Nepal E-Billing & CBMS Compliance Guide 2026

Nepal is rapidly moving towards a fully digital tax ecosystem. The Inland Revenue Department (IRD) has mandated e-billing (computerized billing) for a growing number of businesses. This guide covers everything you need to know about e-billing compliance, CBMS integration, and selecting IRD-approved software.

What is E-Billing and Why is it Mandatory?

E-Billing replaces traditional handwritten bills with invoices generated using IRD-approved software. This simplifies the billing process, reduces errors, and ensures transparency and compliance with tax regulations.

Key Benefits of E-Billing:

• Simplifies the invoicing process
• Reduces errors and enhances accuracy
• Ensures compliance with tax regulations
• Increases transparency in financial transactions

Who is Required to Use E-Billing?

Electronic invoicing is mandatory for certain taxable persons in Nepal:

• Taxable persons with an annual turnover greater than NPR 100 million for all types of supplies
• Taxable persons engaged in the supply of internet services, furnishings, hotels and restaurants with an annual turnover greater than NPR 50 million

For other taxable persons, it may only issue electronic invoices where it has obtained prior approval from the tax authorities. However, nonresident digital service providers and airlines are not required to obtain approval.

What is CBMS (Central Billing Monitoring System)?

CBMS is a centralized system developed by the IRD to monitor and manage invoices issued by businesses. It helps the government track transactions in real-time and ensure tax regulations are being followed.

For businesses with an annual turnover above NPR 25 crore, all invoices must be synced with the CBMS in real-time. When an invoice is generated using IRD-approved software, key details such as customer name, PAN, invoice date, and amount are automatically synced with CBMS.

IRD Approval Process for E-Billing Software

1. Select an Approved E-Billing Software

• Choose an E-Billing software that complies with IRD requirements
• Ensure the software supports features like VAT compliance, transaction tracking, and integration with IRD systems

2. System Configuration and Testing

• Set up the E-Billing system as per IRD guidelines
• Conduct a test run to ensure it functions correctly and complies with legal and technical requirements

3. Prepare Necessary Documents

Gather and submit the following documents along with the application:

• Business registration certificate
• PAN/VAT registration certificate
• Latest Tax Clearance Certificate
• Software purchase invoice
• Agreement with the software provider
• Software user manual
• Agreement with a datacenter (if cloud-based)
• Sample invoices and tax reports generated from the software

4. Register with IRD

• Submit your application to the IRD along with the above documents
• Ensure all provided information is accurate and complete

5. Software Compliance Check

• The IRD will verify whether the chosen E-Billing software meets its technical specifications and standards
• The software must be capable of integrating with IRD's CBMS for real-time transaction data reporting

6. Approval and Certification

• Upon successful testing, the IRD will issue an approval certificate
• This certificate authorizes the business to use the E-Billing system for generating invoices

Key Software Compliance Requirements

Based on the official IRD eBilling Directive, all e-billing software must meet the following minimum standards:

For General (Locally Hosted) Software:

• Database Integrity & Security: SQL-based database, prevent deletion of stored data, automated log archives, regular data backups, and recovery mechanisms
• Invoice Format & Controls: Fiscal year-based serial numbering (Schedule 5), restrict reprints, allow invoice cancellation with stated reason
• Reporting & Export Features: Provide invoice and sales reports in the format prescribed by Schedule 6, maintain audit trails, export data in Excel, XML, or PDF formats
• Access Control & User Roles: Only authorized users should be able to back up the database and log archives
• Documentation & IRD Integration: Include user manuals in Nepali or English, integrate with IRD's CBMS via Web API

Additional Requirements for Cloud-Based Software:

• Server Location: The central server must be located inside Nepal
• IRD Access: Inform IRD and relevant government offices about the server location in advance, allow IRD access to the server upon request
• Third-Party Hosting: Hosting provider must be registered in Nepal, server physically located within Nepal, implement a multi-tenancy architecture, sign a formal agreement between the user, software provider, and server provider

IRD Compliance Reports: Annex 5 & Annex 13

Following IRD rules is very important when using an E-Billing system in Nepal. Every transaction should be recorded properly and reports should match the required format.

Annex 5 - Transaction Records

Annex 5 is used to record all transactions like sales, sales return, purchase, and purchase return. It is auto-prepared from daily entries and includes:

• Bill number
• Customer name and PAN
• Bill date
• Amount, discount, taxable amount
• Tax amount and total amount
• Sync status with IRD

Annex 13 - High-Value Transactions

Annex 13 is used for sales and purchase transactions (including fixed assets) where the amount exceeds NPR 100,000 (One Lakh). It is very important during audit filing periods.

Audit Trail - Activity Tracking

The audit trail keeps track of all activities inside the software. If any record is created, updated, or removed, the system stores that information with details of the user, action type, date & time, and object ID.

Choosing the Right E-Billing Software

When choosing the right e-billing software in Nepal, consider these factors:

• Compliance: Ensure the software supports VAT and E-Billing compliance, with proper tax calculations and reporting
• Integration: Verify the software complies with the latest IRD regulations, reporting requirements, and CBMS integration
• Security: Ensure encryption and best practices for securing sensitive data, with user access control
• Deployment: Choose between cloud-based (accessible, automatic updates) or on-premise (more control)
• Reporting: Should generate detailed reports including sales summaries and tax calculations
• Scalability: Should be able to scale as your business grows
• Customer Support: Local support with training materials and help desk
• Cost: Evaluate pricing structure and look for free trials

Conclusion: Stay Compliant with E-Billing

E-billing is the future of tax compliance in Nepal. Whether you are a large business required to integrate with CBMS or a small enterprise preparing for digital transition, using IRD-approved billing software is essential to avoid penalties and streamline your invoicing process.

Get Started with HamroInvoice's IRD-Compliant Billing Software →