Abstract The aim of this study was to compare costs and socio-economic impact of tuberculosis (TB) for patients diagnosed through active (ACF) and passive case finding (PCF) in Nepal. A longitudinal costing survey was conducted in four districts of Nepal from April 2018 to October 2019. Costs were collected using the WHO TB Patient Costs Survey at three time points: intensive phase of treatment, continuation phase of treatment and at treatment completion. Direct and indirect costs and socio-economic impact (poverty headcount, employment status and coping strategies) were evaluated throughout the treatment. Prevalence of catastrophic costs was estimated using the WHO threshold. Logistic regression and generalized estimating equation were used to evaluate risk of incurring high costs, catastrophic costs and socio-economic impact of TB over time. A total of 111 ACF and 110 PCF patients were included. ACF patients were more likely to have no education (75% vs 57%, P = 0.006) and informal employment (42% vs 24%, P = 0.005) Compared with the PCF group, ACF patients incurred lower costs during the pretreatment period (mean total cost: US$55 vs US$87, P < 0.001) and during the pretreatment plus treatment periods (mean total direct costs: US$72 vs US$101, P < 0.001). Socio-economic impact was severe for both groups throughout the whole treatment, with 32% of households incurring catastrophic costs. Catastrophic costs were associated with ‘no education’ status [odds ratio = 2.53(95% confidence interval = 1.16–5.50)]. There is a severe and sustained socio-economic impact of TB on affected households in Nepal. The community-based ACF approach mitigated costs and reached the most vulnerable patients. Alongside ACF, social protection policies must be extended to achieve the zero catastrophic costs milestone of the End TB strategy.