How to Register a Small Industry in Nepal

Overview of Small Industry Registration

Small industry registration in Nepal is a legal requirement under the Industrial Enterprises Act, 2076 (2019). This process ensures that the industry operates legally within the country’s industrial and economic framework. Small industries include businesses involved in light manufacturing, production, agro-processing, or service delivery with a defined investment threshold.

Registration provides legal recognition, enables PAN registration, allows access to government incentives, and ensures the industry’s compliance with tax and labor laws. The registration is primarily handled by the District Cottage and Small Industry Office (DCSI) or the Department of Industry (DOI), depending on the industry’s scope and location.

Importance of Legalizing Small Industries

Legalizing a small industry in Nepal offers several benefits and is a statutory obligation under the law. Operating without registration is considered illegal and may result in penalties or closure.

Legalizing a small industry:

• Provides a legitimate business identity.
• Allows access to business banking and credit facilities.
• Enables participation in public tenders and supply chains.
• Facilitates PAN and VAT registration with the Inland Revenue Department.
• Helps access government subsidies, grants, or tax exemptions.
• Ensures compliance with labor and environmental regulations.

Unregistered industries face legal risks and cannot expand formally or attract investment.

Criteria for Defining Small Industries

According to Schedule 1 of the Industrial Enterprises Act, 2076, small industries in Nepal are defined based on investment and number of employees.

Criteria:

• Fixed capital investment: Between NPR 500,000 and NPR 100 million.
• Number of employees: Up to 50 full-time workers.
• Involves manufacturing, production, processing, or service delivery.
• Operates at local or district level, often targeting domestic markets.

The classification helps authorities determine the registration authority, fee structure, and applicable regulations.

Legal Requirements for Small Industries

All small industries must comply with the registration requirement under the Industrial Enterprises Act, 2076. Additionally, other related acts such as the Companies Act, 2063, Income Tax Act, 2058, and Environmental Protection Act, 2076 may also apply.

Legal requirements:

• Industry must fall within the permitted sectors.
• Must register with the relevant government authority before operation.
• Environmental clearance may be required for specific industries.
• PAN registration with the Inland Revenue Department is compulsory.
• If hiring employees, registration with Social Security Fund is necessary.

Operating without fulfilling these legal requirements leads to violations of multiple statutory obligations.

List of Documents Needed for Registration

Applicants must prepare and submit a set of documents while applying for registration of a small industry.

Required documents:

• Completed application form (as provided by DCSI office).
• Citizenship certificate of the proprietor or shareholders.
• Company registration certificate (if applicable).
• Partnership deed or MoA and AoA for firms and companies.
• Recent passport-sized photographs of the applicant.
• Land ownership certificate or tenancy/lease agreement.
• Business plan or project proposal.
• Power of attorney (if submitted through a representative).
• Tax clearance certificate (if previously registered).
• Environmental clearance certificate (if required).

All documents must be submitted in original or notarized copies.

Registration Procedure for Small Industries

The registration of small industries in Nepal follows a systematic and legally prescribed process. It can be completed physically at the concerned office or online.

Steps to register:

1. Prepare required documents.
2. Fill out the official application form.
3. Submit the application to the District Cottage and Small Industry Office.
4. Application and document verification by the officer.
5. Site inspection (if required).
6. Receive approval and registration certificate.
7. Register PAN at Inland Revenue Department.
8. Complete labor and environmental formalities (if applicable).

The procedure is relatively straightforward if all documents are in order.

Time Duration for Small Industry Registration

The time required to register a small industry in Nepal depends on the completeness of the application and responsiveness of the concerned authorities.

Estimated duration:

• Standard registration: 5 to 7 working days.
• With additional inspections or approvals: 7 to 15 working days.

Applicants are advised to follow up with the DCSI office to avoid unnecessary delays. Processing time may vary slightly by district.

Applicable Government Charges and Fees

Registration fees are determined by the Ministry of Industry, Commerce and Supplies based on investment category and nature of the business.

Common fees include:

• Registration fee: NPR 1,000 to NPR 10,000 depending on industry type.
• Stamp duty: As per prevailing rules of the Government of Nepal.
• Professional service fee: If using legal or consulting firms (optional).
• Document notarization fee: If applicable.

There are no unofficial charges if submitted through official channels.

Governing Legal Framework in Nepal

Small industry registration is regulated under multiple laws, ensuring a structured process and legal compliance.

Relevant legal acts:

• Industrial Enterprises Act, 2076
• Companies Act, 2063 (for registered companies)
• Income Tax Act, 2058
• Foreign Investment and Technology Transfer Act, 2075 (for FDI)
• Environment Protection Act, 2076
• Value Added Tax Act, 2052 (if applicable)

These laws collectively govern the formation, operation, and regulation of industries in Nepal.

Registration Authorities for Small Industries

The primary government body responsible for registering small industries is the District Cottage and Small Industry Office (DCSI) under the Department of Cottage and Small Industries.

Relevant authorities:

• DCSI Office in respective districts.
• Department of Industry (DOI) for specific sectors or investments.
• Ministry of Industry, Commerce and Supplies (oversight and policy).
• Inland Revenue Department for tax registration.
• Department of Environment for environmental clearances.

Applicants should approach the appropriate office based on their industry category and location.

Checklist Before Submitting Application

A proper checklist helps ensure that no document or step is missed during the application.

Small industry registration checklist:

• Application form is completely filled.
• All necessary supporting documents are attached.
• Photocopies are notarized where required.
• Appropriate fees are paid via proper channels.
• Business address is verified with lease or ownership paper.
• Environmental or local clearances (if applicable).
• Power of attorney provided if submitted by representative.

Reviewing this checklist reduces the chances of rejection or delay.

Online Support and Application Services

The government has made provisions for online application through official portals. Applicants can also get assistance from legal and consultancy firms.

Online services include:

• Submission through doind.gov.np (Department of Industry).
• Online forms and guidelines available for download.
• Email and phone support from local DCSI offices.
• Legal professionals and firms offering document preparation and submission services.

While online systems are improving, in-person follow-ups are still common in many districts.

Post-Registration Legal Formalities

After receiving the industry registration certificate, businesses must fulfill additional legal steps to operate lawfully.

Post-registration requirements:

• Register PAN with the Inland Revenue Department.
• Open business bank account using registration certificate.
• Apply for VAT registration if applicable.
• Register with Social Security Fund (if employing workers).
• Renew permits or clearances annually or as required.
• Maintain accounting records and submit tax returns on time.

Failure to fulfill these obligations may result in fines or suspension.

Benefits of Registering Small Industries

Registering a small industry has both legal and operational advantages.

Key benefits:

• Legal identity and protection under Nepalese law.
• Eligibility for government subsidies and grants.
• Access to bank loans and financial services.
• Participation in public tenders and supply chains.
• Eligibility to import/export goods.
• Tax exemptions or deductions (based on sector and location).

Registration also ensures long-term business sustainability and expansion opportunities.

Legal Advisory for Small Industry Setup

While registration is straightforward, many businesses opt for legal support to ensure all compliance is met and future liabilities are avoided.

Legal advisory services include:

• Consultation on choosing the right industry classification.
• Drafting of necessary legal documents.
• Representation during submission and communication with authorities.
• Assistance in obtaining PAN, VAT, and labor clearances.
• Legal guidance on applicable laws and renewals.

Engaging legal professionals is advisable, especially for first-time applicants or industries with potential regulatory complexity.

 

Frequently Asked Questions (FAQs)

 

What is a small industry in Nepal?

A small industry involves capital investment between NPR 500,000 and NPR 100 million and employs up to 50 people, according to Industrial Enterprises Act.

Where do I register a small industry?

Small industries are registered at the District Cottage and Small Industry Office (DCSI) within the respective district.

Is registration mandatory for all?

Yes. All small industries must be registered before starting operations as per Nepalese law.

What are the fees to register?

Registration fees range from NPR 1,000 to NPR 10,000 based on the type of industry and capital investment.

Can I register online or offline?

Yes, small industries can be registered both online through official portals or in person at DCSI offices.

Who regulates small industries here?

The District Cottage and Small Industry Office and Department of Industry regulate small industries in Nepal.

What benefits do registered industries get?

Registered industries can access loans, tax benefits, legal protection, and government incentives.

Can I operate without registration?

No. Operating without registration is illegal and subject to penalties or forced closure.

Is the process simple and fast?

Yes, the process is straightforward and takes about 5 to 10 working days with complete documents.

What documents are needed exactly?

Citizenship certificate, business plan, land lease or ownership, passport photos, and legal entity documents are needed.