E-commerce in Nepal refers to the online buying and selling of goods or services through digital platforms. As more businesses transition to online operations, understanding the E-Commerce legal framework in Nepal becomes crucial. Although Nepal does not currently have a standalone comprehensive E-Commerce Act, an E-Commerce Bill (2080 B.S.) has been proposed and is expected to come into effect soon. Until then, e-commerce businesses in Nepal must comply with various existing laws such as the Companies Act 2063, Consumer Protection Act 2075, and the Value Added Tax Act 2052. Medha Law and Partners Is a leading law firm in Nepal.
Legislative Framework Surrounding E-Commerce
Under the proposed E-Commerce Bill 2080, several legal provisions will guide the functioning of e-commerce entities in Nepal:
- Once an order is accepted by a seller, it becomes a legally binding contractual agreement.
- Customers have the right to cancel the order without incurring cancellation charges if the item has not yet been dispatched.
- If the product is not delivered within the committed timeline, customers may file official complaints at the District Administration Office.
- Every e-commerce business must appoint a complaint handling officer, and their name, phone number, and contact address must be clearly displayed on the platform’s website.
Entities Capable of Engaging in E-Commerce in Nepal
As per Section 3 and 4 of the proposed Act:
- Only businesses that are registered and licensed to operate under existing laws can engage in e-commerce.
- Electronic transactions of prohibited goods or services are strictly forbidden.
- A business must establish a digital platform to conduct online commerce legally.
Required Disclosures on E-Commerce Platforms
Every E-commerce platform must publicly display the following mandatory business details:
- Name of the electronic platform
- Registered business name and legal entity
- Physical and registered office address, with branch details
- License information (if applicable for specific sectors)
- Description of business activities (e.g., intermediary, listing model)
- VAT Registration Number or PAN Number
- Contact details: email, phone, fax, and customer support lines
- Contact details of the complaint resolution officer
- Platform listing number issued by the regulatory authority
These disclosures enhance transparency, trust, and compliance with legal obligations.
Procedure for E-Commerce Registration in Nepal
To legally operate as an E-Commerce company in Nepal, follow these registration steps:
Step 1: Submission of Application
Submit your business details to the Departmental E-Commerce Registration Portal, set up by the Department of Industry.
Step 2: Application for Platform Listing
Existing e-commerce companies must apply for listing within 3 months from the effective date of the Act.
Step 3: Approval and Listing Number
The department will review the application and issue a Platform Listing Number via electronic communication within 7 working days.
Documents and Details Required for E-Commerce Registration
The following documents and details must be submitted during the registration process:
- Legal name, registration number, and business address
- Name and identity of the proprietor, partner, or company director
- Description of online business activities
- PAN or VAT registration number
- Valid contact details (phone, email, address)
- Number and location of branches/outlets
- Any additional details requested by the E-Commerce Portal
Failure to submit accurate details may result in rejection or delisting.
Offences and Penalties Under E-Commerce Law in Nepal
Any of the following will be considered punishable offences under the new law:
- Operating without a registered electronic platform
- Conducting e-commerce without a valid platform listing
- Failing to provide complete product or service information
- Breaching any obligations set by the E-Commerce Bill
Licensing and Company Registration Requirements
E-commerce companies must be:
- Registered under the Companies Act 2063 or Partnership Act
- Licensed for trade or services in compliance with existing sector-specific laws
- Registered with PAN or VAT authorities for taxation compliance
- Listed under the E-Commerce Platform Listing Portal after successful approval
Failure to meet these requirements leads to legal disqualification and operational risk.
Taxation and VAT Compliance for E-Commerce Businesses
E-commerce entities must:
- Register for VAT under the Value Added Tax Act 2052
- Issue VAT-compliant invoices for all online sales
- Maintain transparent accounting records for audits
- Submit timely tax returns to avoid penalties
Digital transactions must be traceable and verifiable under Nepalese tax laws.
Consumer Protection Obligations for E-Commerce Entities
E-commerce businesses must ensure:
- Fair pricing and transparency in product/service listings
- Honest advertising and no misleading information
- Clear return, exchange, and refund policies
- Response systems for consumer grievances
Failing to meet these expectations could result in fines or legal action under the Consumer Protection Act 2075.
Legal Prohibitions and Restricted Digital Activities
E-commerce companies are prohibited from:
- Selling items banned under Nepali laws or regulations
- Conducting business without full disclosure or misleading descriptions
- Exploiting loopholes to avoid tax, licensing, or consumer protection obligations
- Operating under false or incomplete registration
Penalties may include fines, delisting, license cancellation, or criminal proceedings.
Authorities Regulating E-Commerce Activities in Nepal
Key authorities include:
- Ministry of Industry, Commerce and Supplies
- Department of Industry (DOI)
- Inland Revenue Department (IRD)
- District Administration Office for complaints
- E-Commerce Registration Portal Regulatory Body
These authorities oversee registration, monitoring, tax compliance, and enforcement.
Cybersecurity and Data Protection in E-Commerce
Even though Nepal lacks a full-fledged Data Protection Law, E-Commerce platforms are expected to:
- Protect user data and payment information
- Use secure platforms with SSL encryption
- Avoid sharing customer data without consent
- Report breaches immediately to relevant authorities
Digital Payment Systems and Financial Integration
E-commerce businesses must:
- Use approved Digital Wallets (e.g., eSewa, Khalti, IME Pay)
- Enable bank integrations and secure gateways
- Maintain digital payment logs for audit and tax purposes
Integration with Nepal’s Digital Financial Infrastructure (DFI) is key for scalability.
Timeline for Full Legal Compliance After Launch
New businesses must:
- Apply for listing within 3 months of the Act’s enforcement
- Receive approval and Platform Listing Number within 7 days
- Submit any business updates within 7 days of the change
- Implement compliance protocols immediately post-listing
Delay in fulfilling these timelines may lead to legal consequences.
Future Outlook of E-Commerce Law in Nepal
The E-Commerce Bill 2080 is a promising initiative aimed at:
- Building trust in online transactions
- Formalizing the digital economy
- Encouraging domestic and foreign investment
- Creating a structured and competitive online market
Once passed, it will create a clear legal identity for digital commerce in Nepal.