E-Commerce Marketplace Tax & Compliance in Nepal

A platform that buys and resells goods has a different revenue and inventory position from one arranging sales made by independent sellers. Read the agreement and actual operation: who promises delivery, sets or controls the supply, bears inventory or service obligations and issues the customer invoice? The contract label “marketplace” does not alone decide accounting or VAT treatment. In an intermediary arrangement, a seller’s gross customer sale can remain the seller’s revenue while the platform earns its own commission or service fee. The cash sent to the seller is a settlement after deductions, not necessarily the seller’s revenue figure. Keep the customer invoice linked to the correct legal supplier and the platform invoice linked to its separate fee.

Income Tax Act section 95A(6ङ) requires a resident e-commerce operator to collect 1% when paying the specified sale proceeds to persons providing goods, services or both through its platform. This is a statutory tax collection, not the platform’s commercial commission. Identify the relevant payment base and preserve the seller’s PAN and category. Finance Act 2083 also changes section 92 finality for the specified service-payment category. Do not describe every seller’s 1% deduction as universally final or universally adjustable. Goods, services and mixed arrangements need the exact amended provision. A seller should retain the collection evidence and establish its annual-return treatment rather than merely add the deduction to an expense account.

Maintain the legal/business name, registration, PAN, VAT status where relevant, address, authorised contact, bank settlement details and applicable sector licence. Confirm that the invoicing person is the contracted seller. A bank account in another name needs a documented explanation and permitted arrangement before settlement. The seller agreement should explain supply responsibility, pricing, customer invoice, delivery, returns, refunds, platform fees and deductions. Customer complaints and defective goods must be traceable to the responsible supplier. Keep unnecessary personal documents outside public website listings while making the disclosures required by applicable consumer and e-commerce law.

The underlying seller’s supply and the platform’s service are separate VAT questions. Current ordinary domestic thresholds are NPR 5,000,000 for goods, transport-vehicle rental and transport services, and NPR 3,000,000 for other services and mixed supplies, subject to mandatory registration categories. Standard-rated taxable supplies use 13%. Exemption or zero rating needs its own schedule basis. An unregistered seller does not automatically make the platform’s fee VAT exempt. Conversely, the platform being registered does not by itself make every seller invoice a creditable VAT invoice. Confirm the supplier and supply at each layer.

Assume a seller’s verified VAT-exclusive goods sale is NPR 100,000, the platform fee is NPR 5,000 and the legally applicable 1% collection base is NPR 100,000. The tax collection is NPR 1,000. Ignoring VAT, delivery, returns and other deductions, the seller’s settlement is NPR 94,000. The seller records NPR 100,000 gross sale, the appropriate NPR 5,000 fee and separately classified NPR 1,000 tax collection; it should not record only NPR 94,000 revenue. This is an arithmetic illustration. Verify the actual fee invoice, VAT, collection base and finality before using it for a live seller. If an order is cancelled, reconcile the original sale, collection, fee reversal, refund and any correction rather than simply enter a net negative settlement.

Match order, customer invoice, delivery, collection, return or refund, platform deduction and bank settlement. For cash on delivery, identify who holds the cash and any unsettled amount. A delivery report is not a bank receipt. Review long-outstanding settlements and unexplained deduction changes. Electronic-commerce listing, disclosures, complaint handling and seller obligations form an additional regulatory layer. Confirm the current Act, Directive and authority process for the platform’s business model; this article does not invent a registration portal or filing deadline. Tax records and lawful customer-facing operation should be maintained together.