Excise duty in Nepal applies to a specific category of goods — alcohol, tobacco, and certain other products — and businesses dealing in these need an excise license separate from their standard PAN and VAT registration.
Who actually needs an excise license
Manufacturers, importers, and in some cases distributors of excisable goods — most commonly alcoholic beverages and tobacco products — need to hold a valid excise license before operating in that category. This sits alongside, not instead of, your standard business registration and VAT obligations, since these sectors are also on the list of businesses required to register for VAT regardless of turnover.
The renewal cycle
Excise licenses aren't a one-time registration — they require annual renewal, administered through the IRD. Missing a renewal window can mean operating without a valid license, which carries its own penalty exposure separate from any tax compliance issue.
Excise closure
If a business exits the excisable-goods category — stops importing tobacco, for instance — the excise license needs to be formally closed, not just left to lapse. An unclosed license sitting inactive can still generate compliance obligations and queries.
Why this is easy to overlook
Excise is a narrower requirement than PAN or VAT, so it's less commonly discussed and easier for a business to not realize applies to them — particularly if they're diversifying into a new product line that happens to fall under excise rules without realizing it.
Getting this right from the start
If your business deals in, or is expanding into, any excisable goods category, confirm your excise licensing status before you start selling, not after an inspection raises the question. The registration and renewal process is straightforward once you know it applies to you — the risk is entirely in not knowing.
