Opening a liquor shop in Nepal involves several administrative and legal procedures. These steps ensure the business operates in line with the laws set by the Ministry of Home Affairs, the Ministry of Industry, Commerce and Supplies, and local authorities. Medha Law and Partners Is a leading law firm in Nepal.
What Is the Process to Register a Liquor Shop?
To legally run a liquor shop, you must complete the following steps in sequence:
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Choose a business structure (sole proprietorship, partnership, or private company).
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Register the business at the Office of the Company Registrar (OCR), if applicable.
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Obtain location approval from the local municipality or ward office.
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Apply for PAN registration at the Inland Revenue Department.
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Apply for a liquor license from the District Administration Office (DAO).
By completing these steps in the correct order, you ensure full legal compliance and avoid penalties.
What Are the Legal Requirements?
The legal requirements for registering a liquor shop include:
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The applicant must be a Nepali citizen.
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The business must have a permanent address.
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The applicant must not have a criminal record.
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The location must be approved by local authorities.
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The shop must comply with:
Moreover, liquor shops cannot be located near schools, religious institutions, or hospitals.
Where to Register a Liquor Business in Nepal?
Registration involves coordination with the following offices:
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Office of the Company Registrar (OCR): For legal business registration.
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Local Municipality/Ward Office: For location approval and operation permit.
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Inland Revenue Department (IRD): For PAN and VAT registration.
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District Administration Office (DAO): For issuing the liquor license.
All steps must be completed before beginning operations.
How to Choose the Right Business Type?
Your business structure affects legal liability, taxes, and expansion potential. You can choose from:
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Sole Proprietorship: Simple and ideal for small businesses.
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Partnership Firm: Suitable when multiple partners are involved.
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Private Limited Company: Best for scalability and legal protection.
Most small liquor shops prefer sole proprietorship, but larger ventures often register as companies.
What Documents Are Required?
Different phases of registration require these documents:
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Citizenship certificate of the owner(s)
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Passport-size photographs
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Rental agreement or land ownership certificate
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Business location map and layout
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Business name approval letter (OCR)
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Company registration certificate (if applicable)
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PAN certificate
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Local authority permission letter
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Police clearance certificate
Ensure all documents are complete and up to date for smooth processing.
How to Apply for PAN and VAT?
PAN and VAT registration take place at the Inland Revenue Office. Follow these steps:
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Fill out the PAN application form.
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Submit the following:
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Citizenship certificate
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Rental/land ownership document
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Passport-size photos
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Business registration certificate
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Submit the application at the nearest IRD office.
PAN is typically issued within 2–3 working days. VAT registration is required only if your annual revenue is expected to exceed NPR 2 million.
What Licenses Are Needed to Sell Alcohol?
To sell alcohol, a liquor license from the DAO is mandatory. Types of licenses include:
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Retail License: To sell directly to consumers.
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Wholesale License: For large-scale distribution.
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Bar/Restaurant License: For on-premise alcohol service.
To apply, submit:
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Completed application form
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Business registration documents
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Local approval letter
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Police clearance certificate
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Rental or land documents
Licenses are valid for one year and must be renewed annually.
Step-by-Step Summary
Here’s a quick summary of the liquor shop registration process:
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Choose business structure
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Register with OCR (if applicable)
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Obtain local municipality approval
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Register for PAN at IRD
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Apply for a liquor license at DAO
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Submit required documents
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Allow shop inspection by local police or officials
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Pay the required government fees
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Receive the license and display it at the premises
Each step must be completed accurately for legal operation.
How Much Time Does It Take?
Here’s a general timeline:
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Company registration: 2–5 working days
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Municipality approval: 3–7 working days
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PAN registration: 2–3 working days
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Liquor license issuance: 7–14 working days
Total estimated time: 2 to 4 weeks, depending on document readiness.
What Is the Total Cost?
Costs vary by business type and location. Approximate breakdown:
| Process | Estimated Cost (NPR) |
|---|---|
| Company Registration | 2,500 – 9,000 |
| Municipality Approval | 500 – 2,000 |
| PAN Registration | Free |
| Liquor License Application | 2,000 – 10,000 |
| Misc. (photos, printing) | 1,000 – 2,000 |
| Total Estimate | 6,000 – 20,000 |
What Are the Government Fees?
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Company Registration: Based on capital amount
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PAN: No charge
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Liquor License: Variable; based on shop size and volume
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Annual Renewal Fee: NPR 2,000 to NPR 5,000
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Excise Duty: As per Excise Duty Rules, 2059
Always confirm updated fees on official DAO or IRD websites.
What Laws Regulate Liquor Shops?
The major governing laws are:
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Excise Duty Act, 2058 (2002)
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Local Government Operation Act, 2074 (2017)
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Company Act, 2063 (2006) (if registered as a company)
These laws guide licensing, location, advertising, and penalties.
Which Authorities Approve a Liquor License?
The following bodies play a role in registration and approval:
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District Administration Office (DAO): Issues the liquor license
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Inland Revenue Department (IRD): Provides PAN and VAT
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Local Government Office: Approves the business location
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Office of Company Registrar (OCR): Registers legal business entities
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Police Authority: Inspects the premises during license processing
Close coordination with these authorities is essential.
What Are the Post-Registration Requirements?
Once registered, liquor shops must:
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Renew their liquor license annually
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Submit VAT returns (if applicable)
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Maintain detailed inventory and sales records
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Renew business registration (if registered at OCR)
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Stay compliant with excise and income tax obligations
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Cooperate with surprise inspections by local authorities
You may also consider hiring legal or accounting services for ongoing compliance.