAT summary as a CSV for the accountant. A PAN-only workshop gets the same report with VAT at zero, marked as PAN-only. Either way, MekanikMitra is workshop software, not accounting software — the CSV goes to your accountant's books.
If your registration changes
A workshop that grows into VAT registration just changes the setting, and new invoices carry 13% VAT from then on. Change it when your registration actually changes, and ask your accountant which date to use.
Where to start
Not sure which one you are? Ask your accountant first, then start on the Free Forever plan and set your registration in Workshop Settings — the 15 free job cards a month are enough to see a real VAT or PAN invoice come out of a real job. This article is general information, not tax advice; confirm your own obligations with your accountant or the IRD.
Run your workshop on MekanikMitra — Free Forever plan, no card needed.