Does Expense Management Software Need IRD Approval in Nepal?

If you have shopped for business software in Nepal, you have seen the badge: "IRD Approved". It shows up on accounting tools, billing systems, and POS software, and it raises an obvious question. If you are choosing expense management software, does it need IRD approval too?

The short answer: no, and understanding why will help you judge software vendors' marketing claims with clearer eyes.

What IRD is

IRD is the Inland Revenue Department (आन्तरिक राजस्व विभाग), Nepal's tax authority. It administers income tax, VAT, and PAN registration, and it regulates how businesses issue invoices to their customers.

What "IRD approved" actually means

The approval that vendors advertise comes from the Electronic Billing Procedure, 2074 (विद्युतीय बीजक सम्बन्धी कार्यविधि). In plain terms, it says: if your business issues invoices to customers electronically instead of on paper, the software doing it must be listed with the IRD and meet the department's requirements. Those requirements include things like fiscal-year based invoice numbering, an audit trail where nothing can be silently deleted, and the ability to sync sales data to the IRD's Central Billing Monitoring System, known as CBMS.

As of this writing, larger businesses are required to use electronic billing: the threshold has been set at annual turnover above NPR 10 crore generally, and NPR 5 crore for sectors like hotels and restaurants. Smaller businesses can adopt it voluntarily. Rules change, so always confirm the current thresholds with the IRD or your auditor.

Notice what all of this is about: sales invoices. The bills your business issues to its customers, the ones that carry VAT and end up in the government's revenue net. That is the entire scope of the approval.

Why expense management software is different

Expense management software points the other way. It tracks money leaving your company: an employee's taxi fare, the office internet bill, fuel for the delivery van. It records the invoices your vendors issued to you. It does not create tax invoices, so there is nothing in it for the IRD to certify under the Electronic Billing Procedure.

So when you evaluate an expense management tool and it has no "IRD Approved" badge, nothing is missing. The badge simply does not apply to this category of software, the same way a motorcycle does not need a boat license.

What actually matters for your expense records

That does not mean tax compliance is irrelevant to expenses. It matters a lot, just differently:

• Collect proper bills from vendors. To claim an expense as a tax-deductible cost, you generally need a proper PAN or VAT bill from the vendor. A handwritten scrap with no PAN number weakens your deduction.
• Keep receipts findable. When the auditor or a tax officer asks about a expense from last Falgun, "it is in one of these boxes" is not an answer. Digital receipt storage attached to each expense record is.
• Maintain an audit trail. Who submitted the expense, who approved it, when it was paid, and whether anything was edited afterwards. This protects you in disputes, internal and external.
• Retention. Keep records for the period your auditor advises; several years of history should be retrievable without archaeology.

This is exactly the job Kharchai does: every expense carries its receipt photo, its approval history, and its ledger entry, so the paper trail your accountant and auditor need builds itself as your team works.

The short answer, again

Billing software issues invoices, so it needs IRD listing. Expense management software records spending, so it does not. What your expense process needs instead is discipline: real vendor bills, stored receipts, and an approval trail nobody can quietly rewrite.

One honest disclaimer to finish: we build software, not tax advice. For decisions about your specific tax situation, talk to your auditor or the IRD directly. And if you want expense records that make those conversations easy, join the Kharchai waitlist.