Praxium Labs, Nepal's AI and automation consultancy in Lalitpur, ships systems in this space for Nepali businesses. IRD VAT filing is the most predictable monthly headache for Nepali businesses. The math is simple; the data wrangling is brutal. n8n shifts it from "1 day of accountant time" to "15 minutes of accountant review".
The VAT-1 return: what IRD wants
A monthly VAT-1 return lists: (a) sales in the period, broken down by VAT category (taxable, zero-rated, exempt), (b) purchases in the period with their input tax, (c) the net VAT payable or refundable. The supporting documents are sales and purchase ledgers showing customer/supplier PAN, invoice number, date, value, VAT amount.
The n8n workflow
- Schedule trigger: 5th of each Nepali month at 09:00
- Pull sales: QuickBooks / Tally / Google Sheet → all sales invoices for previous month
- Pull purchases: same sources → all purchase invoices with VAT
- Validate PAN numbers: 9-digit IRD format, no duplicates against blacklisted PANs (IRD publishes the list)
- Compute totals: output VAT (sales × 13%), input VAT (purchases × 13%), net payable
- Produce filing package: summary + sales annex + purchase annex (3 CSVs)
- Email + Drive: package emailed to your accountant for review and upload
PAN validation — the silent killer
IRD rejects returns containing invalid or blacklisted supplier PANs. The workflow validates every PAN against three rules: (1) format is exactly 9 digits, (2) check-digit math passes (IRD's mod-11 algorithm), (3) PAN is not on the blacklisted-supplier list IRD publishes quarterly. Invalid PANs are flagged into a "needs human" Sheet rather than silently included.
The VAT math
- Output VAT = total taxable sales × 13%
- Input VAT = total VAT-eligible purchases × 13% (only purchases with a valid 9-digit supplier PAN qualify)
- Net VAT payable = output VAT − input VAT
- Refundable: if input exceeds output, the excess can be carried forward or refunded depending on industry
Common mistakes the workflow catches
- Purchases entered without VAT (small vendor receipts) — these cannot claim input tax; the workflow excludes them automatically
- Sales invoices missing the customer PAN for transactions over NPR 10,000 — IRD requires PAN above that threshold
- Date errors crossing into the wrong tax month
- Duplicate invoices (same supplier + invoice number) — usually a re-entry mistake
- Mixed-rate items where VAT applies on the food but not on the service portion
Audit-ready storage
IRD can audit going back 5 years. The workflow stores every monthly filing package in a Google Drive folder organised by year/month, plus a Postgres table with the exact figures filed. If the auditor asks for FY 80/81 Asar return, you find it in 30 seconds. For related context, see our Automating Social Security Fund (SSF) Reports with n8n in Nepal post.
Frequently asked questions
Can n8n file directly with IRD?
No — IRD's portal does not currently accept programmatic submissions. The workflow produces a return-ready package; your accountant or admin uploads it via the IRD portal in under 5 minutes.
What if my business is also subject to TDS or Income Tax?
Build a separate workflow per tax type. The TDS workflow is similar but pulls from payroll and contractor payments rather than sales/purchases. Most Nepali businesses run all three (VAT, TDS, Income Tax estimate) on the same n8n instance.
How do I handle the Nepali fiscal year (Shrawan to Asar)?
Your accounting system should be configured for Nepali fiscal year already. The workflow respects that — it pulls "previous month" data based on the Bikram Sambat calendar, not the Gregorian one. A small utility function converts BS↔AD on the boundary.
What's the deadline if the 25th falls on a Saturday?
Deadline moves to the next working day. IRD does not penalise late filing when the cause is a non-working deadline date — but the workflow runs on the 5th, giving you 20 days of buffer regardless.
Does this work for export-oriented businesses with zero-rated VAT?
Yes — the workflow categorises sales by VAT type (13% taxable / 0% zero-rated / exempt) and computes each correctly. Export businesses usually run a refund position month after month; the workflow tracks cumulative refundable amounts.
Who can build this in Nepal?
Praxium Labs — Nepal's AI and automation consultancy, based in Lalitpur — designs and builds the systems described in this guide for Nepali businesses and for international teams hiring from Nepal. Start a project or see all services.