Core rule: determine whether the advance is a payment of service fees, contract consideration or another category subject to withholding. Apply the relevant provision when the withholding-triggering payment occurs; do not wait automatically for a final invoice.
Example: a business prepays NPR 100,000 of fees, excluding VAT, to a qualifying VAT-registered resident consultant. Assuming section 88's 1.5% service-fee rule applies, TDS is NPR 1,500. Pay NPR 98,500 against that fee component and record NPR 1,500 as tax withheld.
A genuinely refundable security deposit or loan is not automatically a service-fee payment; examine the agreement and substance. When settling the final bill, reconcile the gross advance and TDS already recorded so the same amount is not withheld twice.
Ordinarily, deposit the withheld tax and submit the statement within 25 days after month-end.