This Article provides a complete guide for obtaining Construction License (D-Class) in Nepal including the requirements, procedure, documents & time taken. Prime Law Associates acts as Legal Advisor for several construction companies in Nepal and has assisted in obtaining Construction License as well. The Firm can be contacted through:
What is Construction D-Class License?
A Construction D-Class License in Nepal is an authorization issued by the government to individuals or companies for undertaking small-scale construction projects. This license allows the holder to engage in construction activities with a contract value up to 6 million Nepali Rupees. The D-Class license is the entry-level category in the construction licensing system, suitable for small contractors and local builders.
Types of Construction License
Nepal’s construction industry operates under a tiered licensing system with four categories:
- A-Class License: For large-scale national and international projects
- B-Class License: For medium to large-scale projects
- C-Class License: For medium-scale projects
- D-Class License: For small-scale local projects
Each license class corresponds to specific project scales, contract values, and technical requirements.
Requirements for Construction License
Obtaining a construction license in Nepal requires meeting specific criteria set by regulatory authorities:
- Company/ Small Industry Registration: The applicant must have a registered company under the Company Act of Nepal.
- Minimum Capital: A prescribed minimum paid-up capital is required, varying by license class.
- Technical Personnel: The company must employ qualified technical staff, including civil engineers and overseers.
- Equipment: Ownership or lease agreements for necessary construction equipment must be demonstrated.
- Financial Capacity: Proof of financial stability through bank statements or credit facilities is necessary.
- Tax Clearance: Up-to-date tax clearance certificates from relevant authorities are mandatory.
- Citizenship: Nepalese citizenship for company directors and key personnel is required.
Construction License Service in Nepal
Prime Law Associates provides Construction License (D-Class) Service in Nepal. The Firm assists in the incorporation of Construction Company and consequently D-Class License from Kathmandu Metropolitan City. We file applications on behalf of our clients for receiving the license.
Amit Karna
Amit Karna is a Company Registration Lawyer in Nepal with extensive experience in registering multiple companies in Nepal.
Sukra Subba
Sukra Subba has 10 Years of experience in the Corporate Sector of Nepal & facilitating company registration at the Firm.
Process for Obtaining Construction License in Nepal
Step 1: Company/Local Industry Registration
Step 2: VAT Bill Purchase of Required Machines & Instruments
Step 3: Certification of Purchase of Required Machines
Step 4: Issuance of D-Class Construction License
Step 1: Document Preparation for OCR
Gather all required documents, including company registration certificate, tax clearance certificate, citizenship certificates of directors, and proof of technical personnel employment.
Step 2: Application Submission at Kathmandu Metropolitan City
Submit the completed application form along with all required documents to the Kathmandu Metropolitan City office. Pay the prescribed application fee at the designated counter. Obtain an acknowledgment receipt for the submitted application. Ensure all sections of the application form are accurately filled out. Provide contact details for follow-up communications. Submit any additional documents requested by the authorities promptly. Keep copies of all submitted documents for personal records.
Step 3: Document Verification
The Kathmandu Metropolitan City office will review the submitted documents for completeness and authenticity. They may conduct background checks on the company and its directors. Verification of technical staff qualifications and work experience will be carried out. The authorities may inspect the company’s office premises and equipment. R
Step 4: Technical Evaluation
A technical committee will evaluate the company’s capacity to undertake construction projects. This may involve assessing the qualifications and experience of technical staff. The committee will review the company’s equipment inventory and financial capacity. They may examine past project portfolios and client references. Prepare for potential practical tests or demonstrations of technical skills.
Step 5: License Issuance
Upon successful evaluation, the Kathmandu Metropolitan City office will approve the license application. Pay the prescribed license fee at the designated counter. Collect the official construction license certificate from the authority. Verify all details on the license certificate for accuracy. Register the license number with relevant construction associations. Obtain any additional permits or certifications required for specific types of construction work.
Also Read: Company Registration in Nepal । Company Registration Lawyer
Documents required for Obtaining Construction License
To obtain a construction license in Nepal, the following documents are typically required:
- Completed application form
- Company registration certificate
- PAN/VAT registration certificate
- Tax clearance certificate
- Citizenship certificates of company directors
- Equipment ownership documents or lease agreements
- Bank statements or proof of financial capacity
- Office rental agreement or ownership documents
- Photographs of office premises and equipment
Additional documents may be required based on the specific license class and local authority requirements.
Timeline for Construction License Process
The timeline for obtaining a construction license in Nepal varies depending on the efficiency of the applicant and the workload of the issuing authority. Typically, the process takes 2-3 months from application submission to license issuance.
License Fees and Costs
The fees for obtaining a construction license in Nepal vary based on the license class and issuing authority. For a D-Class license, the application fee is typically NPR 1,000-2,000. The license fee ranges from NPR 10,000-25,000. Kathmandu Metropolitan City requires NPR 25,000/- as Construction License Fee. Renewal fees are usually 50-75% of the initial license fee. Additional costs may include document preparation, notarization, and professional assistance fees.
Construction License Renewal in Nepal
Construction licenses in Nepal require periodic renewal to maintain validity. The renewal process typically involves the following steps:
- Submission of Renewal Application: File a renewal application with the issuing authority before the license expiry date. Include updated company information and any changes in technical staff or equipment.
- Document Updates: Provide current tax clearance certificates, insurance policies, and proof of completed projects during the license period.
- Fee Payment: Pay the prescribed renewal fee, which is usually a percentage of the initial license fee.
- License Reissuance: Upon satisfactory review, the renewed license certificate is issued.
Renewal applications should be submitted at least 35 days before the license expiry date.
Legal Framework for Construction License
The construction licensing system in Nepal is governed by several key legal instruments:
- Local Government Operation Act, 2074 (2017)
- Public Procurement Act, 2063 (2007) and its Regulations
These laws establish the regulatory framework for construction activities, licensing requirements, and standards for building safety and quality. They define the roles and responsibilities of contractors, local authorities, and regulatory bodies in the construction sector.
Regulatory Authorities
Several regulatory bodies oversee the construction licensing process in Nepal:
- Local Government Bodies
- Office of Company Registrar
Construction License in Nepal: FAQs
What is D-Class Construction License?
A D-Class Construction License in Nepal allows contractors to undertake small-scale construction projects with a contract value up to 6 million Nepali Rupees. It’s the entry-level license suitable for local builders and small contractors.
How to obtain Construction License in Nepal?
To obtain a Construction License in Nepal, register a company, prepare required documents, submit an application to the local authority, undergo document verification and technical evaluation, and pay the prescribed fees. The process typically takes 2-3 months.
What are the requirements for a construction license?
Requirements include company registration, minimum capital, qualified technical staff, necessary equipment, work experience, financial capacity, tax clearance, Nepalese citizenship for key personnel, office setup, and adequate insurance coverage.
What is the government fee for Construction License in Nepal?
For a D-Class license, the application fee is typically NPR 1,000-2,000, and the license fee ranges from NPR 10,000-20,000. Fees may vary based on the issuing authority and license class.
How often must construction licenses be renewed?
Construction licenses in Nepal generally require annual renewal. The renewal application should be submitted at least 35 days before the license expiry date to avoid penalties or reapplication requirements.
Can foreign construction companies obtain licenses in Nepal?
Foreign construction companies can obtain licenses in Nepal, but they must establish a local entity and meet additional requirements. Joint ventures with Nepalese companies are often preferred for foreign firms entering the Nepali construction market.
Disclaimer: This Article is for informational purposes only and shall not be construed as legal advice, advertisement, personal communication, solicitation, or inducement of any sort from the firm or any of its members. The firm shall not be liable for consequences arising out of any action undertaken by any person relying on the information provided herein.
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