Core rule: VAT follows the statutory time of supply. A customer failing to pay does not automatically cancel the original supply. An accounting bad-debt expense is not, by itself, a VAT adjustment.
Example: a taxable sale of NPR 100,000 carries NPR 13,000 VAT. The customer never pays, and the business writes off NPR 113,000. That write-off alone does not justify reducing output VAT by NPR 13,000.
A genuine price change, supported by a credit note under rule 20, is different from a collection failure. Keep the original invoice, correspondence and evidence of any actual return or agreed price adjustment. Do not issue a fictitious credit note just to clear the debtor balance.
Income-tax deductibility of a bad debt is a separate question with separate conditions.